Question
Q3. Diluted EPS is defined as the earnings per share figure which would arise if all dilutive potential ordinary shares were issued By keeping this
Q3. Diluted EPS is defined as the earnings per share figure which would arise if all dilutive potential ordinary shares were issued By keeping this in view, Muscat insurance Company has an issued share capital consisting of 600,000 ordinary shares. There are no preference shares. The company issued OMR 800,000 of 8% convertible loan stock three years before and convertible in 2021 at the rate of 3 ordinary shares for every OMR 10 of loan stock. The company's profit after tax for the year ended 31st December 2019 is OMR 780,000. Required:
(a) Calculate basic EPS for the year ended 31st December 2019. (1 Mark)
(b) Calculate diluted EPS for the year ended 31st December 2019, if the company pays Tax at 25%. (1 Marks)
c) Determine Diluted Earnings per share if the loan stock attracted interest at 6 % rather than 8%. (1 Marks)
(d) Write about the impact of EPS related to Muscat insurance company and its equity and preference stock holders.
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