Monday, 5 January 2015

Example EPS and Bonus Share

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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