Earnings Per Share Flashcards
(11 cards)
Which accounting standard deals with EPS
IAS 33
What is the denominator of the EPS calc
What is the numerator
Weighted average number of shares
PAT, profit attributable to NCI, exceptional items
What adjustments to profit must you make to the numerator of the EPS calc
Preference dividends included in equity (-)
Cumulative preference dividends whether declared or not (-)
Premium paid on repurchasing preference shares (-)
Discount on repurchasing preference shares (+)
What is the rights bonus fraction
Cum rights price / TERP
(OLD / new)
Where TERP is the average price of all shares after rights issue
How do you restate PY Comparatives for EPS after rights or bonus issue
PY EPS x 1/bonus fraction
What creates a diluted EPS
Potential issue of shares eg convertible bonds, share based payments, contingent consideration
How does diluted EPS work for convertible loans, bonds and preference shares
Adjusted earnings:
Basic earnings X
+ effective interest saved (NET OF TAX) X (» if loan paid off in shares then there is no finance cost)
OR Effective preference dividend saved X
Diluted number of shares:
Basic weighted average + max number of new shares to be issued
How does diluted EPS work with share options
Adjusted earnings: no adjustment needed
Diluted number of shares: basic weighted average + dilutive options
Where dilutive options is the number of ‘free shares’ offered
How are contingently issuable shares dealt with in terms of diluted EPS
Taken into account if and only if the conditions leading to their issue have been satisfied. For these purposes the end of the accounting period is treated as the end of the contingency period.
Contingently issuable shares are included from the beginning of the period for diluted EPS
What is the equation for effective interest saved to add to adjusted earnings for convertible loans diluted EPS
Split accounting liability x EIR x (1-t)
How do you calculate incremental EPS and what do you compare this to
How do you deal with multiple convertible loans
Additional profit / additional shares
Compare to basic EPS
Issues that are dilutive are ranked from most to least dilutive
