Question

Equity, Share Capital T 5,00,000 with face
value & 10 each; 10% Pref. Share capital,
E 200,000 with face value l0 each; Net
Profit after Tax before preference dividend is
57000. Reserves and surplus is
NIL. Return on equity shares is
​

Answer 1

Answer:

Net profit available for equity shareholders will come after deducting dividend on preference from the net profit

So,

57,000- 20,000

= 37,000

now,

return on equity will be

37,000/5,00,000*100

= 7.4%

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