Randstore (Pty) Ltd is a retailer that supplies grocery products and general household appliances to the public. Randstores management is risk-averse and prefers to use as much owner finance as possible to fund its capital structure. Randstores statement of financial position for 2021 includes the following: Issued ordinary share capital R3 200 000 at R2.00 per share. Current total long-term debt R1 800 000, bearing annual interest at 12%. Operating profit for 2021 R950 000.

Ecostar (Pty) Ltd is also a retailer supplying the same products as Randstore and competing in the same markets. Ecostars management is willing to accept more risk if they believe commensurate returns will adequately compensate for the increased risk. Ecostars statement of financial position for 2021 includes the following: Ordinary share capital R2 100 000 at R2.00 per share. Current total long-term debt R3 900 000 borrowed at 13% interest per annum. Operating profit for 2021 R1 100 000. Both companies are equally efficient and the tax rate for companies is 28%. Required

2.2. Use the information provided to calculate the earnings per share (EPS) for both companies and explain why there is a difference in EPS between the companies. (20)