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weighted average shares

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › weighted average shares

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 23, 2021 at 4:16 pm #626161
    alawi sayed
    Participant
    • Topics: 152
    • Replies: 166
    • ☆☆☆

    Hello Mr Chris,

    Thanks for help, in the following question why in kaplan answers they took the average of the market prices of $1.5 and $1.8 why the value 5 m into 1.8 and 1 m into 1.5 why chosen it like that . I could not understand their way which was:

    A $1.35

    TERP
    5 × 1.8 = 9.0
    1 × 1.5 = 1.5
    10.5 / 6 = $1.75

    Shares ‘000
    5,000 × 5/12 × 1.8 / 1.75 2,143
    6,000 × 7/12 3,500
    5,643
    EPS = 7,600 / 5,643 = $1.35

    ——————————————————————————————————————————

    At 1 January 20X8 Artichoke Co had 5 million $1 equity shares in issue. On 1 June 20X8 it made a 1 for 5
    rights issue at a price of $1.50. The market price of the shares on the last day of quotation with rights was
    $1.80.
    Total earnings for the year ended 31 December 20X8 was $7.6 million.
    What was the earnings per share for the year?
    A $1.35
    B $1.36
    C $1.27
    D $1.06

    Thanks,

    June 24, 2021 at 8:34 pm #626238
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6440
    • ☆☆☆☆☆

    Hi,

    there is a rights issue in the question and when we have such then we need to calculate the rights issue fraction. Part of this fraction involves the calculation of the TERP, which is what they are showing in the answer.

    I’d suggest that you go back and look at the class notes/videos to help you identify what to do and then come back with any further questions.

    Thanks

  • Author
    Posts
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