(a) Describe the procedure for calculation of DPS from sales
revenue .
(b) List of different models of dividend Policy.
(a) Describe the procedure for calculation of DPS from sales revenue .
Find sales revenue
Subtract cost of goods sold
subtract other expenses
Add other income
Subtract Depreciaition
Subtract Interest
Calculate taxes
Subtract taxes
you will get net income
find company's typical dividend payout ratio
Find number of shares outstanding
divide net income/number of shares
you will get earnings per share or eps
multiply eps by dividend payout ratio
you will get DPS
(b) List of different models of dividend Policy
1. Modigliani-Miller (M-M) Hypothesis
2. Walter’s Model
3. Gordon’s Model
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