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QUESTIONS PAST EXAM PAPERS

Q11. (NOVEMBER 20)

The following information is available relating to Space India Limited for the Financial Year 2019-20.

Net profit attributable to equity shareholders ₹ 90,000
No. of equity shares outstanding 16,000
Average fair value of one equity share during the year ₹ 90
Potential Ordinary Shares:

Options 900 options with exercise price of ₹ 75
Convertible Preference Shares 7,500 shares entitled to a cumulative dividend of ₹ 9 per share.
Each preference share is convertible into 2 equity shares.
Applicable corporate dividend 8%
tax
10% Convertible Debentures of ₹ 10,00,000 and each debenture is convertible into 4 equity
₹ 100 each shares
Tax rate 25%
You are required to compute Basic and Diluted EPS of the company for the Financial Year 2019-20.
SOLUTION

i. Basic Earnings per share
Year ended
31.3.2020

Net profit attributable to equity shareholders (A) Rs. 90,000
Number of Equity shares outstanding (B) 16,000
Earnings per share (A/B) Rs. 5.625

ii. Diluted earnings per share
Options are most dilutive as their earnings per incremental share is nil. Hence, for the purpose of computation

of diluted earnings per share, options will be considered first. 10% convertible debentures being second most
dilutive will be considered next and thereafter convertible preference shares will be considered (as per W.N.).

Net profit No. of Net Profit
attributable equity attributable
to equity shares per share

shareholders Rs.
Rs.

Net profit attributable to equity 90,000 16,000 5.625
shareholders
Options 150
90,000 16,150 5.572 Dilutive

10% Convertible debentures 75,000 40,000
1,65,000 56,150 2.939 Dilutive

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