Flashcards in Equity Ratios For Investors - income Deck (6)
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1
Q
EPS
A
Profit available to ordinary shareholders / no. of ordinary shares
Measure what you could have had NOT what the dividend actually was
2
Q
Dividend yield
A
net div per share / current share price x 100
Not very useful as dividend is notional
3
Q
Dividend cover
A
EPS / Div per share
Higher the number the better
<1 = raised reserves
= 1 paid out all profits
> 1 = could have afforded to pay more divs
Good to look at pattern of doc cover - one bad year in isolation or year on year?
4
Q
Pay out ratio
A
Inverse of div cover = amount of earnings which have been paid out
Div per share / EPS
5
Q
What are shareholder funds? (2)
A
Total assets - total liabilities
6
Q
What is meant by quality of earnings?
A
- accurately represents trading performance of the business
- not manipulates by accounting policies
- strong cashflow
- performance repeatable
