AS-20 Earning Per Share ( EPS)
Earning per share means company earn profit per share during the particular year.
Accounting Standard 20 is way of determination and presentation of earning per share which help users comparison among different enterprises for the same period.
As know there are two type of shares
- Preference Shares
Earning per share is calculated for Equity Shares only.
Earning per share is two type
-Basic EPS and Diluted to be presented on the face of the Statement of profit and loss for each class of equity shares that has a different right to share in the net profit for the period.
-In consolidated financial statements the information required by this standard should be presented on the basis of consolidated information.
How to calculate basic EPS
Net Profit/loss Available to Equity Shareholder
Weight Average Number of Equity Shares
-Profit/ loss after tax Less Preference dividend and tax thereon
-In case of more than one class of equity shares, net profit or loss is apportioned in accordance with dividend right for each class.
Calculate weighted Average Number of Equity shares
-Number of shares outstanding at the beginning of the year period adjusted for increase and decrease during the period.
-Weight= Number of days shares were outstanding during the period as a proportion of the total number of days in the period
Shobha private Ltd
Net Profit 2017-18 Rs.22,00,000
Number of shares outstanding 2,00,000
Company issue fresh 2,00,000 equity shares on 01/10/2018
EPS for 2017-18 Profit of 2017-18 Rs,22,00,000
Equity shares 2,00,0000
EPS for 2018-19
Weighted average number of equity share
Equity shares outstanding during entire year is 2,00,000 equity shares
Equity shares outstanding 6 months only. is 2,00,000
200000*6/12 = 1,00,000 equity shares
so that weighted average number of shares is 3,00,000
EPS = 36,50,000/3,00,00
XYZA Pvt Ltd earn profit Rs.2,00,00,000 during 2018-19. It paid share capital is 10,00,000 equity share Rs. 10 per share.