Investor Ratios

Question 1

What is dividend yield?

Answer 1

Dividend per share/market price per share x100 ,
percentage
shows shareholders the percentage return on the value of their investment
Higher = better

Question 2

What is earnings per share?

Answer 2

Profit after tax/number of shares
£
Shows shareholders how much profit for the year after tax has been generated by each issue to share
Higher = better

Question 3

What is dividend cover?

Answer 3

Profit after tax/ordinary shared dividends paid
Times
Shows how many times the company could’ve paid out the dividends
Above one is better, but too high could put off in investors as they would want more dividends

Question 4

What is interest cover?

Answer 4

Profit from operations/interest
Times
Shows how many times the company could have paid any interest due
Higher = better

Question 5

What is price earnings?

Answer 5

Market price/earnings per share
Times
Shows how many times over the earnings per share investors are paying for each share
High figure suggests a lot of investor confidence in the company