Compute Earning per share from following information-
| Net profit after tax but before dividend | 1,75,000 |
| Equity shares of ₹10 | ₹7,00,000 |
| Dividend declared @15% | |
| Market price of a share | ₹13 |
Answer & explanation
Correct answer: option 4
The correct answer is option 4- ₹2.50.
| Net profit after tax but before dividend | 1,75,000 |
| Equity shares of ₹10 | ₹7,00,000 |
| Dividend declared @15% | |
| Market price of a share | ₹13 |
-
Net profit after tax = ₹1,75,000
-
Equity share capital = ₹7,00,000
-
Face value per share = ₹10
Number of shares = 7,00,000 ÷ 10 = 70,000 shares
Now,
EPS = Profit available for equity shareholders i.e. Net profit after tax /Number of Equity Shares
EPS = 1,75,000 ÷ 70,000 = ₹2.50