Question

Computronix Ltd. has provided you with the following details. You are required to compute 

(i) Net Profit Ratio 

(ii) Return On Assets 

(iii) Return on Equity 

(iv) Dividend Payout Ratio

Net Sales	Rs. 12.5 crores
EBIT	Rs. 5.6 crores
Net Income available to equity shareholders	Rs. 3.2 crores
Equity Dividends	Rs. 1.2 crores
Total Assets	Rs. 52.5 crores
Equity (2 crore shares outstanding)	Rs. 21 crores

Answer 1

(i) Net Profit Ratio = Net Profit / Net Sales 

= [(3.2 crores – 1.2 crores) / 12.5 crores] x 100 

= 16%

(ii) Return on Assets = Net Income available to equity shareholders / Total Assets 

= 3.2 crores / 52.5 crores 

= 0.06095 or 6.095%

(iii) Return on Equity = Net Income available to equity shareholders / Equity 

= 3.2 crores / 21 crores 

= 0.1524 or 15.24%

(iv) Dividend Payout Ratio = Equity Dividends / Net Income available to equity shareholders 

= 1.2 crores / 3.2 crores 

= 37.50%