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Dear Mike,
As per notes,
1 – Dividend yield ratio = Div. per share ÷ Mid Mrkt price.
What exactly is a mid mrkt price? Is it a stock price?2 – Is debt/ equity as well as debt/(equity+debt) a gearing ratio?
2 – yes
1 – When you ask a broker for the price of a share – with the intention of buying or selling that share – the broker will quote you 2 prices
The lower price is the amount per share that you could receive if you were selling whereas the higher price is the amount you would have to pay if you were buying
Between those two market prices we find a mid-market price
OK?
Hello once again,
Interest cover = PBIT / Interest payable.
When you say interest payable, you mean the interest liability or the accrued interest expenditure for the year?If we have long term loan = 220, cash 20, equity fund = 16048
=> Debt / Equity = (220-20)/16048, right?
Why do we have to net of cash from long term debts?‘Why do we have to net of cash from long term debts?’
– because if we wanted to, we could immediately pay off 20 from that 220
‘When you say interest payable, you mean the interest liability or the accrued interest expenditure for the year?’
– it’s the interest expense for the year that we divide into PBIT
What do the following ratios indicate, i.e. what is the intention of calculating them?
Divided yield.
Dividend cover.
P/E.
Earnings yield.Surely these are explained in the course notes
I know that John Moffat’s F3 lectures cover these ratios (that’s why I don’t feel any guilt for not recording them for F7!)
Check out the F3 lecture and then come back to me if you need to
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