Question

Calculate the Earning per share of Hemisphere Ltd. from the particulars given below:

Particulars	(₹)
10% Debentures	5,00,000
8% Bank Loan	3,00,000
5% Preference Share Capital	2,00,000
Profit before Interest and Tax	2,44,000
Provision for Tax	20,000
Tax paid	18,000
Equity Share Capital (@ ₹ 10 each)	8,00,000

Answer 1

Earning per share = `"Net profit (After interest, tax and dividend on preference share)"/"Number of Equity Shares"`

Here, profit before interest and tax = ₹ 2,44,000

Interest on debentures = 50,000

Interest on bank Loan = 24,000

Provision for tax = 20,000

Preference dividend = 10,000

Net profit after interest, tax and preference dividend

= 2,44,000 – (50,000 + 24,000 + 20,000 + 10,000)

= 2,44,000 – 1,04,000

= ₹ 1,40,000

Earning per share = `140000/80000`

= ₹ 1.75 per share