Question 89 Chapter 4 of +2-B - USHA Publication 12 Class

Question 89 Chapter 4 of +2-B

Earning Per Share, Dividend Per Share. Price Earning Ratio

89. The capital of Everest Co. Ltd. is as follows :

	₹
9% Preference share of 10 each	3,00,000
Equity shares of 10 each	8,00,000
	11,00,000

The Accountant has ascertained the following information :

Profit after tax at 65% p.a.	2,70,000
Equity dividend paid 20%	60,000
Market price per equity share	40

You are required to calculate the following
(i)Earning per share
(ii) Price Earning Ratio

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The solution of Question 89 Chapter 4 of +2-B: –

Earnings per Share	=	Net profit after Interest and Tax Preference Dividend
Earnings per Share	=	Number of Equity Shares
	=
	=	₹ 2,43,000
	=	₹ 80,000
	=	₹ 3.0375

Price Earning Ratio	=	Market price per share
Price Earning Ratio	=	Earning per share
	=
	=	₹ 40
	=	₹ 3.0375
	=	13.16 times

Preference Dividend	=	9% Preference share
	=	9	X	₹ 3,00,000
	=	100	X	₹ 3,00,000
	=	₹ 27,000
Net profit preference Dividend	=	Profit after tax – Preference Dividend
	=	₹ 2,70,000 – ₹ 27,000
	=	₹ 2,43,000

End of Solution

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Chapter No. 8 – Company Accounts (Share Capital)

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