Answer to Question #165244 in Finance for Muhammad Muizz Shaikh

Question

 Angro Foods had Rs. 450,000 of retained earnings on December 31st 2020.The company paid common dividend of Rs. 25,000 in 2020 and the had retained earning balance on December 31st 2019 of Rs. 400,000. Calculate Net income, EPS and Dividend per share for 2020. Outstanding common shares are 20,000 shares. 

Answer 1

Answer

Step 1-Definition

1.Net Income for year= Closing retained earning(December 31st 2020)+dividend paid in 2020-Opening retained earnings(December 31st 2019).

2. EPS= $Net income \over No of shares outstanding$

3. Dividend per share= $Total dividend paid \over total outstanding shares$

Step 2

(1) Net Income= 4,50,000+25000-4,00,000= Rs. 75,000

(2) EPS= Rs. $75000 \over 20000$= Rs. 3.75

(3) Dividend per share = Rs. $25,000 \over 20000$ = Rs. 1.25