FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The issued share capital of a company consists of 1,680,000 ordinary shares of £1 each.
Half way through its financial year the company made a rights issue of 3 for 6 at an exercise
price of £1.85 a share.
The market value of the company's shares was £2.52 a share just before the rights issue.
The company reported a net profit after taxation for the year of £1,008,000.
The market value of each ordinary share at the end of the year was £2.99.
The theoretical ex-rights value per share is £2.30.
Calculate the adjustment factor (correct to 5 decimal places) to use to calculate earnings per
share for the year. Do NOT calculate earnings per share - just the adjustment factor.
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Transcribed Image Text:The issued share capital of a company consists of 1,680,000 ordinary shares of £1 each. Half way through its financial year the company made a rights issue of 3 for 6 at an exercise price of £1.85 a share. The market value of the company's shares was £2.52 a share just before the rights issue. The company reported a net profit after taxation for the year of £1,008,000. The market value of each ordinary share at the end of the year was £2.99. The theoretical ex-rights value per share is £2.30. Calculate the adjustment factor (correct to 5 decimal places) to use to calculate earnings per share for the year. Do NOT calculate earnings per share - just the adjustment factor.
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