Q:
Study the table below to answer these questions.
Rate of Interest, Dividend Payout Ratio and the Retained Earnings of Five Companies
Profit earned is either paid out as dividend or ploughed back in business as retained earnings. Interest is paid on borrowings.
1. By how much do the borrowings of Company B exceed that of Company A ?
1. Rs. 1,210,000 2. Rs.1,320,000 3. Rs.1,000,000 4. Rs.1,100,000
2. By how much does the dividend paid by Company D exceed the dividend paid by Company B ?
1. Rs.23 lakh 2. Rs.32 lakh 3. Rs.320 lakh 4. Rs.230 lakh
3. The profit of E is more/less than that of C by _____ %
1. 33.3% less 2. 33.3% more 3. 25% less 4. 25% more
4. What is the sum of profits made by Companies A and B ?
1. Rs.500 lakh 2. Rs.600 lakh 3. Rs.700 lakh 4. Rs.800 lakh
5. What is the sum of the borrowings of all five companies ?
1. Rs.146 lakh 2. Rs.14.6 lakh 3. Rs.14.6 crore 4. None of these
Answer
1. Answer : 4
Explanation : Let the borrowing of Company A = x
Interest of Company A = 234000
Rate of Interest = 18%
Let the borrowing of Company B = y
Interest of Company B = 576000
Rate of interest = 24%
Required difference = y - x = 2400000 - 1300000 = Rs. 1100000
2. Answer : 2
Explanation :
Let the profit of Comapny B = 100%
Dividend Payout ratio(%) of B = 19.60
Remaining percent i.e retained earning = 100 - 19.60 = 80.4%
According to question, 80.4% = Rs.402 lakh
100% = Rs.500 lakh
Therefore, Total dividend paid by Company B = 500 - 402 = Rs. 98 lakh
Let the profit of company D = 100%
Dividend payout ratio (%) of D = 32.50
Remaining percent i.e retained earning = 100 - 32.50 = 67.5%
According to question, 67.5% = Rs. 270 lakh
100% = Rs. 400 lakh
Therefore, Total dividend paid by company D = 400 - 270 = Rs. 130 lakh
Required difference = 130 - 98 = Rs. 32 lakh
3. Answer : 3
Explanation :
Let the profit of Company C = 100%
Dividend payout ratio of C = 8.75%
Remaining percent i.e, retained earning = 100 - 8.75 = 91.25
According to question, 91.25% = Rs. 365 lakh
100% = Rs. 400 lakh
Therefore, Profit of C = Rs. 400 lakh
Let the profit of company E = 100%
Dividend payout ratio of E = 28%
Remaining percent i.e retained earning = 100 - 28 = 72%
According to question, 72% = Rs.216 lakh
100% = Rs.300 lakh
Therefore, Profit of E = Rs. 300 lakh
Required percentage = = 25% less
4. Answer : 3
Explanation :
Profit made by company A = Rs. 200 lakh
Profit made by company B = Rs. 500 lakh
Required Sum = 200 + 500 = Rs. 700 lakh
5. Answer : 4
Explanation :
Required Sum = 1300000 + 2400000 + 810000 + 1600000 + 1200000 = 7310000 = Rs. 73.1 lakh
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