Puru Ltd. has a paid up share capital of ₹ 40,00,000 consisting of 40,000 shares of Rs. 100 each. The…
Earnings per share are ₹ 17. Interest is ₹ 15,00,000 × 10% = ₹ 1,50,000, leaving profit before tax of ₹ 10,00,000 − ₹ 1,50,000 = ₹ 8,50,000. Profit after tax is ₹ 8,50,000 ×…
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Puru Ltd. has a paid up share capital of ₹ 40,00,000 consisting of 40,000 shares of Rs. 100 each. The management is planning to raise another ₹ 15,00,000 through 10% debentures. Company's expected earnings before interest and tax (EBIT) is ₹ 10,00,000. Corporate tax rate is 20%. Calculate earning per share (EPS) :
Answer and explanation
Correct answer B
Earnings per share are ₹ 17. Interest is ₹ 15,00,000 × 10% = ₹ 1,50,000, leaving profit before tax of ₹ 10,00,000 − ₹ 1,50,000 = ₹ 8,50,000. Profit after tax is ₹ 8,50,000 × 80% = ₹ 6,80,000, and EPS is ₹ 6,80,000 ÷ 40,000 = ₹ 17.
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Madhya Pradesh SET (MP SET)