CS Executive · Corporate Accounting and Financial Management · Dividend Decisions
Sundaram Ltd has 5,00,000 equity shares and a net profit of Rs 40,00,000. It follows a constant payout ratio of 60%. What is the dividend per share (DPS)?
Dividend per share is Rs 4.80. Earnings per share is Rs 40,00,000 divided by 5,00,000 shares, which is Rs 8, and a 60% payout ratio applied to this gives Rs 4.80. Rs 3.20 would be the retained earnings per share.
- ARs 4.80Correct
- BRs 8.00
- CRs 3.20
- DRs 6.00
Explanation
EPS = 40,00,000 / 5,00,000 = Rs 8. DPS = 60% x 8 = Rs 4.80. Rs 3.20 is the retained portion (40%), a wrong-base mistake; Rs 8 is EPS itself.
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