Chpt 17 - EPS

Question 1

EPS

Answer 1

= Earnings / no. of shares x100%

Question 2

Bonus Issue - Bonus Fraction

Answer 2

= no. new shares/ no. old shares

Question 3

Rights issue - Bonus fraction

Answer 3

= FV per share before exercise of rights / TERP

= Old SP/New SP

Question 4

Share Options

Answer 4

1) Cash receivable (no options x exercise price)
2) No shares is bought at Market price = (1)/MP
3) Deduct (2) from actual no. shares issued
4) Add these ‘free shares’ to WACC

Question 5

Diluted EPS

Answer 5

= Adj earning / adj no shares x 100%

Question 6

Adj Earnings

Answer 6

= PAT + (interest saved after tax = no. convertible loan x % convertible loan x(1-t))

Question 7

Adj no shares

Answer 7

= No original shares + (loan amount x (eq share basis/ $loan note))