If the face value of share is Rs. 10, earning per share is Rs. 4 and dividend per share is Rs. 2, then dividend payout ratio will be
A. 20%
B. 40%
C. 25%
D. 50%
Answer: Option D
Solution (By Examveda Team)
The dividend payout ratio shows what percentage of a company's earnings are paid out to shareholders as dividends.We can calculate it using the following formula:
Dividend Payout Ratio = (Dividend per Share / Earnings per Share) * 100
In this case:
* Dividend per share = Rs. 2
* Earnings per share = Rs. 4
So, the calculation is:
(Rs. 2 / Rs. 4) * 100 = 0.5 * 100 = 50%
Therefore, the dividend payout ratio is 50%. This means the company is paying out half of its earnings as dividends.
This Question Belongs to Commerce >> Accounting
Dividend payout ratio= dividend per share divided by earning per share into 100
DPS÷EPS×100=2/4×100=50%
Formula of finding Dividend payout ratio is:
= Dividend Per Share (DPS) / Earning Per Share * 100
= 2 / 4 * 100
= 0.5 * 100
= 50 %
So, the answer D is right.