Investors' ratios Flashcards
Dividend per share =
Dividends paid / Number of issued shares
Dividend yield =
Dividend per share / market price per share x 100
What does dividend yield show?
It shows shareholders the percentage return on the value of their investment
Earnings per share =
Profit after tax in pence / Number of issued shares
What does earnings per share show?
It shows how much profit after tax has been generated by each issued share. It measures profitability.
Price earnings =
Current market price / Earnings per share
What does a higher price earnings figure indicate?
A high market price due to expected future returns or low earnings per share due to low profit after tax
Dividend cover =
Profit after interest and tax / Ordinary share dividends
paid
What does dividend cover measure?
It measures how easily the company can afford the dividends without using previous years’ retained earnings
Interest cover =
Profit before interest and tax / Interest payable
What does interest cover measure?
It measures how easily the company can afford the interest.
