- 7 Marks
FR – Nov 2022 – L2 – Q6b – Potential Ordinary Shares
Rank the types of potential ordinary shares and calculate the diluted EPS for Jumai Nigeria Limited.
Question
The following information relates to Jumai Nigeria Limited for the year ended December 31, 2020.
Issued ordinary shares of 50k each N3,000,000
Profit for the year N18,000,000
Average market price of shares during the year was N70 per share. The potential financial instruments in existence in the company are detailed below:
i. 800,000 options with exercise price of N52.50.
ii. 5% convertible bond of N6,000,000. Each bond is convertible in year 2025 into ordinary shares at the rate of 30 new shares for every N100 bonds.
iii. 200,000 8% convertible preference shares at N10 per share. Each preference share is convertible in year 2024 at the rate of one ordinary share for every 25 preference shares held. The Company income tax rate is 30%. Assume that all the options are exercised.
Required:
Rank the potential ordinary shares and calculate the diluted EPS for the year ended December 31, 2020. (7 Marks)
Find Related Questions by Tags, levels, etc.