Find out: Earnings per share of A Limited after acquisition.

CS Professional · Valuations & Business Modelling · PYQS · December 2021
Find out: Earnings per share of A Limited after acquisition.

Answer & Explanation:

Earnings per share of A Limited after acquisition: 1. Net Profit of A Limited after acquisition: Net Profit of A Limited = ₹312 Lacs Net Profit of B Limited = ₹175 Lacs Combined Net Profit = ₹312 Lacs + ₹175 Lacs = ₹487 Lacs Considering 10% synergy gain on combined profit = ₹487 Lacs × 1.10 = ₹535.70 Lacs 2. Total No. of Shares after acquisition: Existing shares of A Limited = 30 Lacs New shares issued by A Limited for B Limited = 14.24 Lacs (from 1(a)) Total shares after acquisition = 30 Lacs + 14.24 Lacs = 44.24 Lacs Earnings per share (EPS) after acquisition = Net Profit after acquisition / Total No. of Shares after acquisition = ₹535.70 Lacs / 44.24 Lacs = ₹12.11

Topics: Valuation of Business

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