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Question
From the following information, calculate earnings per share (up to two decimal places):
| Particulars | |
| 10% Preference Share Capital | ₹ 6,00,000 |
| Equity Share Capital (3,00,000 shares of ₹ 10 each) | ₹ 30,00,000 |
| Profit before Tax | ₹ 15,00,000 |
| Tax Rate | 30% |
Numerical
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Solution
Formula for calculating earning per share (EPS):
EPS = `"Earnings available for equity shareholders"/"Weighted average number o shares"`
Working Notes:
Earnings available for equity shareholders:
| Profit before tax | 15,00,000 |
| Less: Tax @ 30% | 4,50,000 |
| 10,50,000 | |
| Less: Preference dividend | 60,000 |
| 9,90,000 |
EPS = `(9,90,000)/(3,00,000)`
= ₹ 3.30
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