Management Aptitude Test 2014 Paper

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(Q. Nos. 136-140) Study the table below to answer these questions.
Rate of interest, dividend payout ratio and the retained earnings of five companies

Company	Interest (₹000)	Rate of Interest	Dividend payout Ratio
A	234	18	22.50
B	576	24	19.60
C	129.6	16	8.75
D	144	9	32.50
E	180	15	28.00

Profit earned is either paid out as dividend or ploughed back in business as retained earnings Interest is paid on borrowings

Question : 137 of 200

Marks: +1, -0

By how much does the dividend paid by company D exceed the dividend paid by company B ?

₹ 23 lakh
₹ 32 lakh
₹ 320 lakh
₹ 230 lakh

Validate

Solution:

(b ) For company B,
Divdend pay out ratio = 19.6%
∴ Retained earning ratio = 100- 19.6% = 80.4%
∴ Total profit of company B =

{402 × 100}/80.4

= ₹ 500 lakh
So, dividend paid = 19.6% of 500 lakh
=

{19.6 × 500}/500

= ₹ 98 lakh
For company D,
Dividend pay out ratio = 32.5%
∴ Retained earning ratio = 100- 32.5% = 67.5%
∴ Total profit of company D =

{270 × 100}/67.5

= ₹ 400 lakh
So, dividend paid = 32.5% of 400 lakh
=

{32.5 × 400}/100

= ₹ 130 lakh
∴Required difference = 130 - 98 = ₹ 32 lakh

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