Basic earnings per share formula

Learning objectives

• Calculate basic earnings per share (profit or loss attributable to ordinary equity holders of the parent divided by the weighted average number of ordinary shares).L1, L2, L3

Normative references

• IAS 33 §9Basic earnings per share are calculated for profit or loss attributable to ordinary equity holders of the parent entity and, if presented, for profit or loss from continuing operations attributable to those equity holders.
• IAS 33 §10Basic earnings per share are calculated by dividing profit or loss attributable to ordinary equity holders of the parent (numerator) by the weighted average number of ordinary shares outstanding during the period (denominator).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

5 questions

• For the year, Vermeil SA earned a profit attributable to ordinary equity holders of {earnings_ordinary} (in euros). Its weighted average number of ordinary shares outstanding is {weighted_shares}; at the reporting date, 2,000,000 ordinary shares are outstanding. Calculate basic earnings per share. Round earnings per share to two decimals (case convention).L1
• The management accountant of Lorient SA describes the basic earnings per share calculation in a working note. Which sentence of this note is incorrect?L2
• At 1 January, Aubrac SA has {opening_shares} ordinary shares outstanding. On 1 April it issues {issued_shares} shares for cash, received on that date: these shares are outstanding for {months_outstanding} months of the year (weighting in months, an approximation of the day-based time factor adopted for the case). The profit attributable to ordinary equity holders for the year ended 31 December is {earnings_ordinary} (in euros). Calculate the weighted average number of ordinary shares, then basic earnings per share. Round earnings per share to two decimals (case convention).L3
• For the year, the profit attributable to the parent of Sabaudia SA is {profit_parent} (in euros) before preference dividends. The preference shares, classified as equity, gave rise to declared dividends of {pref_dividends}, net of any tax effect; dividends of 180,000 were also declared on the ordinary shares. The weighted average number of ordinary shares is {weighted_shares}. Calculate the profit attributable to ordinary equity holders, then basic earnings per share. Round earnings per share to two decimals (case convention).L2
• Delmas SA has two classes of preference shares, both classified as equity, with no tax effect on their dividends. For the year, the dividends declared are {pref_a_dividend} for class A (5% of a nominal amount of 2,000,000) and {pref_b_dividend} for class B (6% of a nominal amount of 1,500,000). The profit attributable to the parent before these dividends is {profit_parent} (in euros) and the weighted average number of ordinary shares is {weighted_shares}. Calculate the profit attributable to ordinary equity holders and then basic earnings per share. Round earnings per share to two decimals (case convention).L3