Question

How do we calculate dividend when there is eps retention ratio
and dps retention ratio?

Answer 1

To calculate the dividend when there is an EPS retention ratio and a DPS retention ratio, multiply the EPS by the EPS retention ratio. Then, multiply the DPS by the DPS retention ratio. Finally, subtract the dividends paid from the retained earnings to get the dividend.

Step-by-step explanation:

To calculate the dividend when there is an earnings per share (EPS) retention ratio and a dividends per share (DPS) retention ratio, you need to follow these steps:

1. Calculate the retained earnings by multiplying the EPS by the EPS retention ratio
2. Calculate the dividends paid by multiplying the DPS by the DPS retention ratio
3. Subtract the dividends paid from the retained earnings to get the dividend

Here's an example:

Let's say the EPS is $2, the EPS retention ratio is 0.7, the DPS is $1, and the DPS retention ratio is 0.5.

Step 1: Retained earnings = EPS x EPS retention ratio = $2 x 0.7 = $1.40

Step 2: Dividends paid = DPS x DPS retention ratio = $1 x 0.5 = $0.50

Step 3: Dividend = Retained earnings - Dividends paid = $1.40 - $0.50 = $0.90