When you’re looking at EPS you’ll also come across a ratio called the price-earnings ratio.
Definitions of Rights issues, Options and Warrants
A rights issue is where a company offers existing shareholders a chance to buy new shares in the company at below market rates at a future date.
They’re usually offered to shareholders in proportion to their existing shareholdings.
Options and warrants are similar in the sense that people, often employees can get the opportunity to buy shares at below their market rate.
In this article, we’re going to take a look at the presentation for Earnings per Share under IAS 33.
A bonus issue of shares (also known as a scrip issue or a capitalisation issue) is an issue of new shares to existing shareholders, in proportion to their existing shareholding, for no cost or consideration. The company receives absolutely no money for it, they’re given away free of charge. Why does a company issue bonus …
Why do we need to know how to calculate Earnings per Share?
IAS 33 allows companies to present an alternative measure of EPS (Earnings per Share) in addition to the standard basic and diluted EPS presented. Sometimes companies will do this if they have large or unusual items in their financial statements.
IAS 33 Earnings per Share can be a tricky topic to grasp. You might find it easier to study IAS 33 using one of our quizzes.
Earnings For the purpose of calculating basic earnings per share under IAS 33, earnings is the net profit after deducting: Tax Non-Controlling Interest (Minority Interest) Non-controlling interest So earnings is the net profit after tax minus any minority interest. So how do we adjust the minority interest out of the EPS calculations? Simply take the …
Basic earnings per share is calculated by dividing the net profit or loss on continuing operations by the weighted average number of ordinary shares in issue during the period.
1. Ordinary Shares
An ordinary share is an equity instrument that is subordinate to all other classes of equity instrument.