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    TOA Book Value, Basic and Diluted Per Share

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    Patrick Bacongallo
    This document discusses key concepts related to book value per share and basic earnings per share. 1) Book value per share is calculated by dividing total shareholders' equity by the number of shares outstanding. A 100% stock dividend decreases earnings per share and book value per share. Preference shareholders have rights to dividends before ordinary shareholders. 2) Basic earnings per share must be disclosed by public entities and is encouraged for non-public entities. It is calculated using the weighted average number of ordinary shares outstanding during the period. Preference dividends, whether cumulative or non-cumulative, are deducted from or added to net income depending on whether they are declared.

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    TOA Book Value, Basic and Diluted Per Share

    Uploaded by

    Patrick Bacongallo
    77 views1 page
    This document discusses key concepts related to book value per share and basic earnings per share. 1) Book value per share is calculated by dividing total shareholders' equity by the number of shares outstanding. A 100% stock dividend decreases earnings per share and book value per share. Preference shareholders have rights to dividends before ordinary shareholders. 2) Basic earnings per share must be disclosed by public entities and is encouraged for non-public entities. It is calculated using the weighted average number of ordinary shares outstanding during the period. Preference dividends, whether cumulative or non-cumulative, are deducted from or added to net income depending on whether they are declared.

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    TOA Book Value , Basic and Diluted Per share

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    This document discusses key concepts related to book value per share and basic earnings per share. 1) Book value per share is calculated by dividing total shareholders' equity by the number of shares outstanding. A 100% stock dividend decreases earnings per share and book value per share. Preference shareholders have rights to dividends before ordinary shareholders. 2) Basic earnings per share must be disclosed by public entities and is encouraged for non-public entities. It is calculated using the weighted average number of ordinary shares outstanding during the period. Preference dividends, whether cumulative or non-cumulative, are deducted from or added to net income depending on whether they are declared.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    77 views1 page

    TOA Book Value, Basic and Diluted Per Share

    Uploaded by

    Patrick Bacongallo
    This document discusses key concepts related to book value per share and basic earnings per share. 1) Book value per share is calculated by dividing total shareholders' equity by the number of shares outstanding. A 100% stock dividend decreases earnings per share and book value per share. Preference shareholders have rights to dividends before ordinary shareholders. 2) Basic earnings per share must be disclosed by public entities and is encouraged for non-public entities. It is calculated using the weighted average number of ordinary shares outstanding during the period. Preference dividends, whether cumulative or non-cumulative, are deducted from or added to net income depending on whether they are declared.

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    © All Rights Reserved
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    Book value per share

    1. Total SHE divided by the number of shares outstanding represent the book value per share
    2. The effect of recording a 100% stock dividend would be to leave working capital unaffected, decrease earnings
    per share and decrease book value per share
    3. Shareholders right is commonly enhances in an issue of preference shares the right to receive a full cash
    dividend before dividends are paid to other classes of share capital
    4. Features of PS would most likely be opposed by ordinary shareholders participating
    5. Liquidation value- is the amount which preference shareholders would receive upon liquidation of the entity.
    6. Call price- is the amount paid to preference shareholders upon redemption of preference share during the
    lifetime of the entity.
    7. In the absence of liquidation value ,the preference shareholders shall receive the par or stated value
    8. In relation to preference as to dividends: if dividends are declared, the preference shareholders have the right to
    receive dividends first before ordinary shareholders are paid a dividend.
    9. When the right to received dividend is forfeited in any one year in which dividend is not declared, the
    preference share is said to be noncumulative.
    Basic Earnings per share
    1. EPS disclosures are required for entities whose ordinary shares and potential ordinary shares are publicly traded
    and entities that are in the process of issuing ordinary shares in public market.
    2. EPS disclosures are required for public entities and encouraged for nonpublic entities.
    3. An ordinary share is an equity instrument that is subordinate to all other classes of equity instrument,
    4. Potential ordinary share- it is a financial instrument or other contract that may entitle the holder to ordinary
    shares
    5. EPS shall be computed on the basis of the average ordinary shares outstanding during the year
    6. In computing dividend basic EPS ,an entity would include dividends on noncovertible cumulative preference
    shares
    7. In computing basic EPS, the amount of preference dividends on noncumulative preference shares would be
    deducted from net income only when declared
    8. In computing basic EPS ,the full amount of the required preference dividends on cumulative preference shares
    for the period should be deducted from the net income whether declared or not
    9. In computing basic loss per share, the annual preference dividend on cumulative preference shares should be
    added to the net loss whether declared or not.
    10. Earnings per share disclosures are required only for public entities
    11. The basic and diluted per share be reported in the income statement
    12. An entity that reports a discontinued operation shall present basic and diluted earnings per share for those line
    items are either on the face of the income statement or in the notes financial statements
    13. In the computation of weighted average number of shares outstanding when there is a share split, the
    additional shares are considered outstanding at the beginning of the earliest year reported.
    14. Earnings per share should be computed on the basis of voting ordinary shares
    15. Undeclared preference dividends are deducted from net income in the earnings per share computation in
    cumulative preference share
    16. In computing basic earnings per share and of the preference share are cumulative the annual preference
    dividend should be deducted from net income
    17. Earnings per share should always be reported for income from continuing operations.

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