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Sri Lanka Equity Forum » Stock Market Talk » Expert Chamber » REEF and VFIN- Accountants who can't calculate

REEF and VFIN- Accountants who can't calculate

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innam

innam
Manager - Equity Analytics
Manager - Equity Analytics
REEF results are out and i'm sure we'll get multiple posts about the magical EPS figure of 7 for the March quarter that they have reported.

http://www.cse.lk/cmt/upload_report_file/568_1306907002379.pdf

But it seems that some of the accountants working for CSE listed companies don't seem to know how to use a calculator.

REEF profit after tax for the March quarter 2011 is 14 million and with 47 million shares outstanding my excel gives a figure of 30 cents but REEF is showing an EPS figure of 7.27
Profit after tax March quarter 2010 is 9 million and with 47 million shares outstanding my excel gives a figure of 20 cents but REEF is showing an EPS figure of 4.93
i have left out the dilution from the warrants to keep it simple for the moment

The same thing happened with VFIN yesterday and with two DONKEY LEVEL mistakes in two days, the troubling question to ask is, is this a deliberate attempt to mislead retailers by manufacturing incorrect EPS numbers or aren't they bothered about accuracy?
http://forum.srilankaequity.com/t4305-vfin-good-results-will-it-shoot-up-soon#29045

Don't the CEOs/CFOs/Finance Managers of these companies take look at what they file?

econ

econ
Global Moderator
thanks innam. very good observation as always you do.
I think this is not calculation problem. they may want to fool around investors.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Man.. Innam is dead correct..

REEF and VFIN- Accountants who can't calculate Reef10

Lets take Group figures;
Equity Holders of the Parent (12 months ended 31-03-11) - Rs.14834000/-
Equity Holders of the Parent (03 months ended 31-03-11) - Rs.15721000/-

Total No of Shares after rights issue - 47,191,953 (as illustrated on the reports)

Therefore; Annual Group EPS = 14834000/47191953 = Rs. 0.314/-
Qurater Group EPS = 15721000/47191953 = Rs.0.333/-

Lets take company figures;
Compnay figure (03 months ended 31-03-11) = Rs.14286000/-
Therefore Company EPS = 14286000/47191953 = Rs.0.30/-

Now from where this magical number 7.27 came from??



Last edited by smallville on Wed Jun 01, 2011 5:19 pm; edited 1 time in total

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
interestingly, admin or moderators or any of the members of you have the contact with the company, why don't you informed to the company and ask them to correct it

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@innam wrote:REEF results are out and i'm sure we'll get multiple posts about the magical EPS figure of 7 for the March quarter that they have reported.

http://www.cse.lk/cmt/upload_report_file/568_1306907002379.pdf

But it seems that some of the accountants working for CSE listed companies don't seem to know how to use a calculator.

REEF profit after tax for the March quarter 2011 is 14 million and with 47 million shares outstanding my excel gives a figure of 30 cents but REEF is showing an EPS figure of 7.27
Profit after tax March quarter 2010 is 9 million and with 47 million shares outstanding my excel gives a figure of 20 cents but REEF is showing an EPS figure of 4.93
i have left out the dilution from the warrants to keep it simple for the moment

The same thing happened with VFIN yesterday and with two DONKEY LEVEL mistakes in two days, the troubling question to ask is, is this a deliberate attempt to mislead retailers by manufacturing incorrect EPS numbers or aren't they bothered about accuracy?
http://forum.srilankaequity.com/t4305-vfin-good-results-will-it-shoot-up-soon#29045

Don't the CEOs/CFOs/Finance Managers of these companies take look at what they file?

Yes, Innam when I saw VFIN report first time I thought two things.
a) They know the greatest of magic
b) maybe as the accountant is indisposed his 4 year old child did the math

On a serious note, as you mentioned the issue is how can it evade 3 qualified peoples eyes it is was a mistake. Accountant , Diretor, CEO ? Twisted Evil

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
My personal idea is EPS = 7 is correct for REEF

Total equities 1,438,306,000
Total shares 47,191,953
NAV = Rs 30.59

last quarter NAV = Rs 22.39
They haven't include the profit to the PL statement but they have included to the balance sheet.
There are lot of comments about the fairness of the way ( selling lands to subsidiaries at higher prices) they earned Rs 7 EPS during the last quarter. But anyhow now they have NAV over 30.


http://forum.srilankaequity.com/t1561-cse-announcement-about-reef-reef-350mn-capital-gain

innam

innam
Manager - Equity Analytics
Manager - Equity Analytics
@sapumal wrote:My personal idea is EPS = 7 is correct for REEF

Total equities 1,438,306,000
Total shares 47,191,953
NAV = Rs 30.59

last quarter NAV = Rs 22.39
They haven't include the profit to the PL statement but they have included to the balance sheet.
There are lot of comments about the fairness of the way ( selling lands to subsidiaries at higher prices) they earned Rs 7 EPS during the last quarter. But anyhow now they have NAV over 30.


http://forum.srilankaequity.com/t1561-cse-announcement-about-reef-reef-350mn-capital-gain

so this is the target audience for the magic EPS of 7.

i may be wasting my time convincing the target audience but just so newcomers are not mislead- magical land revaluations that take place on the balance sheet (the so called change in NAV) and not on the income statement (eg-mark to market adjustment) CANNOT be taken to calculate EPS. The only thing that can be used for EPS calculation is the earnings shown in the face of the income statement.

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
I don't have any disagree with your point innam. They can't show a EPS using this statement. It is a magic figure
My point is they had a EPS of Rs 7 during last quarter due to the land revaluation and it is in the balance sheet.

innam

innam
Manager - Equity Analytics
Manager - Equity Analytics
bottom line if these management teams can't even do a simple calculation ( dividing 14 million profits by 47 million shares ), and the error isn't spotted by senior management- what other errors and mistakes are hidden within the detailed accounts?

Fresher


Moderator
Moderator
at least cant the one who prepares spot the large discrepancy between the quarter EPS and the yearly one. purely taking retailers for a ride.
next time they'll type EPS 30 and say they forgot to place the decimal

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@Gaja wrote:interestingly, admin or moderators or any of the members of you have the contact with the company, why don't you informed to the company and ask them to correct it

I already sent them a note requesting an explanation..

TuskerLK

TuskerLK
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Donno how many more companies have reported like this.

monash

monash
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@innam wrote:bottom line if these management teams can't even do a simple calculation ( dividing 14 million profits by 47 million shares ), and the error isn't spotted by senior management- what other errors and mistakes are hidden within the detailed accounts?

Thank you Innam for your effort. I appreciate it.

I don't see these as mistakes. These may be done purposely to mislead investors. Fortunately this is Sri Lanka otherwise the company and auditors in trouble as investors can sue the company. Because this is CSE they are just playing games and toying investors. We have to think again about the credibility of financial statements at CSE.
Evil or Very Mad



Last edited by monash on Wed Jun 01, 2011 8:54 pm; edited 2 times in total

TuskerLK

TuskerLK
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
However these are not audited accounts,so audit firm has nothing to do with the quartally reports

xhora

xhora
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Can we really believe auditors?
E.g ENRON & Arthur Andersen

TuskerLK

TuskerLK
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
For me auditors are not ethical at all. Most of the young guys and girls who works days and nights to meets the deadline are getting paid a allowance (not salary) less than what a estate worker get paid.

So how come we can expect a reliable work from them?

mark

mark
Expert
Expert
guys,same thing i experienced in CSF results,ddn't got correct values......don't know,i may be wrongly calculated,but there was many questions.. Suspect Suspect

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@smallville wrote:
@Gaja wrote:interestingly, admin or moderators or any of the members of you have the contact with the company, why don't you informed to the company and ask them to correct it

I already sent them a note requesting an explanation..

Good let us know, if you got the reply

Hiru


Manager - Equity Analytics
Manager - Equity Analytics
tinyman wrote:For me auditors are not ethical at all. Most of the young guys and girls who works days and nights to meets the deadline are getting paid a allowance (not salary) less than what a estate worker get paid.

So how come we can expect a reliable work from them?

That is true trainees are doing all the field work for Audits, but there are several stages which pay attention to accounts before they reach to Assigned Partner for his signature, specially in big for Audit Firms. So, have these managers at the audit firm failed to comply with procedures?
However, it seems these statements are not Audited.

Above all, I believe, there must be check for accuracy at CSE before publishing accounts on the CSE Website as all investors are not of the same quality.

GJ


Manager - Equity Analytics
Manager - Equity Analytics
is it good or bad to buy?
--
===
====
=====

Hiru


Manager - Equity Analytics
Manager - Equity Analytics
@GJ wrote:is it good or bad to buy?
--
===
====
=====

VFIN is good at below Rs 50.

REEF is good to watch and buy as there would be huge capital gains. For me REEF.W0017 is comparably good. My view is based on the current trend and the information currently available, but not on fundamentals.

Please search for information available and evaluate by your self as money is yours.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@Gaja wrote:
@smallville wrote:
@Gaja wrote:interestingly, admin or moderators or any of the members of you have the contact with the company, why don't you informed to the company and ask them to correct it

I already sent them a note requesting an explanation..

Good let us know, if you got the reply

I'm afraideven after 2 days I've recieved NO reply.. U know wat this means right??? Twisted Evil
Poor souls.. Can we send this to SEC as well? indicating the malpractice by company??

monash

monash
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Smallville i also waited for your post to know the response of company.

Yes of course we can inform this to SEC. i think there is possibility to sue the company also if you have money and time, Consult a lawyer.. Wink
Reef is a pure scam.. the latest victim of them is CLND.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@monash wrote:Smallville i also waited for your post to know the response of company.

Yes of course we can inform this to SEC. i think there is possibility to sue the company also if you have money and time, Consult a lawyer.. Wink
Reef is a pure scam.. the latest victim of them is CLND.

Well to be honest with, I dont have a single share even warrants.. but just for the community service I tried informing the company toget some response.. They didnt have the courtesy to accept it a mistake or whatever further assures this is a pure scam Wink Twisted Evil
Well I have other fish to fry.. so if some can post this to SEC, would be glad.. Wink

intelstk


Senior Equity Analytic
Senior Equity Analytic
tinyman wrote:For me auditors are not ethical at all. Most of the young guys and girls who works days and nights to meets the deadline are getting paid a allowance (not salary) less than what a estate worker get paid.

So how come we can expect a reliable work from them?

this is nothing to do with auditors. These interim figures are un audited. They responsible for annual audited figures only. Even that case prepartion and presentation of FS in a responsible of Directors.

Eventhough they are paid less than state workers, they are doing great job for the entire market definitly. So, don scold auditors in this case plssssssssssss

duke


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@smallville wrote:
@monash wrote:Smallville i also waited for your post to know the response of company.

Yes of course we can inform this to SEC. i think there is possibility to sue the company also if you have money and time, Consult a lawyer.. Wink
Reef is a pure scam.. the latest victim of them is CLND.

Well to be honest with, I dont have a single share even warrants.. but just for the community service I tried informing the company toget some response.. They didnt have the courtesy to accept it a mistake or whatever further assures this is a pure scam Wink Twisted Evil
Well I have other fish to fry.. so if some can post this to SEC, would be glad.. Wink

complaining to SEC is futile, waste of time and postage stamps.

gann

gann
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Maybe they have added the capital gain from CLND implicitly Smile

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@gann wrote:Maybe they have added the capital gain from CLND implicitly Smile

If you are serious . no can do. This is for quarter ending March 31st isn't it.

In anycase it is inexcusable to make such drastic errors. If they have an alternative way of calculating EPS it is in decent interest to let the public know.

gann

gann
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@slstock wrote:
@gann wrote:Maybe they have added the capital gain from CLND implicitly Smile

If you are serious . no can do. This is for quarter ending March 31st isn't it.

In anycase it is inexcusable to make such drastic errors. If they have an alternative way of calculating EPS it is in decent interest to let the public know.

I was kidding. geek

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
This can not be a mistake nor an ignorance.

As a manager you know the position of you company. You do not need a report to have a general idea of you company. That is in your day to day life.

When there is a 7 Rupee figure at the bottom for REEF any donkey who go through the report before releasing it should know that is impossible.





DPPEL


Stock Trader
what do you think vfin curent price ......

greedy

greedy
Manager - Equity Analytics
Manager - Equity Analytics
A similar mistake that I found in Browns IPO..... (I posted this in another forum)

I was looking at Browns IPO Prospectus & came across this funny EPS figure in the accounts for the 9 months ended 31.12.2010. As per the prospectus, the EPS number is LKR4.917. There were 98mn shares as of 31 March 2010 and this was sub divided in an 1:10 ratio in 16/11/2010. Post split number of shares became 980mn shares.

As per the income statement, net profit for the 9 month period ended 31.12.2010 is LKR1,445.556mn.

Therefore, based on the above numbers the EPS for the period is;

EPS = LKR1,445.556mn/980mn

= LKR1.475.


So how did they get an EPS of LKR4.917? Is this an error or done deliberately?

I Guess they have done a wrong Calculation. The below could have been their calculation which is wrong...

Net Profit for the period LKR1,445.556mn

Weighted Average Number of shares (98mn+882mn/9months*2months) = 294mn shares

EPS = LKR1,445.556/294mn shares
EPS = LKR 4.917

Anyone with accounting knowledge would know that when there is a share split, EPS needs to be calculated based on post split numbers not by weighted average number of shares.

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@greedy wrote:A similar mistake that I found in Browns IPO..... (I posted this in another forum)

I was looking at Browns IPO Prospectus & came across this funny EPS figure in the accounts for the 9 months ended 31.12.2010. As per the prospectus, the EPS number is LKR4.917. There were 98mn shares as of 31 March 2010 and this was sub divided in an 1:10 ratio in 16/11/2010. Post split number of shares became 980mn shares.

As per the income statement, net profit for the 9 month period ended 31.12.2010 is LKR1,445.556mn.

Therefore, based on the above numbers the EPS for the period is;

EPS = LKR1,445.556mn/980mn

= LKR1.475.


So how did they get an EPS of LKR4.917? Is this an error or done deliberately?

I Guess they have done a wrong Calculation. The below could have been their calculation which is wrong...

Net Profit for the period LKR1,445.556mn

Weighted Average Number of shares (98mn+882mn/9months*2months) = 294mn shares

EPS = LKR1,445.556/294mn shares
EPS = LKR 4.917

Anyone with accounting knowledge would know that when there is a share split, EPS needs to be calculated based on post split numbers not by weighted average number of shares.

Welcome to the forum buddy.. Hope you're the same person..
And good finding..
However I think even with the correct EPS figure of 1.4, Browns inv. is fairly ok.. but its shame on EPS calculation Wink
First VFIN then REEF now BIL.. Seems like accountants are not that intelligent these days or authorities don't care.. Shame on us for not looking at this earlier too. Evil or Very Mad

rijayasooriya

rijayasooriya
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@smallville wrote:
@greedy wrote:A similar mistake that I found in Browns IPO..... (I posted this in another forum)

I was looking at Browns IPO Prospectus & came across this funny EPS figure in the accounts for the 9 months ended 31.12.2010. As per the prospectus, the EPS number is LKR4.917. There were 98mn shares as of 31 March 2010 and this was sub divided in an 1:10 ratio in 16/11/2010. Post split number of shares became 980mn shares.

As per the income statement, net profit for the 9 month period ended 31.12.2010 is LKR1,445.556mn.

Therefore, based on the above numbers the EPS for the period is;

EPS = LKR1,445.556mn/980mn

= LKR1.475.


So how did they get an EPS of LKR4.917? Is this an error or done deliberately?

I Guess they have done a wrong Calculation. The below could have been their calculation which is wrong...

Net Profit for the period LKR1,445.556mn

Weighted Average Number of shares (98mn+882mn/9months*2months) = 294mn shares

EPS = LKR1,445.556/294mn shares
EPS = LKR 4.917

Anyone with accounting knowledge would know that when there is a share split, EPS needs to be calculated based on post split numbers not by weighted average number of shares.

Welcome to the forum buddy.. Hope you're the same person..
And good finding..
However I think even with the correct EPS figure of 1.4, Browns inv. is fairly ok.. but its shame on EPS calculation Wink
First VFIN then REEF now BIL.. Seems like accountants are not that intelligent these days or authorities don't care.. Shame on us for not looking at this earlier too. Evil or Very Mad
These are the ways that companies use to fool the investers who are not with good knowledge in accounting.
Actually there is some logic behind the method,used by company to calculate EPS.Person without proper accounting knowledge can not understand such tricks.
It is really nice of our experts that they have kept an eye on such cunning tricks and posted those to the form.
Thank u very much to all.Exclamation

kiwi

kiwi
Senior Equity Analytic
Senior Equity Analytic
REEF have corrected the EPS figure now. I am not sure if there was any explanation given. http://www.cse.lk/cmt/upload_report_file/568_1307353270.pdf

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@kiwi wrote:REEF have corrected the EPS figure now. I am not sure if there was any explanation given. http://www.cse.lk/cmt/upload_report_file/568_1307353270.pdf



Can anyone tell me who is the ultimate owner of REEF ?

Is that still Mr. KDD (PABC) or Mr. DJ (Imagewise)

(Pl. Refer above report )

sapumal


Vice President - Equity Analytics
Vice President - Equity Analytics
@Chinwi wrote:
@kiwi wrote:REEF have corrected the EPS figure now. I am not sure if there was any explanation given. http://www.cse.lk/cmt/upload_report_file/568_1307353270.pdf



Can anyone tell me who is the ultimate owner of REEF ?

Is that still Mr. KDD (PABC) or Mr. DJ (Imagewise)

(Pl. Refer above report )

Currently it is DJ. PABC is the credit provider. Tomorrow it may be differ

hariesha


Vice President - Equity Analytics
Vice President - Equity Analytics
In VFIN its anualised EPS, not for the qtr. Correctly all companies should show their EPS in anualised format. So in VFIN EPS of 4.64 is correct and it trades @ PER of 9.2 which is atractive.

greedy

greedy
Manager - Equity Analytics
Manager - Equity Analytics
@hariesha wrote:In VFIN its anualised EPS, not for the qtr. Correctly all companies should show their EPS in anualised format. So in VFIN EPS of 4.64 is correct and it trades @ PER of 9.2 which is atractive.


Companies should disclose only their quarterly & year to date EPS in the quarterly accounts. Because, that would be the actual number based on actual results. When Quarterly EPS is annualised, it implies that company management tells us that the company is going to make profits similar to the current period in the remaining quarters which is totally inaccurate!

Therefore, EPS, should never be annualised in the Quarterly accounts/prospectus. It's up to the investors to predict what will be results for the coming periods.

reyaz

reyaz
Manager - Equity Analytics
Manager - Equity Analytics
@sapumal wrote:I don't have any disagree with your point innam. They can't show a EPS using this statement. It is a magic figure
My point is they had a EPS of Rs 7 during last quarter due to the land revaluation and it is in the balance sheet.

Eps = Earnings for the reporing period
           No. Of shares (cumulative)

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