Read the following information carefully and answer the question.
The Balance Sheet of ABC Ltd as on 31 March 2022:
| Liabilities | Amount (₹) |
Asset | Amount (₹) |
| Share Capital Equity(₹10) | 4,00,000 | Fixed Assets | 9,50,000 |
| 12% preference shares | 1,00,000 | Current Assets | 2,34,000 |
| General Reserve | 1,84,000 | ||
| 10% Debentures | 4,00,000 | ||
| Current Liabilities | 1,00,000 | ||
| 11,84,000 | 11,84,000 |
Additional information :
1. Market price of share = 34
2. Net profit after tax = 1,50,000
3. Tax = 50,000
Earning Per Share (EPS) will be :
Answer & explanation
Correct answer: option 3
The correct answer is option 3- ₹3.45.
* Equity capital = 4,00,000
Face value = ₹10
No of equity shares = 4,00,000/10
= 40,000
Net profit after tax = 1,50,000
Dividend on preference shares = 1,00,000 x 12/100
= 12,000
* Profit after preference dividend = 1,50,000 - 12,000
= 1,38,000
This is profit that is left for equity shareholders.
Earning per share = Profit left for equity shareholders/No of equity shares
= 1,38,000/40,000
= ₹3.45