# Question 89 Chapter 4 of +2-B – USHA Publication 12 Class Q-89- CH-4 Book 2 - Usha Pub. +2 Book 2020 - Solution

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

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

 Earnings per Share = Net profit after Interest and Tax Preference Dividend Number of Equity Shares = = ₹ 2,43,000 ₹ 80,000 = ₹ 3.0375
 Price Earning Ratio = Market price per share Earning per share = = ₹ 40 ₹ 3.0375 = 13.16 times

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

Also, Check out the solved question of previous Chapters: –