Monday, 26 July 2010

Financial Ratios and Their Uses


Earnings per share (EPS) and dividends per share (DPS) indicate stock returns on investment.

Dividend yield measures a shareholder’s cash return relative to investment.

Growth ratios such as the internal and sustainable growth rates indicate the company’s ability to grow given earnings and dividend expectations.

Market value ratios, most commonly price to earnings and price to book, indicate a stock’s market popularity and its effects on its price.

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