Ratios + Budgets Flashcards
What is Dividend Yield ?
Dividend Yield is the percentage return on the market value of the share.
Represents to the shareholder the immediate return on his/her investment
What is the Dividend Yield ratio ?
Ordinary Dividend per share
—————————- X
Market Value
What does Dividend Yield tell you?
Dividend Yield gives the investor a truer return on their investment.
What is Dividend Cover ?
Dividend cover measures the amount of profit available to pay ordinary dividends to the actual cost of the dividend
What does Dividend Cover tell you?
A low Dividend Cover could indicate that the business may have difficulty in maintaining the present ordinary dividend level in the future…
A high Dividend Cover could indicate that the company is in a good position to produce better returns in the future
High dividend cover could also indicate that much of the profit achieved has been reinvested in the company for future expansion
What is the Dividend Cover ratio ?
Dividends on Ordinary Shares
What is Earnings per share ?
Earnings per share shows how much of the current years profit is attributable to each ordinary share.
Often referred to as the most critical of the investment ratio and is possibly a batter invocatory than either dividend Yield or cover
Needs to be treated with caution!
What is the earnings per share ratio ?
Number of Ordinary Shares
What is Price/earnings ratio ?
The Price Earnings ratio shows how the Market price of a charge compares with its earnings.
The market price of a share is determined by the demand for it in the stock market in relation to its supply.
What does it mean if a company has a higher Dividend Yield than another company ?
Indicating that one company have performed better than the competitor and that the client would review better return on their investments
What is the Price/earnings Ratio ?
Earnings per share
What does it mean if a company has a higher Dividend Cover than another company ?
The Company with the higher Dividend cover shows that they retain more of its profits in the business in reserve, which may benefit the investor with increased share prices.
What does it mean if a company has a higher Price/earnings ratio than another company ?
.
What is a Sales Budget ?
A sales budget can be used to compare actual results with the budget to identify areas for improvement
E.g. Checking sales staff performance
What is the layout for a sales budget ?
Opening Inventory(units)
Add: Production (Units)
Less: Closing Stock(Units)
= Sales(Units)
