The issued share capital of a company consists of 3,360,000 ordinary shares of £1 each. Half way through its financial year the company made a rights issue of 2 for 6 at an exercise price of £1.58 a share. The market value of the company's shares was £2.04 a share just before the rights issue.. The company reported a net profit after taxation for the year of £2,016,000. The market value of each ordinary share at the end of the year was £2.31. The theoretical ex-rights value per share is £1.93, and the adjustment factor is 1.059740. The weighted average number of shares issued for the year is 4,020,364. Calculate, correct to the nearest whole number, the earnings per share which would be reported in the company's income statement for the year.

The issued share capital of a company consists of 3,360,000 ordinary shares of £1 each. Half way through its financial year the company made a rights issue of 2 for 6 at an exercise price of £1.58 a share. The market value of the company's shares was £2.04 a share just before the rights issue.. The company reported a net profit after taxation for the year of £2,016,000. The market value of each ordinary share at the end of the year was £2.31. The theoretical ex-rights value per share is £1.93, and the adjustment factor is 1.059740. The weighted average number of shares issued for the year is 4,020,364. Calculate, correct to the nearest whole number, the earnings per share which would be reported in the company's income statement for the year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The issued share capital of a company consists of 3,360,000 ordinary shares of £1 each.
Half way through its financial year the company made a rights issue of 2 for 6 at an exercise
price of £1.58 a share.
The market value of the company's shares was £2.04 a share just before the rights issue..
The company reported a net profit after taxation for the year of £2,016,000.
The market value of each ordinary share at the end of the year was £2.31.
The theoretical ex-rights value per share is £1.93, and the adjustment factor is 1.059740.
The weighted average number of shares issued for the year is 4,020,364.
Calculate, correct to the nearest whole number, the earnings per share which would be
reported in the company's income statement for the year.

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