If profit before interest and tax is Rs.10000, provision for Tax=Rs.5000, No. of Equity Share = 3000,…
Given Profit Before Tax = Rs. 10,000 and Tax = Rs. 5,000, Profit After Tax (PAT) = Rs. 5,000. Subtracting Preference Dividend of Rs. 2,000 leaves Rs. 3,000 for 3,000 equity…
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If profit before interest and tax is Rs.10000, provision for Tax=Rs.5000, No. of Equity Share = 3000, Preference dividend = 2000, Dividend per equity share=0.40, what is the value of payout ratio?
Answer and explanation
Correct answer D
Given Profit Before Tax = Rs. 10,000 and Tax = Rs. 5,000, Profit After Tax (PAT) = Rs. 5,000. Subtracting Preference Dividend of Rs. 2,000 leaves Rs. 3,000 for 3,000 equity shares, giving EPS = Rs. 1.00. With Dividend per share (DPS) = Rs. 0.40, the Dividend Payout Ratio = (DPS / EPS) x 100 = (0.40 / 1.00) x 100 = 40%.
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UGC NET Management