Standard Chartered Bank Zambia PLC (Stanchart) has 100,000 shares in issue at the beginning of 2020. On 30th June 2020, the bank issues 50,000 more shares at full market price of K2.3. The nominal price per share of the initial 100,000 shares was K1. The 2019 earnings before tax were K250,000 (2019: K330,000), with an effective tax rate of 30%.

REQUIRED:

Identify an appropriate company on the LUSE whose performance will be compared to that of Stanchart. Now analyse Stanchart's performance for 2020 with reference to the following question.

Calculate the earnings per share (EPS) as at 31st December 2019 and 2020 correct to two decimal places for Stanchart.

[10 Marks]

Calculate the earnings per share (EPS) as at 31st December 2019 and 2020 correct to two decimal places for the comparative company.

[10 Marks]

Explain Stanchart's performance in 2020.

[10 Marks]

Explain fie (5) reasons for using EPS as a performance measure.

[10 Marks]

Explain 5 limitations of using ratio analysis as a means of assessing the bank's performance.