The following information provided by Akul Ltd. for the year ended 31 st March, 2018: (i) Share Capital: 4,00,000, 9% Preference Shares of ₹100 each ₹4,00,00,000 80,00,000, Equity Shares of ₹10 each ₹8,00,00,000 (ii) 90,

CS Executive · Corporate and Management Accounting · PYQS · December 2018
The following information provided by Akul Ltd. for the year ended 31 st March, 2018: (i) Share Capital: 4,00,000, 9% Preference Shares of ₹100 each ₹4,00,00,000 80,00,000, Equity Shares of ₹10 each ₹8,00,00,000 (ii) 90,000, 8% Debentures of ₹100 each ₹90,00,000 (iii) Profit before interest and tax ₹2,87,20,000 (iv) Corporate tax rate 30% (v) Dividend payout ratio 80% (vi) Price-Earning (P/E) ratio 15 You are required to find out : (1) Earnings per equity share (2) Dividend per equity share (3) Market price per equity share (4) Earning yield on equity shares (5) Dividend yield on equity shares.

Answer & Explanation:

Working Notes: Amount (₹) Profit before interest & Tax (PBIT) 2,87,20,000 Less: Debenture Interest (8% on 90,00,000) 7,20,000 Profit Before Tax 2,80,00,000 Less: Tax @ 30% 84,00,000 Profit After Tax 1,96,00,000 Less: Preference Dividend (9% on 4,00,00,000) 36,00,000 Profit available for Equity Shareholders 1,60,00,000 (1) EPS = Profit available for Equity Shareholders / No. of Equity Shares = 1,60,00,000 / 80,00,000 = ₹2 per share (2) Dividend per Equity Share = EPS * Dividend payout Ratio = 2 * 80% = ₹1.60 per share (3) Market Price per Equity Share = P/E Ratio * EPS = 15 * 2 = ₹30 per share (4) Earning Yield = EPS * 100 / MPS = 2 * 100 / 30 = 6.67% (5) Dividend Yield = DPS * 100 / MPS = 1.60 * 100 / 30 = 5.33%

Topics: Corporate Accounting

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