How do you work out the earnings per share?

topcat

Do we even need to know it for 2013 updated exams because i can not find it any of the books?

Been doing the 2010 practice papers

The question which has puzzled me is the 2010 Finical Statements Q2.1 "earnings per share" can not working it out at all

thanks

Lucy_M

Do you mean the split of the profits between the Parent Co. and the NCI? Otherwise, no, I don't remember it and I only took it a few weeks ago... xx

Lucy_M

Found the exam question, funny, I don't remember that one but no, although I would imagine it to be a version of the Return on Equity ratio? xx

topcat

thanks for have a gander, i though that to but can not get that 15 figure . Think ill have another look in a few hours

coojee

Have you tried doing net profit divided by the number of shares? If you're ever unsure of how to calculate a ratio you can try doing exactly what the ratio says, in this case "earnings" (net profit) "per" (divided by) "share" (number of shares in issue). You'd need to check which version of net profit is to be used (before, after tax etc)

SandyHood

Coojee is right

This ratio is the amount each share has earned for the shareholder
So find the profit available to be distributed to the ordinary shareholders (if there are preference shareholders this is after their dividend has been paid) and is definitely after tax
And divide it by the number of shares in issue during the year (this might have to be a weighted average if their has been a share issue during the year)

This topic is a whole 3 hour lecture at CIMA F2 so I can't imagine an AAT exam going into any more detail than coojee gave (and I've repeated above).

topcat

thanks all profit after tax / ordinary shares worked :001_smile: