Reference no: EM132601816

The following Financial statement draft extracts for year ending 31st Dec 2015 relate to Solax, a public limited company.

TZS '000'

Operating Profit 50,340

Interest Expense: (340,)

Profit before Tax 50,000

Income tax expense (15,000)

Profit after tax 35,000

The company has the following

Capital Structure as at 1st Jan 2015

Ordinary shares of TZS 4 each TZS 1,600,000 8%

Cumulative Preference shares of TZS 3 each TZS 1,800,000 9%

Convertible Preference shares of TZS 5 each TZS 2,400,000 12%

Bonds TZS 2,000,000 10%

Convertible Debt TZS 1,000,000

Company is subject to corporate tax rate of 30%

Additional Information

1. During the year ending 2015 the company proposed dividend of TZS 216,000 for Convertible Preference Shares and TZS 240,000 for Cumulative Preference Shares.

2. On 1st March 2015 the company decided to consolidate all existing shares into 100,000 ordinary shares. On May 1st 2015 the company issue 240,000 new shares at a full market price. Additionally the company purchased and cancelled 60,000 shares on 1st Aug 2015. Finally On 1st October 2015, the company decided to issue 250,000 shares in which 100,000 shares was issued for free and the rest was issue at a full market price

3. On 1st March 2015 The Company has option outstanding of 390,000 ordinary shares at exercise price of TZS 10 each. The fair market price was TZS 15

4. 9% Convertible Preference Shares are convertible at option of shareholder or the company in 2018/2019 into basis of 5 Preference shares to 4 Ordinary shares 5. Each TZS 250 of convertible debt will be convertible into 100 ordinary shares

Required:

Question a) Calculate basic EPS for the year ending 31st Dec 2015

Question b) Calculate diluted EPS for the year ending 31st Dec 2015