ABC Ltd is an Australian listed company. The results for the financial year endi
ID: 2335635 • Letter: A
Question
ABC Ltd is an Australian listed company. The results for the financial year ending 30 June 2019 have exceeded expectations—profit after tax is $4 million. As at 30 June 2018, there were 9 million ordinary shares on issue.
On 1 May 2019, 3 million further ordinary shares were issued at a price of $3 - paid to $1.00. The partly paid shares carry rights to dividends in proportion to the amount paid relative to the total issue price.
REQUIRED
Calculate the basic EPS for ABC Ltd for the year ending 30 June 2019.
Explanation / Answer
Solution:
Net income = $4 million
Weighted average outstanding shares = beginning ordinary shares + (further issued shares * 1/3*2/12)
= 9 + (3*1/3*2/12) = 9 + 0.166667 = $9.166667 million
Basic EPS = Net income / Weighted average outstanding shares
= 4 / 9.166667 = $0.43636 per shares