Question

Rosy Ltd determined its profit attributable to ordinary shareholders for the reporting period ended 30 June 2020 as $1,900,000. The number of ordinary shares on issue up to 1 October 2019 was 1,000,000. Rosy Ltd announced a three-for-five bonus issue (three bonus shares for every five shares held) of shares effective for each ordinary share outstanding at this date.
Required: What is the basic earnings per share for the year ended 30 June 2020 (keep two decimal places)?

Answer 1

Given

Number of shares as on October 2019 1,000,000

3 Bonus Shares are issued for every 5 shares held

Number of bonus shares issued = 1000000*3/5 = 600000 shares

Number of outstanding shares as on 30th June 2020 are

= 1,000,000+ 600,000

= 1,600,000

Profit for the year on June 30, 2020 is 1,900,000 dollars

Therefore Basic Earnings Per Share = (Profit attributable to equity shareholders / Number of Outstanding shares)

= 1900000/1600000

= 1.19 dollars per share