The earnings per ordinary share calculation includes the interest paid on the unsecured loan stock. Is this an error?
Hi Grit, interest payments on debt are tax-deductible for companies so the post-tax profits of £360k / £240k for Company A / Company B have already excluded the interest payments on unsecured loan stock. Therefore the only adjustment needed to the post-tax profits (for use in the earnings per ordinary share calculation) is to remove the preference share dividends.
