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Question 90 Chapter 14 of Class 12 Part – 2 – 2024
Earning Per Share, Dividend Per Share. Price Earning Ratio
90. The capital of a limited company is as follows :
| ₹ | |
| 10% preference shares of 10 each | 2,00,000 |
| Equity shares of 10 each | 10,00,000 |
| 12,00,000 |
Net profit after tax 4,20,000. Profit distributed as dividend 50%.
The market price of equity share is ₹ 35.
You are required to calculate
(i)Earning per share
(ii) Dividend per share
(iii) Price Earning Ratio
| Earnings per Share | = | Net profit after Interest and Tax Preference Dividend |
| Number of Equity Shares | ||
| = | ||
| = | ₹ 4,00,000 | |
| 1,00,000 | ||
| = | ₹ 4 |
| Dividend Per share | = | Profit distributed as equity share |
| Number of equity shares | ||
| = | ||
| = | ₹ 2,00,000 | |
| 1,00,000 | ||
| = | ₹ 2 |
| Price Earning Ratio | = | Market price per share |
| Earning per share | ||
| = | ||
| = | ₹ 35 | |
| ₹ 4 | ||
| = | 8.75 times |
| Preference Dividend | = | 10% Preference share | ||
| = | 10 | X | ₹ 2,00,000 | |
| 100 | ||||
| = | ₹ 20,000 | |||
| Net profit preference Dividend | = | Profit after tax - Preference Dividend | ||
| = | ₹ 4,20,000 - ₹ 20,000 | |||
| = | ₹ 4,00,000 |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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