n NISM Certifications
XV NISM Series XV
Medium

A company has an EBIT margin of 50% with EBIT of ₹6,00,000. Its net profit margin is 25%. There are 50,000 outstanding shares and the retention ratio is 50%. What is the dividend per share?

Practice question from NISM XV Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Rs. 1.50

  2. Rs. 3

    Correct answer

  3. C

    Rs. 4

  4. D

    Rs. 5

Why this is the answer

Sales = 6,00,000 ÷ 50% = ₹12,00,000. Net Profit = 25% of 12,00,000 = ₹3,00,000. EPS = 3,00,000 ÷ 50,000 = ₹6. Dividend payout ratio = 50%. Dividend per share = 50% of 6 = ₹3.

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