Page 362 - SBR Integrated Workbook STUDENT S18-J19

Chapter 22

Earnings per share

3.1 Earnings per Share (EPS)

 EPS is a key ratio used to assess financial performance.

 Listed companies must disclose basic and diluted EPS.

3.2 Basic EPS

Earnings attributable to ordinary shareholders
Weighted average no. of ordinary shares

3.3 Diluted EPS

At the year-end, an entity may have a commitment to issue more ordinary shares.
Such commitments include:

 convertible loans

 share options.

Diluted EPS is an estimate of the impact of these future share issues on an entity’s
EPS.

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