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EPS Questions

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Abdulwahid Abdulrahman
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44 views3 pages

EPS Questions

Uploaded by

Abdulwahid Abdulrahman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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EARNINGS PER SHARE

Question 1

The following figures are extracted from the financial statements of A plc, a
listed company, for the year ending 31 December 2020:

TZS 000

Profit on ordinary activities before taxation 4,567


Tax on profit on ordinary activities (1,213)
Profit on ordinary activities after taxation 3,354

Dividends paid in the year were as follows: Ordinary 490


Preference 164
Total 654

There were 11,000,000 ordinary shares in issue at 1 January 2020. An


additional 400,000 shares were issued for cash on 30 September 20020

Required:
Calculate the basic EPS for 2020

Question 2

Black plc, a listed company, has earnings per share in 2019 of TZS 30, with an
issued share capital of 300,000 TZS 100 ordinary shares. In 2020, 200,000
shares were issued as part of a capitalisation issue. The 2020 earnings are TZS
10,0,000.

Required:
Calculate the EPS for 2020 and the restated 2019 EPS.

Question 3

Kennedy plc, a listed company, has 2,000,000 shares in issue at 1 January 2020.
On 30 June 2020 it made a rights issue of 1 for 10 at TZS 50. The price of the
shares on the last day of quotation cum-rights was TZS 100. Earnings for the
year to 31 December 2020 were TZS 100,000,000 and for the previous year
were TZS 45,000,000.

Required:
Calculate the EPS for 2020 and the restated 2019 EPS.

Question 4

A listed company has a year end of 31 December 2020. As at the start of the
year, it had 2,000,000 shares in issue. In 1996, TZS 300,000 of 10%
convertible loan stock was issued with the following details available:

 Every TZS 100 of stock can be converted to ordinary shares at the


following rates:

Shares

30 June 2007 100


30 June 2008 105
1
 The profit after tax for the year ended 31 December 2020 was TZS 800,000.

 The rate of corporation tax is 30%

Required:
Calculate the basic and diluted EPS for the year to 31 December 2020.

Question 5

Dunkeld plc, a listed company, has 1,500,000 shares in issue and profits after
tax of TZS 1,200,000 (all from continuing operations). This gives a basic EPS
of 80p. The company also has the following convertible stock: TZS 400,000 of
10% loan stock, each TZS 1,000 of stock having the right to convert into 2,000
shares.

In addition it has 500,000 convertible preference shares, entitled to a cumulative


dividend of 10p per share. Each is convertible to one and a half ordinary shares.

The tax rate is 30%.

Required:
Calculate the diluted EPS for the year.

Question 6

Glass plc (‘Glass’) is a UK listed company. On 1 November 2003 its issued


share capital was 10,000,000 ordinary shares of 60p each and 4,000,000 4%
preference shares of TZS 1 each. During the year ended 31 October 2019 the
company made a rights offer to its shareholders of three new ordinary shares of
60p each for every 10 existing ordinary shares held. The offer was fully taken
up by shareholders, who purchased the new shares for TZS 3 each on 1 May
2019. The fair value of each ordinary share on 30 April 2019 was TZS 4.15.

At 31 October 2019 the ordinary shareholders of Glass also held options,


exercisable between 1 November 2007 and 1 May 2008, to purchase 1,200,000
ordinary shares at TZS 2.80 per share. No options were issued during the year
ended 31 October 2019. The average fair value of the ordinary shares during
the year was TZS 4.20 each.

The company paid an ordinary dividend of TZS 1,040,000 and a preference


dividend of TZS 160,000 during the year to 31 October 2019.

Glass’s draft profit and loss account for the year ended 31 October 2019 shows
the following:

TZS 000’s
Operating profit 4,525
Interest payable (329)
Profit on ordinary activities before taxation 4,196
Taxation (1,279)
Profit on ordinary activities after taxation 2,917
Minority interests (132)
Profit for the financial year 2,785

Required:

2
(1) Calculate the basic earnings per share for Glass for the year ended
31 October 2019.

(2) Calculate the diluted earnings per share for the year ended 31
October 2019.

(3) Prepare the earnings per share disclosure note for the year ended
31 October 2019.

Note:
Comparative figures are not required

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