Earnings
per Share and bonus share
As
bonus share are not to contribute additional fund to the organization, therefore weighted average of share is not calculated in case of bonus share. It is
assumed that bonus share is issued at the begging of the year.
Example EPS and Bonus Share
Ordinary Profit
|
$ 700,000
|
Ordinary
shares outstanding Jan,2014
|
200,000 @ 1 $
|
During Year 20%
shares issued
|
|
Calculate EPS
for the year
|
|
Solution
The
basic rule is that bonus share issued during is deemed to be issued at the beginning
of the year.
Ordinary
Profit
|
$700,000
|
Ordinary Share
|
200,000 Shares
|
Bonus Shares
20% @ 200,000
|
40,000 Shares
|
Shares at the begging
of Year ( 200,000+400,000)
|
240,0000 Share (only Deemed)
|
Earnings Per
Share $700,000/ 240,000 Shares
|
$
2.9167
|
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