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.

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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The issued share capital of a company consists of 840,000 ordinary shares of £1 each.Half way through its financial year the company made a rights issue of 3 for 7 at an exercise price of £1.63 a share.The market value of the company’s shares was £2.22 a share just before the rights issue..The company reported a net profit after taxation for the year of £504,000.The market value of each ordinary share at the end of the year was £2.66.The theoretical ex-rights value per share is £2.04, and the adjustment factor is 1.086637.Calculate the weighted average number of shares which will be used in the calculation of earnings per share for the year.（maybe the answer is 1056388，but I don't know why）
The issued share capital of a company consists of 840,000 ordinary shares of £1 each. Half way through its financial year the company made a rights issue of 3 for 7 at an exercise price of £1.63 a share. The market value of the company's shares was £2.22 a share just before the rights issue.. The company reported a net profit after taxation for the year of £504,000. The market value of each ordinary share at the end of the year was £2.66. The theoretical ex-rights value per share is £2.04, and the adjustment factor is 1.086637. Calculate the weighted average number of shares which will be used in the calculation of earnings per share for the year.
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