E16.

19
Method 1 (TB) Method 2
denominator=weighted average number of share outstanding denominator=
Accu share share split fraction(yr) weighted avg
opening bal 600000 2 1/3 400000 opening bal
1-May 300000 900000 2 1/3 450000 1-May
1-Aug -150000 750000 2 3/7 625000 1-Aug
1475000

numerator= net income - preference share dividend

= 2200000 - 400000
= 1800000
where
net income= 2200000
pref share
dividend= 5000000 x 8%

Basic EPS= net income/ weighted average number of share outstanding

= 1800000
1475000
= 1.22033898

E16.22
denominator=weighted average number of share outstanding Method 2
Accu share share dividenfraction(yr) weighted avg denominator=
opening bal 800000 1.05 1/4 210000
1-Apr 450000 1250000 1.05 1/2 656250 opening bal
1-Oct -110000 1140000 1.05 1/4 299250 1-May
1165500 1-Aug

numerator= net income - preference share dividend

= 2830000 - 980000
= 1850000
where
net income= 2830000
pref share
dividend= 141500000 x 7%

Basic EPS= net income/ weighted average number of share outstanding

=

=
2122S1
denominator=weighted average number of share outstanding Method 2
Accu share share split fraction(yr) weighted avg denominator=
opening bal 200000 2 1/3 33333 1/3
1-May 50000 250000 2 1/9 41666 2/3 opening bal
1-Jun 250000 500000 1/4 125000 1-May
1-Sep -20000 480000 1/3 160000 1-Jun
360000 1-Sep

numerator= net income - preference share dividend

= 1250000 - 1000
= 1249000
where
net income=
pref share
dividend=

Basic EPS= net income/ weighted average number of share outstanding

= 1249000/460000

= 2.7152

(b) Adding to the bacis EPS

conversion of bonds
numerator: add back the interest expense (net of tax)
48000

denominator: increase of ordinary shares

50000

Exercise of option as net income> $800000

numerator: N/A

denominator: increase of ordinary shares

[(averaged market price - option price)/market price] x number of options exercised
2000
weighted average number of share outstanding
share split fraction(yr) weighted avg
600000 2 1 1200000
300000 2 2/3
-150000 2 3/7

weighted average number of share outstanding

share dividenfraction(yr) weighted avg
800000 1.05 1
450000 1.05 3/4
-110000 1.05 1/4
 weighted average number of share outstanding
share split fraction(yr) weighted avg
200000 2 1 400000
50000 2 2/3 66667
250000
-20000 1/3
460000

er of options exercised