3. EPS Flashcards
1
Q
Earnings per share - basics
A
The statement of profit or loss and other comprehensive income of listed firms must present the EPS (IAS 33).
2
Q
basic EPS - Calculation
A
Share price = EPS x PER
EPS = (profit/loss) / weighted average number of ordinary shares
3
Q
Types of EPS
A
Basic ESP: potential dilutive effects of options and other instruments are not considered
Diluted EPS: potential dilutive ordinary shares caused by options, convertible bonds and other financial instruments are taken into account
dilutes EPS is always lower or equal to the basic EPS
4
Q
diluted EPS - Calculation
A
EPS = (profit + number of convertible bonds * face value * interest rate * (1 - tax rate)) / (number of shares + number of convertibles * exchange rate(right number))
