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Shujaa ltd has in issue 25,000 4% debentures with a nominal value of ksh 1

Accounting

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Shujaa ltd has in issue 25,000 4% debentures with a nominal value of ksh 1.00.  The debentures are convertible to ordinary shares at a rate of 1:1 at any time until 2021. The entity's management receives a bonus based on 1% profit before tax.

 

Shujaa ltd's results for 2021 showed a profit before tax of ksh80,000 and a profit after tax of 56,000 (tax rate is 30%).

 

Required:

 

a) Calculate the earnings for the purpose of dilutive EPS                                          (10 marks)

 

b) Discuss the various components processes in business analysis                           (10 marks)