Earnings Per Share

Question 1

What is the earnings per share ratio used for?

Answer 1

To compared the after-tax profit available to ordinary S/H of an entity on a per share basis, with that of other entities.

Question 2

What are the components in the numerator and the denominator in the earnings per share calculation?

Answer 2

Profit attributable to ordinary S/H of the parent entity/ Weighted average number of ordinary shares outstanding during the reporting period

Question 3

Where are the earnings per share figures for a parent entity presented?

Answer 3

parent’s separate financial statements

Question 4

What happens when there are treasure shares (repurchase)?

Answer 4

Then the weighted ave number of shares outstanding for the period in which the transaction takes place must be adjusted for the reduction in the number of shares from the date of the event.

Question 5

What is a Diluted EPS?

Answer 5

Diluted EPS is a ratio which recognises the potential dilutive effect of the basic EPS ration from the assumption that the entity’s convertible securities are converted, its warrants or options are exercised, or that its contingently issuable shares are issued.

Question 6

Where are the basic and diluted EPS ratios presented in a set of financial statements?

Answer 6

In an entity’s statement of profit or loss and OCI.