NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
A company with 10 crore shares outstanding reports a net profit of Rs 150 crore and pays total dividends of Rs 45 crore. What is its dividend payout ratio?
The dividend payout ratio is 30%. It equals total dividends of Rs 45 crore divided by net profit of Rs 150 crore. The 70% figure would be the retention ratio, which is the share of profit kept in the business.
- A10%
- B20%
- C30%Correct
- D70%
Explanation
Dividend payout ratio = Dividends / Net profit = 45 / 150 = 30%. The 70% option is the retention ratio (1 - 0.30), a different measure. Checking: 30% of 150 = 45.
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