Profit before taxes - Rs. 50 lacs
Dividend declared per share - Rs 2
Price of the share prevalent on stock exchange-Rs 200
Applicable tax rate - 35%
Share capital of company 5 lakhs shares of Rs. 10 each
Calculate:
Earring per share
Dividend pay out ratio
Price earning ratio
Answers
Answered by
1
Earning per share = $6.5
Dividend pay out ratio = 30.77%
Price earning ratio = 30.77
Explanation:
The computations are shown below:
1. Earning per share
= {Net income × (1 - applicable tax rate)} ÷ (Number of shares)
= {($50 lakhs × (1 - 0.35)} ÷ (5 lakhs shares)
= ($32.5 lakhs) ÷ (5 lakhs shares)
= $6.5
2. Dividend payout ratio
= Dividend ÷ earning per share
= $2 ÷ $6.5
= 30.77%
3. Price earning ratio
= Market price per share ÷ earning per share
= $200 ÷ $6.5
= 30.77
Learn more
A company declares 8 percent dividend to the share holders.If a man receives Rs2840 as his dividend,find the nominal value of his shares
https://brainly.in/question/1152979
Similar questions