Catherine Plc has 5,000,000 ordinary shares of 25 cents each in issue as at December 31, 2021. The following information relates to Catherine Plc for the year ended 31 December 2021: $
Turnover 4,700,000
Operating costs 2,200,000
Trading Profit 2,500,000
Tax on ordinary activities 875,000
Profit after tax 1,625,000
Additional information available at December 31, 2021 were: i. $1,000,000 of 14% convertible loan notes, convertible into equity shares in three years' time at the rate of 2 shares per $10 of stock. ii. $2,000,000 of 10% convertible preference shares, convertible in one year's time at the rate of 3 shares per $5 of stock. iii. The company’s tax rate was 35% Required
A. Calculate the basic EPS for December 31, 2021. (3 marks)
B. Calculate the diluted EPS for December 31, 2021. (12 marks)
C. Briefly comment on the need to disclose a diluted EPS figure and on the relevance of this figure to the shareholders. (5 marks)