Basic EPS

In this lesson

1. 0:00 Earnings per share overview
2. 1:14 Basic EPS calculation formula
3. 2:01 Understanding earnings and shares
4. 3:05 Weighted average shares at market price
5. 6:04 Bonus issue treatment and adjustment
6. 8:02 Rights issue and TERP calculation
7. 15:41 Rights issue worked example

About this lesson

You'll master the core formula—earnings divided by the weighted average number of ordinary shares—and discover how to handle different types of share issues: market price issues (requiring weighted average calculations), bonus issues (requiring grossing up and restatement of comparatives), and rights issues (combining both methods). By working through practical examples, you'll gain confidence applying these techniques to real exam scenarios and understand the critical adjustments needed to ensure fair year-on-year comparisons. This is essential knowledge for Financial Reporting and Strategic Business Reporting papers, where EPS calculations appear regularly in both objective tests and case studies. The session covers IAS 33 requirements, shows you how to work with consolidated figures for groups, and explains the reasoning behind each adjustment so you can apply these principles confidently under exam conditions. Whether you're dealing with straightforward earnings figures or complex capital restructuring, you'll leave with a clear, step-by-step methodology and the ability to restate comparative figures correctly—a skill that examiners test consistently.

Duration: 21m