A. Explain the importance of Earnings per Share as a business statistic. (5 marks) B. Temuka...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A. Explain the importance of Earnings per Share as a business statistic. (5 marks) B. Temuka Berhad is a local manufacturing company listed in Bursa Malaysia since 2012. On 1 January 2020, the issued share capital consisted of 60,000,000 ordinary shares of RM1 each and 10,000,000 cumulative preference shares of RM1 each. The following information was extracted from the company's books. 1. The company issued 1,000,000 10% convertible debentures on 1 January 2020. The convertible debentures can be converted into ordinary shares on the basis of 150 shares per RM100 debentures. 2. On 1 April 2020, the entity made a rights issue of 1 for every 3 shares. The rights issue was given to existing shareholders at RM1.80 per share. The market price prior to the rights issue was RM2.20 per share. 3. Thirty percent of the debentures were converted on 30 June 2020. 4. The company declared preference dividend amounting to RM 1,000,000. 5. Profit after tax for the year amounted to RM72,500,000. 6. Tax rate for 2020 was 24%. 7. Basic Earnings per Share for year ended 31 December 2019 was RM1.02. 8. The company's financial year ends on 31 December each year. Required: a. Calculate the basic Earnings per Share for the year ended 31 December 2020. Restate previous year's Earnings per Share where necessary. (5 marks) b. Calculate the diluted Earnings per Share for the year ended 31 December 2020. (6 marks) c. Evaluate the effect on the diluted EPS for 2020 if on 1 November 2020, the entity has also offered share options to the executives' personnel to acquire 5 million shares at RM1.50 per share where the average price of an ordinary shares for the year was RM2. A. Explain the importance of Earnings per Share as a business statistic. (5 marks) B. Temuka Berhad is a local manufacturing company listed in Bursa Malaysia since 2012. On 1 January 2020, the issued share capital consisted of 60,000,000 ordinary shares of RM1 each and 10,000,000 cumulative preference shares of RM1 each. The following information was extracted from the company's books. 1. The company issued 1,000,000 10% convertible debentures on 1 January 2020. The convertible debentures can be converted into ordinary shares on the basis of 150 shares per RM100 debentures. 2. On 1 April 2020, the entity made a rights issue of 1 for every 3 shares. The rights issue was given to existing shareholders at RM1.80 per share. The market price prior to the rights issue was RM2.20 per share. 3. Thirty percent of the debentures were converted on 30 June 2020. 4. The company declared preference dividend amounting to RM 1,000,000. 5. Profit after tax for the year amounted to RM72,500,000. 6. Tax rate for 2020 was 24%. 7. Basic Earnings per Share for year ended 31 December 2019 was RM1.02. 8. The company's financial year ends on 31 December each year. Required: a. Calculate the basic Earnings per Share for the year ended 31 December 2020. Restate previous year's Earnings per Share where necessary. (5 marks) b. Calculate the diluted Earnings per Share for the year ended 31 December 2020. (6 marks) c. Evaluate the effect on the diluted EPS for 2020 if on 1 November 2020, the entity has also offered share options to the executives' personnel to acquire 5 million shares at RM1.50 per share where the average price of an ordinary shares for the year was RM2.
Expert Answer:
Answer rating: 100% (QA)
A A N SWER Ea rnin gs per shar e EPS is a key stati sti c used by i nvestors t o a s sess a c ompany... View the full answer
Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
Posted Date:
Students also viewed these finance questions
-
The computation and publication of earnings per share (EPS) figures by listed companies are governed by IAS 33 Earnings per Share. Notes: 1 Called-up share capital of Nottingham Industries plc: In...
-
Explain the importance of market segmentation. What are several ways in which markets can be segmented?
-
Explain the importance of a time line.
-
A Styrofoam slab has thickness h and density ps. When a swimmer of mass m is resting on it, the slab floats in fresh water with its top at the same level as the water surface. Find the area of the...
-
Computer Village sells computer equipment and home office furniture. Currently the furniture product line takes up approximately 50 percent of the companys retail floor space. The president of...
-
(a) Propose a mechanism for the acid-catalyzed reaction of salicylic acid with acetic anhydride. (b) Explain why a single drop of sulfuric acid dramatically increases the reaction rate.
-
When should an organization consider conducting independent audits?
-
Creative Ideas Company has decided to introduce a new product. The new product can be manufactured by either a capital-intensive method or a labor-intensive method. The manufacturing method will not...
-
For which type of financial decision you undertake an analysis for ABC Limited? a) Investment decision b) Financing decision c) Dividend decision d) Both investment and financing decisions
-
Case : Karl and June Monroe
-
You consider investing in a new project. To start the project, you need to pay $94 today. After this the project will pay a stream of cash flow that starts at $6 in a year and grows by 1% per year...
-
Evaluate the following quotation: "Every business, large or small, should have an annual audit by a CPA firm. To forgo an audit because of its cost is false economy."
-
The first SAS issued was substantially larger and different in coverage from all the following ones. What explains this difference?
-
Your CPA firm has been requested to perform a peer review of the firm of William & Stafford. What is involved in the performance of such an engagement? Discuss.
-
What topics should be discussed in a preliminary meeting with a prospective audit client?
-
The coefficient of determination is the square of the ____________________ . In Exercises 510, fill in each blank with the appropriate word or phrase.
-
The mechanism shown in Figure 1 is in the horizontal plane. A motor on the shaft through A drives link AB with a constant counterclockwise torque T = 1 Nm. The ring gear R is kept fixed. Rod AB and...
-
The following processes constitute the air-standard Diesel cycle: 12: isentropic compression,23: constant-volume energy addition (T and P increase),34: constant-pressure energy addition (v...
-
Alpha has owned 80% of the equity shares of Beta since the incorporation of Beta. On 1 July 20X6 Alpha purchased 60% of the equity shares of Gamma. The statements of comprehensive income and...
-
Alpha entered into an operating lease under which it was committed to five annual payments of 50,000 per year. It was subsequently decided to treat the lease as a Right-of-use asset reported on the...
-
Morn Ltd acquired 90% of the shares in Eve Ltd on 1 January 20X1 for £90,000 when Eve Ltds accumulated profits were £50,000. On 10 January 20X1 Morn Ltd received a dividend of...
-
Folk Landscaping is evaluating an offer to purchase Bruce Lawn Care, its main competitor, for \($250,000.00.\) An accountant has projected that the purchase will increase Folks annual net cash flow...
-
How much do we need to invest each year to have \($100,000.00\) in a college fund when our child turns 18 years old? New parents often seek similar advice from their financial advisors to establish...
-
Forester Company is evaluating the purchase of equipment from two vendors. Differences in the technology and labor requirements to operate the equipment of each vendor affect the projected net cash...
Study smarter with the SolutionInn App