a company where there is no fresh issue if shares there eps and dps will be same or not..pls confirm...
if in case in that company prefrence dividend are payble then we have to deduct it from net profit right..
in that case eps and dps will differ right...
pls advise
Dividends are paid from Retained earnings. That does not impact EPS.
There are many ways DPS is calculated, one is for issuing additional shares. If you issue additional shares, DPS changes.
Another instance where dividends is used is when convertible preference shares are exercised with cumulative dividend, and it is antidilutive. Meaning, EPS will increase and loss will decrease.
Dilutive EPS means EPS will decrease, loss will increase. Your first part is correct. DPS need not be calculated not unless the following happens:
Options & Warrants
Rights issue for employee
Additional issue
Convertible preference shares
In your second part, dividends are subtracted from net profit to get the numerator.
CAclubindia
