Module 8 Stock Exchange Indicators

Question 1

Earnings per Share

Answer 1

Earnings per Share = Profits attributable to ordinary shareholders / No. Share in issue

Question 2

P/E Ratio

Answer 2

P/E = Market price per share / Earnings per share

P/E = Market capitalisation / Earnings attributable to ordinary shareholders

Question 3

Dividend Cover

Answer 3

Dividend cover = Profits attributed to ordinary shareholders / Dividends paid

• Low dividend cover comapny pays out large portion of profits in dividends
• High dividend cover company retains and reinvestes most profits

Question 4

Dividend Yield

Answer 4

Dividend Yield = Dividend per share / Share Price

• Shares with low dividend yield are expected to increase in value in future

Question 5

Flat yield (Intrest Yield)

Answer 5

Flat Yield = Coupon / Market price