NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Investing in Stocks
Ananya Traders Ltd. has a share price of Rs 600 and earnings per share (EPS) of Rs 40. The company pays a dividend of Rs 10 per share. What are its price-earnings ratio and dividend payout ratio respectively?
The P/E ratio is 15 times (Rs 600 divided by Rs 40 EPS) and the dividend payout ratio is 25% (Rs 10 dividend divided by Rs 40 EPS). Payout measures the share of earnings distributed as dividends rather than retained.
- A15 times and 25%Correct
- B15 times and 4%
- C60 times and 25%
- D15 times and 16.7%
Explanation
P/E = 600/40 = 15 times. Dividend payout ratio = dividend/EPS = 10/40 = 25%. The 4% option wrongly divides dividend by EPS inverted ratio mix; 60 times divides price by dividend; 16.7% uses price-based confusion (10/60).
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