Disclosure standards - part 2

In this lesson

1. 0:00 Introduction to disclosure standards
2. 1:52 Basic EPS formula explained
3. 3:00 Weighted average share calculation
4. 4:08 Three types of share capital changes
5. 6:00 Rights issue as hybrid mechanism
6. 8:04 Market price issue treatment
7. 9:01 Bonus issue treatment
8. 9:47 Rights issue combined approach

About this lesson

Unlike IAS 24 (which is purely narrative disclosure), IAS 33 tells you both what to show in your financial statements and how to calculate it—making it far more likely to be tested across multiple question types. You'll master the basic EPS formula: profit available to ordinary shareholders divided by the weighted average number of ordinary shares. The key is understanding that the numerator is group profit after tax (after deducting non-controlling interests and preference dividends), while the denominator only includes ordinary shares, not preference shares. The weighted average element becomes critical when share capital changes during the year. The video breaks down three types of actual share capital changes and how each affects your calculation. Market price issues (shares sold at current market rate) and rights issues (shares sold below market price) both involve cash being received, so you must calculate a weighted average based on when the shares were issued. Bonus issues (free shares given to existing shareholders) involve no cash, so instead of weighting, you gross up the share count for the entire year as if issued on day one. Rights issues combine both approaches: you weight average for the cash element and gross up for the free element. By the end, you'll confidently handle EPS calculations in any scenario and understand the reasoning behind each adjustment—essential knowledge for both objective tests and case study scenarios where EPS analysis appears regularly.

Duration: 11m