Following information is related to Exe Ltd. for the year ended 31st March, 2026: Total dividend coverage ratio 2.863 times Dividend yield on the…

CA Intermediate · Financial Management and Strategic Management · PYQS · May 2026
Following information is related to Exe Ltd. for the year ended 31st March, 2026: Total dividend coverage ratio 2.863 times Dividend yield on the equity shares 4% Market price per equity share 40.00 Equity share capital of 10 each 12,00,000 Preference share capital of 10 each 3,00,000 Price-earnings ratio 8 times You are required to calculate: (i) Total dividend paid to equity shareholders (ii) Earnings per share (iii) Rate of preference dividend (iv) Total profit after tax

Suggested Answer and Working Notes:

Dividend per Equity Share (DPS) = 4% of 40.00 = 1.60 No. of Equity Shares = 12,00,000 /10 = 1,20,000 shares (i) Total Dividend Paid to Equity Shareholders 1,20,000 × 1.60 = 1,92,000 (ii) Calculation of Earnings Per Share (EPS) P/E ratio = MPS EPS 8 = 40 / EPS EPS = 5 (iii) Rate of Preference Dividend Profit Available to Equity Shareholders EPS × No. of Equity Shares = 5 × 1,20,000 = 6,00,000 Let preference dividend = P Then, PAT = 6,00,000 + P Total dividend =Equity Dividend+ Preference Dividend = 1,92,000 + P Dividend coverage ratio = 2.863 2.863 = (6,00,000+P) (1,92,000+P) 6,00,000+P = 2.863(1,92,000+P) 6,00,000+P = 5,49,696+2.863P 50,304 = 1.863P P = 27,000 Rate of Preference Dividend= 27,000/3,00,000 x 100=9% (iv) Total Profit after Tax PAT = 6,00,000 +27000 = 6,27,000

Topics: Part-A: Financial Management

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic