Diluted EPS is defined as the earnings per share figure which would arise if all dilutive potential
Question:
“Diluted EPS is defined as the earnings per share figure which would arise if all dilutive potential ordinary shares were issued” – By keeping this in view, Muscat insurance Company has an issued share capital consisting of 600,000 ordinary shares. There are no preference shares. The company issued OMR 800,000 of 8% convertible loan stock three years before and convertible in 2021 at the rate of 3 ordinary shares for every OMR 10 of loan stock. The company's profit after tax for the year ended 31st December 2019 is OMR 780,000. Required:
(a) Calculate basic EPS for the year ended 31st December 2019.
(b) Calculate diluted EPS for the year ended 31st December 2019, if the company pays Tax at 25%.
(c) Determine Diluted Earnings per share if the loan stock attracted interest at 6 % rather than 8%.
(d) Write about the impact of EPS related to Muscat insurance company and its equity and preference stock holders.
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones