Target Exam

CUET

Subject

-- Accountancy Part B

Chapter

Accounting Ratios

Question:

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
Options:

₹4.3

₹5.2

₹3

₹2.50

Correct Answer:

₹2.50

Explanation:

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