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Entity has 40 lakh shares + 6.3 lakh options exercisable at ₹70/share. Average market price 20X8 ₹160; PAT ₹6,00,000. Diluted EPS denominator and result:
ADenominator 40,00,000 + 3,54,375 dilutive shares = 43,54,375; EPS ≈ ₹0.14 (= 6,00,000 / 43,54,375)
BDenominator 40,00,000 + 6,30,000 = 46,30,000; EPS ₹0.13
CDenominator 40,00,000 only; EPS ₹0.15
DDenominator 46,30,000; EPS ₹0.13
Answer & Solution
Correct answer: A. Denominator 40,00,000 + 3,54,375 dilutive shares = 43,54,375; EPS ≈ ₹0.14 (= 6,00,000 / 43,54,375)
Treasury stock: 6,30,000 options × ₹70 / ₹160 = 2,75,625 shares 'paid for'. Free shares = 6,30,000 − 2,75,625 = 3,54,375. Total denominator = 43,54,375. EPS = 6,00,000 / 43,54,375 ≈ ₹0.14.
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