Question
The following summarised information is available in relation to La Scan, a publicly listed company in Australia: Statement of comprehensive income extracts for years ended
The following summarised information is available in relation to La Scan, a publicly listed company in Australia:
Statement of comprehensive income extracts for years ended 30th June:
2018 | 2017 | |||
| Continuing | Discontinued | Continuing | Discontinued |
| $000 | $000 | $000 | $000 |
Profit after tax from: |
|
|
|
|
Existing operation | 2,000 | (750) | 1750 | 600 |
Newly acquired operations* | 450 |
| nil |
|
* Acquired on the 1st November 2017
Analyst expect profits from the market sector in which La Scans existing operations are based to increase by 6% in the year to 30th June 2019 and by 8% in the sector of its newly acquired operations.
On 1st July 2016 La Scan had:
$12 million of $1 ordinary shares in issue.
$5 million 8% convertible debentures 2023; the terms of conversion are 40 equity shares in exchange for each $100 of debenture.
On 1 January 2017 the directors of La Scan were granted options to buy 2 million shares in the company for $1 each. The average market price of La Scans shares for the year ending 30th June 2018 was $2.50 each.
Assume an income tax rate of 30% for year 2016,2017 and 2018
Required:
(i) Calculate La Scans estimated profit after tax for the year ending 30 June 2019 assuming the analysts expectations prove correct;
(ii) Calculate the diluted earnings per share (EPS) on the continuing operations of La Scan for the year ended 30 June 2018 and the comparatives for 2017.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started