Question
The following information is extracted from the financial statements of Halifax Group (Halifax) for the year ended 31 December 2017: $000 $000 Profit before tax
The following information is extracted from the financial statements of Halifax Group (Halifax) for the year ended 31 December 2017:
| $000 | $000 |
Profit before tax |
| 4,131 |
Tax |
| (1,629) |
Net profit |
| 2,502 |
Profit attributable to: Shareholders of Halifax |
|
2,412 |
Non-controlling interest |
| 90 |
|
| 2,502 |
Retained profits at 1 January 2017 |
| 5,268 |
Profit for the year |
| 2,412 |
Dividends: |
|
|
Preference dividends | (45) |
|
Ordinary dividends | (669) |
|
|
| (714) |
Retained profits at 31 December 2017 |
| 6,966 |
From 1 January 2017 until 31 March 2017 the share capital of Halifax consisted of 12 million ordinary shares and 900,000 $0.5 preference shares.
On 1 September 2017 warrants were issued to existing shareholders on a 1 to 1 basis. Every warrant gave the right to subscribe for 1 ordinary share on 31 December 2019 at a price of $1 for each share. The average market price of the Halifaxs share was $2.0 for 2017.
Required:
(a) | Determine the basic earnings per share of Halifax for the year ended 31 December 2017. |
| (9 marks) |
(b) | Determine the diluted earnings per share of Halifax for the year ended 31 December 2017. |
| (6 marks) |
(c) | Identify the limitations of earnings per share as a profitability measure. |
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