Shareholder ratios

Question 1

What is dividend per share ?

Answer 1

Shows how much money a shareholder receives per share

Higher amount = the better the investment

Question 2

What is the formula for dividend per share ?

Answer 2

Total dividend paid / N.O of shares issued = X pence

Question 3

How can higher dividend per share figures be attained ?

Answer 3

Making bigger profits
Giving greater proportion of profit as dividends
Buying back shares

Question 4

What is dividend yield ?

Answer 4

Shows the rate of return on the investment

Question 5

What is the formula for dividend yield ?

Answer 5

Dividends per share / Market price per share X 100

Question 6

How can higher results of dividend yield be attained ?

Answer 6

Lowering market price of the share
Distributing greater proportion of profit as dividends

Question 7

What is Earnings per share ?

Answer 7

Ratios shows what each share earned in a financial year

It is unlikely a shareholder will see this as some profit will be retained for reinvestment

Question 8

What is the formula for earnings per share ?

Answer 8

Profit for the year / Shares issued = X

Question 9

What is the formula for Price earnings ratio ?

Answer 9

Market price of share / Earnings per share

Question 10

What is the importance of dividends to shareholders ?

Answer 10

Important for those who want to boost annual income ( pensioners )

Wanting a higher pay out each year leads to a pressure on short term profit , could sacrifice long term gain