Is my understanding correct? Assume there are 500000 shares before the rights issue and the ratio of rights issue is 1:5 then 100000 shares will issued as rights issue. Step 1 : we need to calculate the ex theoretical price of the share prior to the rights issue Assume market price before rights issue is 100 and after is 75 the rights issue is at 60 So the calculation is 500000*100+100000*60= 93.33 So this is my ex theoretical price Step 2 Calculating the adjustment ratio as we have to calculate the portion of bonus issue element in the rights issue Adjustment of ratio. :: 100 market price befor the rights issue / 93.33 the price of theoretical 1.0714 Step 3 Then now we have to calculate the bonus portion that will be included in earliest periods Which is 1.0714*500000-500000= 35714 shares Now this will be taken and added to the previous year shares for example 500000 Final step Then 500000+35714= 535714 To calculate the revised eps And for the new we will have to the time line and compute

aman kawad

aman kawad

CA Inter


30-Jun-20 12:19


Answers (1)

Yes! Correct

ruchi lahoti

ruchi lahoti


30-Jun-20 16:34