A company’s profit after tax for the year ended

31 December 2020 was £420,000

31 December 2019 was £385,000

The company’s share capital consisted of 100,000 ordinary shares issued.

On 01 June 2019 the company made 1 for 5 bonus issue of shares.

On 01 Oct 2020 the company made 2 for 6 rights issue of shares at an exercise price of 120p per share, this was fully subscribed. The market value of the company’s shares just before this rights issue was 180p per share.

Required:

a)

i) Calculate the basic earnings per share for the year ended 31 December 2019.

ii) Calculate the basic earnings per share for the year ended 31 December 2020.

iii) Re-calculate the basic earnings per share for 2019 following the 2020 rights issue.

You are required to show all workings, rounding the earnings per share (EPS) figure to two decimal places.

 

Answer rating: 100% (QA)

First lets understand a few basic concepts required to solve this problem 1 Earnings Per Share EPS I... View the full answer