Chapter 26 - EPS Flashcards
EPS
Earnings Per Share - forms the denominator of the PE Ratio
IAS 33
The standard sets out the rules for consistent calculation and presentation of EPS
EPS Principle
To get a consistent and comparable ratio for measuring earnings
Measures performance by measuring earnings
IAS 33 - Net Profit Attributable to ordinary shareholders
Consolidated profit or loss after tax, NCI, appropriations for non-equity shares including profits from Associates and Joint Ventures
IAS 33 - Ordinary Share
An equity instrument subordinate to all other classes of equity instruments
IAS 33 - Weighted Average Number of Shares
This is the issues and repurchases of shares during the year, weighted on time
Shares issued in exchange for cash
Shares are added in th weighting when cash is receivable
Dividends are reinvested as shares
Shares are included at the date of payment of the dividends
Convertible debt and other financial instruments are used
The shares will be included when the interest ceases to accrue
Shares are issues for consideration in the acquisition of another entity
Shares will be included at the date of acquisition of the other entity
Equity Shares in issue
> issue at full market price
bonus issue (also known as capitalization issue or scrip issue
share exchange
rights issue
Equity Shares issue at full market price
Average number of shares in issue and ranking for dividend
> 4 Million shares issued at January 1
1 Million additional shares issued at September 30
Earnings at December 31, 500 thousand
Weighted average number of shares and EPS?
Weighted average shaures = 4,250 Million
EPS = 11.8c
Equity Shares Bonus Issue
No additional resources enter the business and no additional earnings are generated
Equity Shares Bonus Issue
Shares ranking for dividends after the bonus issue are used