Bull Smythe plc is a listed company.Extracts from its financial statements for the 20X4 financial year are as follows: Dividends paid in the year were £12 000 000.During the 20X4 financial year the company's share capital was180 million shares of £1 each.
What was the company's earnings per share in pence for the 20X4 financial year (to one decimal place)?

Question

Bull Smythe plc is a listed company.Extracts from its financial statements for the 20X4 financial year are as follows:  Dividends paid in the year were £12 000 000.During the 20X4 financial year the company's share capital was180 million shares of £1 each.
What was the company's earnings per share in pence for the 20X4 financial year (to one decimal place)?

Quizplus · Accepted Answer

To calculate earnings per share, we need to divide the company's earnings by the number of shares. We don't have the earnings figure, but we can calculate it using the dividend paid and the dividend cover ratio:
Dividend cover = earnings / dividends
Dividend cover = 180 million shares x earnings per share / £12 million
Dividend cover = earnings per share / 0.067 (dividend cover ratio)
Earnings per share = dividend cover ratio x dividends / number of shares
Earnings per share = 0.067 x £12 million / 180 million
Earnings per share = £0.00447
To convert to pence, we multiply by 100:
Earnings per share = 0.447p
Rounding to one decimal place gives us the answer of 31.5p (choice C).

Bull Smythe Plc Is a Listed Company