Net profit for the year $18,160,000
Ordinary shares of $1: $40,000,000
Number of ordinary shares in issure : 40,000,000
Average fair value of one ordinary share during the year : $1.5
Number of shares under options during the year : 2,000,000
Exercise price for shares under options during the year : $1.2
Calculation for above :
Earnings / Shares / EPS
Basic EPS $18,160,000 / 40,000,000 / 0.454
Additional shares (2,000,000 - 1,600,000)
(2,000,000 x 1.2 / 1.5 = 1,600,000) 400,000
Diluted EPS $18,160,000 / 40,400,000 / 0.450
If the company issued $20 m of 6% convertible loan stock on 1 May 2008, the terms of conversion of the loan stock per $200 nominal value of loan stock were:
Conversion date / number of shares :
31 May 2010 / 23
31 May 2011 / 22
31 May 2012 / 21
No loan stock has yet been converted.
Calculate diluted earnings per share.