Hi Chintan, I would like to try to answer you questions.. A. 1. Outstanding share would be calculated including promoters' shares also. So, there is no question that what will they do in this case...Promoters Institution or Public all are shareholders and treated equally for calculating EPS 2. Promoters/Institutions or Public all shareholders are entitled to profit of the company by way of dividends and retained earnings. Dividends are distributed profits which I think you will be aware about. and Retained earnings are profits which are not distributed. You can see this under Reserves and Surplus in balance sheet. It may be balance of profit and loss account, General Reserve, etc. Some part of undistributed profit may have been kept aside for specific purposes as a reserve like reserves for redemption of any debt or preference shares. B. The amount of EPS you calculated is nothing but EPS for the separate company created by IPO. You have not provided the details whether given profit is total profit made by using all the 210 million of assets. If it is the case the outstanding no. of share will be earlier no. of shares + IPO shares. Then you will find actual no. of shares to find EPS. If the profit you gave is made by using only IPO proceed, it is a case of saparate company IPO and EPS will be of saparate company. Then this would be example like Reliance Energy with 200 million of Existing Assets and Reliance POwer comin with IPO of 10 million and after that it makes profit and that is distributed among RPOwer share holders. As far as the matter of showing in balance sheet is concerned profits as I said earlier are always shown in the Reserves and Surplus in Balance sheet. I think your confusion will be cleared. Jitendra Abhani On Mon, Aug 18, 2008 at 11:31 AM, <[EMAIL PROTECTED]> wrote:
Dear All, I have some confusion regarding following. Generally company EPS is calculated as Net operation profit/No. of outstanding shares. Few question to understand real EPS. A. Generally good companies equities to general public is only 10% , most of equity is with institutional investors. MF, FII etc. and substantial part is with promoters. For example if company has outstanding share 1000 nos ( including general public and institutions) and made profit of 1000 Rs. Its EPS would be "1 rs". 1. What will promoters do in that case? they will not take any profit?? 2. How they can take any profit, where it is shown in balance sheet? B. Generally companies want to plan IPO for expansion or start new business which they are running from so many years. ( for example ABC company want to expand its existing manufacturing facilities which is existing from 20 years. ABC company is not listed on any of exchanges. If say they will float IPO in sept 2008 to raise 10 million Rs by issue of 100,000 (1 lacs) equity issues, and have total asset before issue of IPO is 200 million. If after one year this company made net profit of 1 million Rs, How the EPS will be calculated EPS = 1,000,000 ( Net profit)/ 100,000 (outstanding share) = 10 rs In this case what happened to profit generated from its own assets which was not part of shareholders equity?? Where the profit goes from it?? Where it is shown on balance sheet. Appreciate if some senior members of the groups will clarify above questions. Regards. Chintan N. Patel ======================================================= Confidentiality Notice This communication and the information it contains:- (a) Is intended for the person(s) or organisation(s) named above and for no other person(s) or organisation(s). (b) May be confidential, legally privileged and protected in law. Unauthorised use, copying or disclosure of any of it may be unlawful. If you have received this communication in error, please contact us immediately by email at [EMAIL PROTECTED] ======================================================= -- Posted By Ronald Chisley to Investor Forums at 8/18/2008 02:26:00 PM --~--~---------~--~----~------------~-------~--~----~ Logon at – http://investorline.co.in/blogs/news Learning Center- http://investorline.co.in/blogs/learning Mutual funds - http://investorline.co.in/blogs/mutualfunds Life Insurance - http://investorline.co.in/blogs/lifeinsurance Investor Journal - http://investorline.co.in/blogs/investor Latest News - http://investorline.co.in/blogger/?q=aggregator/categories/ Create your own Forum & Blog at - http://investorline.co.in/blogger To post to this group, send email to [email protected] Visit this group at-http://groups.google.com/group/investor-forums?hl=en -~----------~----~----~----~------~----~------~--~---
