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Homework answers / question archive / The net income increased by 15% compared to the last year, and this year 4 points the firm's EPS is Rs 2

The net income increased by 15% compared to the last year, and this year 4 points the firm's EPS is Rs 2

Finance

The net income increased by 15% compared to the last year, and this year 4 points the firm's EPS is Rs 2. If the net income in the last year was Rs 15,000, and the retained earnings in this year increased by Rs 3000, the rupee dividend per share for the current year is: O 1.65 O None 1.68 O 0.35 O 1.63 1.58
4 points The net income increased by 7% compared to the last year, and this year the firm's EPS is Rs 2. If the net income in the last year was Rs 15,000, and the retained earnings in this year increased by Rs 3000, the dividend payout ratio for the current year is: * O 0.83 0.81 O 0.20 O None O 0.17

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Q-1) Net Income this year increased by 15% compared to last year

Last Year's Net Income = $15,000

Current year's Net Income = $15000*(1+15%) = $17,250

EPS this year = $2

No of shares oustanding this year = Current year's Net Income/EPS = $17,250/$2

No of shares oustanding this year = 8625

- Additions to retained Earnings this year = $3000

Dividend per share = ( Current year's Net Income - Additions to retained Earnings this year)/No of shares oustanding this year

Dividend per share = ($17,250 - $3000)/8625

Dividend per share = $1.65

Option 1

Q-2)

Net Income this year increased by 7% compared to last year

Last Year's Net Income = $15,000

Current year's Net Income = $15000*(1+7%) = $16,050

EPS this year = $2

No of shares oustanding this year = Current year's Net Income/EPS = $16,050/$2

No of shares oustanding this year = 8025

- Additions to retained Earnings this year = $3000

Dividend per share = ( Current year's Net Income - Additions to retained Earnings this year)/No of shares oustanding this year

Dividend per share = ($16,050 - $3000)/8025

Dividend per share = $1.6262

- Current Year's Dividend Payout ratio = Dividend per share/EPS

= $1.6262/$2

Current Year's Dividend Payout ratio = 0.81

Option 2