CA Inter P1 · Chapter 2 · Question 7 of 12
Case: Shivalik Foods Ltd earned a profit after tax of ₹30,00,000 for the year ended 31 March 20X2. Dividend on its cumulative preference shares for the year is ₹3,00,000. It had 5,00,000 equity shares outstanding on 1 April 20X1 and issued 2,00,000 further equity shares for cash at full market price on 1 October 20X1. Basic EPS under AS 20 is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹4.50
Explanation
Earnings for equity shareholders = 30,00,000 - 3,00,000 = 27,00,000; preference dividend on cumulative shares is deducted whether or not declared. Weighted shares = 5,00,000 + 2,00,000 x 6/12 = 6,00,000. Basic EPS = 27,00,000 / 6,00,000 = ₹4.50.
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