Growth Ratios

Question 1

Basic Earnings per
Share

Reflects the company’s earning power,
i.e., its ability to generate income from
normal operations.

Answer 1

Income Available to Common
Stockholders
/Average Common Shares
Outstanding

Question 2

Earnings Yield

Shows the relationship of earnings per
share to the market price per share.

Answer 2

Earnings per Share
/Market Price per Share

Question 3

Dividend Yield

Shows the relationship of common
dividends per share to the market price of such shares

Answer 3

Cash Dividends per Common Share
/Market Price per Common Share

Question 4

Dividend Payout
Ratio

Shows whether a firm pays out most of its
earnings in dividends or reinvest the
earnings internally.

Answer 4

Cash dividends per
Common Share
/Earnings per Share