Question

Describe the disclosure requirements for earnings per share.

Answer 1

Earnings per share has been stated in AS-20. As per AS 20, earning per share (EPS) is a ratio which gives information about the earnings available or equity share owned by a company. It acts as a comparative analysis between two or more companies or in different two or more accounting periods. It demonstrates the process of calculation of earnings per share. The two types of EPS which are demonstrated in financial statement are basic EPS and diluted EPS.

Thus Basic EPS = Net profit/loss attributable equity shareholders / weighted average number. of outstanding equity shares

In case of Diluted EPS calculation, net profit/loss attributable shareholders and the weighted average number of outstanding shares during the period should be adjusted in respect of effects of all dilutive equity shares which are potential in nature namely convertible preference shares and debentures, options etc.