Some Examples for the Calculations of EPS 25th November, 2014By Dr. Helena Thomas

Example 1Company XYZ Ltd with 600,000, TZS 1,000 ordinary shares as at 31 December 2013, with market value of TZS 2,000/= decides to make a rights issue to its existing shareholders offering 1 new share for every 6 existing shares held. New shares are issued at TZS 1,500/= each.

Required What is the rights issue in shares and in Tanzanian shilling? Example 2GM Enterprises had 400,000 shares in issue, until on September 30, 2013 it made a bonus issue of 100,000 shares. Calculate the EPS for the year 2013 and the corresponding figure for the year 2012, if total earnings were TZS 80,000,000 in the year 2013 and TZS 75,000,000 in 2012. The companys accounting period runs from January 1 to December 31.Example 3GM Enterprises had 400,000 shares in issue, until on September 30, 2013 it made a bonus issue of 100,000 shares. Calculate the EPS for the year 2013 and the corresponding figure for the year 2012, if total earnings were TZS 80,000,000 in the year 2013, assuming that for 2012, the same amount of profit/earning were also generated by this company the companys accounting period runs from January 1 to December 31.

Rights Issues Computations Step 1:Average Price of Shares Before and After a Rights Issue To Identify the Amount of the Bonus the Company Has Granted & BEPS Example 4Assume that Ms. Kadunduli purchased two TZS 500/= shares at market price of TZS 4,000/= each in Watoto plc on 1st January, 2014 and that on 2nd January, 2014 the company offered a 1:2 rights issue [one new share for every two shares held] at TZS 3,250/=per share. Step 2 The Weighted Average Number of Shares Calculated For Current Year Example 5(a) Continuing from our previous example, assume that the Watoto plc made a rights issue of one share for every two shares held on 1st January, 2013. As of the end of this date the number of outstanding shares amounted to 1,000,000. Nominal value of shares, TZS 500, the market value of TZS 4,000 and rights issue price; TZS 3,750. Required:Compute the total shares to be used for computing the BEPS for Watoto plc in 31st Dec. 2013. (b) Assume a different scenario where rights issue is made on 30th September, 2013 rather than 1st January, 2013.Step 3 Calculation of BEPS for the Current Year Example 6Further information revealed that Watoto plc had generated a total of TZS 150,000,000 as profit after deducting the preferred dividend for the period. What will be the BEPS for 2013?Step 4 Adjustment for the Previous Years BEPS for the Bonus Element of a Rights Issue Example 7Extending the same example of Watoto plc, assuming that the company in 2012 obtained the same profit of 150,000,000 as post tax profits what should be considered as BEPS for 2012 to be compared with BEPS in 2013?

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