Corporate Accounting and Auditing · Earnings per Share (Ind AS 33)

How to Calculate Basic EPS under Ind AS 33

Updated 10 October 2026 · Fact-checked

Basic EPS is profit or loss attributable to ordinary equity holders of the parent, divided by the weighted average number of ordinary shares outstanding in the period. First deduct the after-tax preference dividend from profit. Then weight each change in shares by the fraction of the year it was outstanding.

Understand Basic EPS Calculation and Earnings Numerator

Earnings per share (EPS) tells you how much of a company's profit belongs to each ordinary share. Investors use it to compare performance across periods and across companies.

In Ind AS 33, basic EPS has two parts. The numerator is profit or loss attributable to ordinary equity holders of the parent entity. The denominator is the weighted average number of ordinary shares outstanding during the period (paragraph 10).

The numerator starts with profit after tax. All income and expense recognised in the period, including tax expense, are included (paragraph 13). Then you remove what does not belong to ordinary holders. The main item is the after-tax amount of preference dividends. Paragraph 14 says what to deduct. For non-cumulative preference shares, deduct the dividend declared in respect of the period. For cumulative preference shares, deduct the dividend required for the period, whether or not it is declared. Do not deduct arrears of earlier periods that are paid or declared in the current period.

There is one exception. Preference dividends on shares classified as liabilities are already treated as an expense in arriving at profit (paragraph 13), so you do not deduct them again. Paragraph 12 applies the deduction to preference shares classified as equity.

The denominator is weighted because shares issued during the year earn profit only for part of it. You multiply the shares by the fraction of the period they were outstanding. Shares issued for cash count from the date the cash is receivable. Bonus and rights adjustments are covered in a separate topic.

Key rules to remember

Basic EPS: Basic EPS = Profit or loss attributable to ordinary equity holders ÷ Weighted average number of ordinary shares outstanding; This is the rule in paragraph 10. Report it for profit or loss and, if presented, for continuing operations (paragraph 9).
Earnings numerator: Earnings = Profit after tax − after-tax preference dividend (on preference shares classified as equity) − share of profit attributable to non-controlling interests; Non-controlling interest applies to consolidated figures. For standalone problems, ignore it.
Preference dividend to deduct: Non-cumulative: dividend declared for the period. Cumulative: dividend for the period, declared or not; Paragraph 14. Exclude arrears of earlier years paid or declared this year.
Weighted average shares: Σ (Shares outstanding × Months outstanding ÷ 12); Use days or months consistently. Change the weight whenever the number of shares changes.

How to solve Basic EPS Calculation and Earnings Numerator questions

Use the same order for every basic EPS problem. It keeps the numerator and denominator separate and earns step marks.

1Start with profit after tax for the period. Note any items debited or credited directly to reserves that should be adjusted (paragraph 12).
2Identify the preference shares. Check whether they are classified as equity or as liabilities, and whether they are cumulative.
3Deduct the after-tax preference dividend for the period to get earnings attributable to ordinary equity holders.
4List the opening ordinary shares and every change in the year, with dates.
5Weight each block of shares by the fraction of the year outstanding and add them to get the weighted average number.
6Divide earnings by the weighted average shares. Show the working and state the unit, such as ₹ per share.
7If the question asks for continuing operations, repeat the calculation using profit from continuing operations.

Quickest way: Timeline method for weighted average shares

When to use it: Use it when shares are issued or bought back at several dates in the year.

Draw a timeline from the start to the end of the period and mark each date of change.
Write the shares outstanding between each pair of dates and the months in each gap.
Multiply and add: shares × months ÷ 12 for each gap.
Compute earnings in a separate line: PAT less preference dividend.
Divide. Check the answer lies between EPS on opening shares and EPS on closing shares.

Common mistakes in Basic EPS Calculation and Earnings Numerator

Not deducting the preference dividend from profit before dividing.
Students divide PAT directly by equity shares.
Fix: Always write 'PAT − preference dividend' as the first line of the numerator.
Deducting dividend on cumulative preference shares only when it is declared.
Students link the deduction to declaration, as with non-cumulative shares.
Fix: For cumulative shares, deduct the dividend for the period whether or not declared. Do not deduct arrears of earlier years.
Using the closing number of shares as the denominator.
It is simpler and gives a number quickly.
Fix: Weight each issue by the time outstanding.
Deducting dividend on preference shares classified as liabilities a second time.
Students see 'preference dividend' and deduct automatically.
Fix: Check the classification. If the shares are liabilities, the dividend is already charged in profit (paragraph 13).
Deducting the gross dividend where the question gives a tax effect.
Paragraph 14 refers to the after-tax amount, but students overlook it.
Fix: Use the amount actually deducted, plus any tax effect the question states. If no tax effect is given, use the dividend as stated.

Worked examples

Example 1

Arjun Textiles Ltd has profit after tax of ₹12,00,000 for the year ended 31 March. It has 2,00,000 equity shares of ₹10 each throughout the year. It also has 50,000 8% cumulative preference shares of ₹10 each classified as equity. No dividend was declared on the preference shares. Compute basic EPS.

Show the solution

Preference dividend for the year = 50,000 × ₹10 × 8% = ₹40,000.
The shares are cumulative, so deduct the dividend for the period even though it is not declared.
Earnings for equity holders = ₹12,00,000 − ₹40,000 = ₹11,60,000.
Weighted average shares = 2,00,000, since there was no change in the year.
Basic EPS = ₹11,60,000 ÷ 2,00,000 = ₹5.80.

Answer: Basic EPS = ₹5.80 per share.

Example 2

Meera Foods Ltd earned profit after tax of ₹18,00,000 for the year ended 31 March. On 1 April it had 3,00,000 equity shares. It issued 60,000 shares for cash on 1 July and bought back 30,000 shares on 1 January. Non-cumulative preference dividend of ₹1,50,000 was declared for the year on preference shares classified as equity. Compute basic EPS.

Show the solution

Earnings = ₹18,00,000 − ₹1,50,000 = ₹16,50,000.
1 April to 30 June: 3,00,000 shares × 3 ÷ 12 = 75,000.
1 July to 31 December: 3,60,000 shares × 6 ÷ 12 = 1,80,000.
1 January to 31 March: 3,30,000 shares × 3 ÷ 12 = 82,500.
Weighted average shares = 75,000 + 1,80,000 + 82,500 = 3,37,500.
Basic EPS = ₹16,50,000 ÷ 3,37,500 = ₹4.89 (rounded to two decimals).

Answer: Basic EPS = ₹4.89 per share (approximately).

Exam tips

Show the numerator and denominator as two separate workings. Step marks are given for each.
Read the preference shares carefully for 'cumulative', 'non-cumulative' and 'classified as equity or liability'. The dividend adjustment depends on these.
For MCQs, spot the trap first: the usual ones are an undeclared cumulative dividend and a mid-year issue. Then calculate.
Write the formula and cite Ind AS 33 in your answer. State the unit as ₹ per share.

Practice questions from Earnings per Share (Ind AS 33)

Basic EPS Calculation and Earnings Numerator: frequently asked questions

What is the formula for basic EPS under Ind AS 33?

Basic EPS is profit or loss attributable to ordinary equity holders of the parent divided by the weighted average number of ordinary shares outstanding in the period. This is the rule in paragraph 10.

Do I deduct preference dividend if it is not declared?

For cumulative preference shares, yes. Deduct the dividend required for the period whether or not it is declared. For non-cumulative shares, deduct only the dividend declared for the period.

Why do we use the weighted average number of shares?

Shares issued during the year contribute to earnings only for part of the period. Weighting by the time outstanding matches the profit with the capital that helped earn it.

Is preference dividend always deducted from profit?

No. If the preference shares are classified as liabilities, the dividend is already an expense in arriving at profit. You deduct it separately only for preference shares classified as equity.