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CA Intermediate · Advanced Accounting · AS 20 Earnings Per Share

Sagar Pharma Ltd. had 5,00,000 equity shares outstanding on 1 April. On 1 July it issued 1,00,000 shares for cash at full market price. On 1 January it bought back 60,000 shares. Net profit for equity shareholders for the year ended 31 March is Rs 56,00,000. What is the basic EPS?

Weighted average shares are 5,60,000, so basic EPS is Rs 10.00 (Rs 56,00,000 divided by 5,60,000).

  1. ARs 10.00
  2. BRs 10.37Correct
  3. CRs 10.60
  4. DRs 9.33

Explanation

Weighted shares = 5,00,000 x 3/12 = 1,25,000; 6,00,000 x 6/12 = 3,00,000; 5,40,000 x 3/12 = 1,35,000. Total = 5,60,000. EPS = 56,00,000 / 5,60,000 = Rs 10.00. Check: this gives Rs 10.00, not Rs 10.37, so the stated key is wrong.

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