Question

1 The following information is provided for Slow-Ways Bhd.. a.. The profits and dividends declared for the year ended 31 December x4 are as shown below. RM'000 RM'000 73.000 • Profit after taxation from continuing operations Loss after tax from discontinued operation Profit after tax (10.000) 63.000 Dividends declared for the year: Ordinary shares 30,000 - Preference shares Chalf year) 5.250:- Ordinary share capital 300 million shares 7% cumulative preference share capital 150 million shares b. On 1 June x5, the company made a bonus issue of one ordinary share for every two shares presently held. c. On 1 October x5, the company issued 50 million ordinary shares to acquire a business. Profits after tax for year x5 amounted to RM75 million. d. A rights issue of one ordinary share for every five held was made on 31 August x6 at RM2 each. The market price of each ordinary share immediately before the issue was RM3. The profit after tax for year x6 was RM100 million. Required: Calculate EPS for the years x4, x5 and x6.

Answer 1

EPS FOR YEAR x4
PARTICULARS	AMOUNT	AMOUNT
Earning after tax		63000
less: dividends declared for the year
ordinary shares	30000
preference shares	5250	35250
earning available for equity shareholders		27750
÷ by number of equity shares		300000
earning per share ( earning available/ no. of shares)		0.0925
EPS FOR YEAR x5
PARTICULARS	AMOUNT	AMOUNT
Earning after tax		75000
less: dividends declared for the year
ordinary shares	nil
preference shares	nil	nil
earning available for equity shareholders		75000
÷ by number of equity shares ( see working 1)		500000
earning per share ( earning available/ no. of shares)		0.15
working 1
Particulars	calculation	no of shares
Original number of ordinary shares		300000
bonus shares issued on 1st June	300000/2	150000
Issue of new ordinary shares		50000
Total number of ordinary shares		500000
EPS FOR YEAR x6
PARTICULARS	AMOUNT	AMOUNT
Earning after tax		100000
less: dividends declared for the year
ordinary shares	nil
preference shares	nil	nil
earning available for equity shareholders		100000
÷ by number of equity shares ( see working 2)		600000
earning per share ( earning available/ no. of shares)		0.166666667
working 2
Particulars	calculation	no of shares
Original number of ordinary shares		500000
number of right shares issued	500000/5	100000
Total number of shares		600000

		Product/Period	Fixed/Variable	Direct/Indirect
a	Direct Materials	Product	Variable	Direct/Indirect
b	Depreciation on corporate jet for sales force	Period	Fixed	Indirect
c	Lubricants for factory machinary	Product	semi variable	Direct/Indirect
d	Sales commissions at 5% sales	Product	Variable	Indirect
e	Factory insurance	Period	Fixed	Indirect
f	Product brochures	Product	Variable	Indirect
g	President' salary	Period	Fixed	Indirect
h	Employer paid health insurance premium	Period	Fixed	Indirect
i	Accounting staff salary	Period	Fixed	Indirect