The net profit after tax for AB Limited for the year ended 31/12/2023 was K125 000 and the company and 1000 000 ordinary shares of K1 each. On 1/5/2023 the company issued 200 000 ordinary shares as bonus issue. The company has 10% convertible debt of K2 500 000. If the bondholders can convert to equity shares on the basis of K2 for very share.Required to computea) Basic EPS b) Diluted EPS c) Why is it important to distinguish between basic EPS and DEPS wen making investment
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The net profit after tax for AB Limited for the year ended 31/12/2023 was K125 000 and the company and 1000 000 ordinary shares of K1 each. On 1/5/2023 the company issued 200 000 ordinary shares as bonus issue. The company has 10% convertible debt of K2 500 000. If the bondholders can convert to equity shares on the basis of K2 for very share.
Required to compute
a) Basic EPS
b) Diluted EPS
c) Why is it important to distinguish between basic EPS and DEPS wen making investment
Step by step
Solved in 2 steps
- A company had profit after tax of €50,000,000 for the year ended 31 December 2020. The number of shares in issue on 1 January 2020 was 12,000,000 and the company undertook a 2 for 1 stock split on 1st May and bought back 2,000,000 shares on 1st October financed by a debt issue. The company has 2 million preferred shares in issue each with 10 PAR value and a dividend of 8%. The company also has in issue convertible bonds with a total of 10,000,000 of PAR value with a coupon of 3% and each 100 of PAR convertible into 10 shares. The company also has issued stock options covering 600,000 shares with a strike price of €25. The share price at the end of the year was €35 and averaged €32 over the year. The company pays tax at 20%. Calculate EPS and diluted EPS for the company, assuming their accounting year is the same as the calendar year. With regards to the buyback of shares, explain how the buyback would be treated in the accounts and the reasons companies buy back shares.On January 01, 2022, DEF Company provided the following information: Ordinary share capital, P50, 150,000 shares 7,500,000 10% bonds payable, each P1,000 is convertible into 20 ordinary shares 6,000,000 On June 30, bonds with face amount of P3,000,000 were actually converted into ordinary shares. The net income for the current year was P2,115,000 and the income tax rate is 30%. Diluted EPSa. 10.13b. 12.15c. 9.00d. 11.57On April 1, 2021, River Company issued P2,000,000 12% bonds at face amount. Each P1,000 bond is convertible into 10 ordinary shares. The entity reported net income of P2,749,000 for the year ´ended December 31, 2021. The average number of ordinary shares outstanding was 100,000 shares and the income tax rate is 30%. Required: 1. Basic earnings per share 2. Diluted earnings per share.
- Petrock Company provided the following information at year-end: 2020 2021 Ordinary share capital Convertible preference share capital 10,000 shares 90,000 shares 90,000 shares 10,000 shares During 2021, the entity paid dividends of P10 per ordinary share and P24 per preference share. · The preference share capital is convertible into 20,000 ordinary shares. The net income for 2021 was P2,850,000. Required: 1. Basic earnings per share 2. Diluted earnings per shareMirana Co. owes 150000 loan payable to RIKIMARU UNIVERSAL BANK as of June 30, 2014. RIKIMARU accepted 20000 shares of Mirana as full payment of the Loan. At this date the shares are selling at P6 per sharE. THE SHARE HAS 5p PAR VALUE BASED ON THE SHARE RECORDS. bY WHAT AMOUNT WOULD the shareholder's equity change as a result of the issuance of shares to RIKIMARU. P120000 increase P100000 increase P150000 decrease P120000 DecreaseMIRANA Co. owes P150,000 loan payable to RIKIMARU UNIVERSAL BANK as of June 30, 2014. RIKIMARU accepted 20,000 shares of MIRANA as full payment of the loan. At this date the shares are selling at P6 per share. The share has P5 par value based on the share records. By what amount would the shareholder’s equity change as a result of the issuance of shares to RIKIMARU. A. P150,000 decrease B. P120,000 decrease C. P120,000 increase D. P100,000 increase
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- Gemilang Bhd has share capital of RM1 million in shares of 25 sen each. At 31 May 2022 shares had a market value of RM1.10 each. On 1 June 2022, the company makes a right issue of 1 shares for every 4 held at RM0.60 per share. Its profit were RM500,000 in 2022 and RM440,000 in 2021. The year-end is 30 November. Calculate (a) the theoretical ex-rights price; (b) the bonus issue element; (c) the basic earnings per share for 2021; and (d) the basic earnings per share for 2022.Relenta Company reported an after-tax net profit of Rs. 3,17,000 for 2022. On April 1, 2021 the company had 96000 equity shares of Rs.10 par value and 1000 of 12%, Rs.100 convertible cumulative preference shares. Information about transactions that affected the share capital are as follows: 1. On July 1, 2021, Company declared bonus of 1 share for every 4 shares held. 2. Issued 60,000 shares at a premium of Rs.25 on October 1, 2021 On March 31, 2022, company declared preference dividends of Rs.12000. Required: 1. Analyze the basic Earning per share (EPS) for 2022. 2. Compute the diluted earning per share (EPS) assuming each preference share will be converted into 10 equity shares. 3. Comment upon the difference between the two.ABC SAOG has in issue 2,000,000 ordinary shares of OMR 0.500 fully paid. On 31st Dec 2018 management board has decided to pay a dividend of 100 baisa on each ordinary share which was readily approved by the shareholders. The date of payment was 10th March 2019. During the year the company earned a profit after tax of OMR 200,000. The company paid the amount of dividends for the ordinary shareholders for the year 2019. What will be the Net Retained earnings after the payment of dividend to shareholders assuming that the company had opening Retained earnings on 1st January 2018 of OMR 800,000? a. OMR 1,000,000 b. OMR 600,000 c. OMR 800,000 d. OMR 300,000 The amount of ordinary dividend to be distributed to the shareholder is a. OMR 200,000 b. OMR 1,000,000 c. OMR 700,000 d. OMR 400,000