Net Profit = 20m
No of common shares on 1stJan = 2m
No of common shares repurchased on 1st May = .5m
Stock Dividend on 1st July = 30%
No of common shares issued on 1st Sept = 1m
Stock Split on 1st Oct = 2 for 1
In this sum when we calculate weighted avg no of shares first we do 2×1.3×2 – .5×1.3×2 + 1×2 and then 5.2m × 1 -1.3 × 8/12 + 2 × 4/12. Isme .5m shares jo repurchased hua h on 1st May ain’t we showing the effect of stock split & stock div on these shares for the first 4momths i.e., Jan – April jabki stock split toh repurchase hone ke baad hua tha?
Please explain
Hi,
In Stock split & Stock Dividend, the date does not affect the weighted average number of shares in the market whereas in shares issued & repurchased, the date is important.
Hope this helps!
Okay. So it means that weighted avg of common shares calculate krte waqt pehle 4months before stock repurchase, stock split ka effect unn .5m shares mei aaega?
Yes
Okay. I got your point. Thanks for the same. Just for knowledge is there any reason why is it done in this way?