The following information relates to XYZ Limited for the year ended 31st March, 2024: Net Profit for the year after tax:37,50,000 Number of Equity…

Computation of basic earnings per share Net profit for the current year / Weighted average number of equity shares outstanding during the year 37,50,000 / 5,00,000 = 7.50 per share Computation of diluted earnings per share Adjusted net profit for the current year / Weighted average number of equity shares Adjusted net profit for the current year ₹ Net profit for the current year 37,50,000 Add: Interest expense for the current year 4,00,000 Less: Tax relating to interest expense (30% of 4,00,000) (1,20,000) Adjusted net profit for the current year 40,30,000 Number of equity shares resulting from conversion of debentures = 55,000 Equity shares (given in the question) Weighted average number of equity shares used to compute diluted earnings per share = 5,55,000 shares (5,00,000 + 55,000) Diluted earnings per share = 40,30,000/ 5,55,000 = 7.26 per share Note: Conversion of convertible debentures into Equity Share will be dilutive potential equity shares. Hence, to compute the adjusted profit the interest paid on such debentures will be added back as the same would not be payable in case these are converted into equity shares.