Eps

What is Meaning of Basic & Dilluted EPS, any difference between both...can Basic and Dilluted EPS are same on all time.?

Replies (2)

Basic earnings per share should be calculated by dividing the net

profit or loss for the period attributable to equity shareholders by the

weighted average number of equity shares outstanding during the period.

 

For the purpose of calculating basic earnings per share, the net

profit or loss for the period attributable to equity shareholders should be

the net profit or loss for the period after deducting preference dividends

and any attributable tax thereto for the period.

 

Diluted Earnings Per Share

 For the purpose of calculating diluted earnings per share, the net

profit or loss for the period attributable to equity shareholders and

the weighted average number of shares outstanding during the period

should be adjusted for the effects of all dilutive potential equity

shares.

 

Example:-

 

Example - Convertible Debentures  
   
Net profit for the current year Rs. 1,00,00,000
No. of equity shares outstanding 50,00,000
Basic earnings per share Rs. 2.00
   
No. of 12% convertible debentures of 1,00,000
Rs. 100 each  
Each debenture is convertible into  
10 equity shares  
Interest expense for the current year Rs. 12,00,000
Tax relating to interest expense (30%) Rs. 3,60,000
Adjusted net profit for the current year Rs. (1,00,00,000 + 12,00,000 -
  3,60,000) = Rs. 1,08,40,000
No. of equity shares resulting from 10,00,000
conversion of debentures  
No. of equity shares used to compute 50,00,000 + 10,00,000 =
diluted earnings per share 60,00,000
Diluted earnings per share 1,08,40,000/60,00,000 =
  Re. 1.81

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