Investor Ratio Analysis

Investor symmetrys There are sundry(a) symmetrys that are designed to help investors who hold allocates in a caller-out to assess the descends on their coronation. These are Dividend per dispense The dividend per percent ratio relates the dividends pertaining to an explanation check to the substance of shares in issue during the period. The ratio is given as follows Dividend per share = Dividends pertaining to a period Number of shares in issue The ratio provides an indication of the cash return a shareholder receives from holding shares in a company.Although it is a multipurpose measure, it must be remembered that the dividend received ordain usually only represent a partial measure of the return to an investor. Dividends are usually only a portion of the kale generated by the firm and available to shareholders. A business may decide to handle back some of its hire back into the business in identify to achieve future growth. These ploughed back benefit belong to the shareholders and should in principle ontogeny the value of the shares. Thus w h e n assessing the total return to an investor we must look at both(prenominal) the dividends received and any movement in the share hurt.The dividend per share for Alexis Ltd is given as follows scalawag 1 of 5 Dividends per share can transform considerably between companies. A number of factors will influence the amount that a company is willing or able to issue in the form of dividends to shareholders. These factors include The profit available for distribution to investors The future disbursement commitments of the company The expectations of shareholders concerning the level of dividend payment The cash available for dividend distributionComparing the dividends per share between companies is not always useful as there may be differences between the nominal value of the shares issued. It may be more useful to monitor the trend in dividends per share over a period of time. Dividend Yield Ratio This ratio relates the cash return from a share to its current merchandise value and is given as follows Dividend Yield Ratio = Dividend per Share Market Value of a Share * 100 1 The ratio for Alexis pic is given as follows Page 2 of 5 In essence this ratio measures the real rate of return on a share.Investors can compare the returns from a companys shares to the returns that could be earned by investing either in another company or by investing in another form of investment. Dividend Cover Dividend cover (for normal shares) looks at how many time a firms profits (after lodge in, lax and taste dividends) cover the normal dividends. Dividend Cover = Profit after interest, tax and Pref Share Dividends Ordinary Share Dividends For Alexis plc this ratio is calculated as follows Interpretation Alexis plc profits covers ordinary dividends 3. 96times.Dividend cover is calculated using the profit after interest and tax figure because banks, government and preference shareholders hand a invidious claim on the profits of the firm. This ratio is of particular interest to ordinary shareholders. meshwork per share The earnings per share relates the earnings generated by the company during a period and available to shareholders to the number or snares in issue. For ordinary shareholders the amount available will be give notice profit after interest, tax and preference dividends because banks, the government and preference shareholders have a preferential claim on the profits of the firm.Page 3 of 5 Earnings per share = Earnings available to ordinary shareholders Number of ordinary- shares in issue For Alexis plc this ratio is calculated as follows The EPS is regarded by many investment analysts as a fundamental measure of share performance. Tracking the EPS over time can help assess the investment potential of the companys shares. supervise must be taken when comparing EPS from different firms as uppercase structures differ from one firm to the next. Price Earnings (P/E) R a t i o The price earnings ratio relates the market value of a share to the earnings per share.It is calculated a s follows P/E Ratio = Market value per share Earnings per Share The P/E Ratio for Alexis is calculated as follows Page 4 of 5 The ratio reveals that the capital value of the share is 9. 4 times mellowed gearer than its current level of earnings. The ratio is essence is a measure of market confidence in the future of the company. A high P/E ratio means that relative to profits the price of the share is quite high. Why would this be the case? The higher the P/E ratio the greater the confidence in the future earning military force of the company i. e. lthough current earnings are low investors expect them to increase in the future and thus investors are prepared to pay a high price for the share in relation to the current earnings of the share. A low P/E ratio means that the share price is quite low compared to earnings this implies a pessimistic att end of the future. Nobody will be willing to pay a high price for a share in a company that has bland trading prospects. Because the P/E ratio gives a guide as to market confidence in a share it can therefore be helpful when comparing different companies although P/E ratios per firmament will vary. Page 5 of 5