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hi mike
in exam paper June 2015 Q2 answer in the section other issues can you explain that area a little better please I would really appreciate itHi mike, I am seeking assistance
For Investor’s ratio
dividend yield dividend per share
______________________ x100
current market value of sharedividend cover earnings per share
______________________ x 100
dividend per shareprice earnings current market value of the share
__________________________
earning per shareearnings yield earnings per share
_________________________ x100
current market value of the shareOn a cash flow question .how would this be calculated
don’t understand the calculation that welldividend yield
dividend per share x 100
______________________
current market value of shareYou should be told the dividend per share or the total dividend and you know the number of shares in issue … so you can calculate the dividend per share
The question has to have given you the current market value per share
Therefore you can calculate dividend yield
dividend cover
earnings per share
______________________ x 100
dividend per shareYou should be able to calculate “profits available for equity shareholders” (profit after tax)
Divide that by the number of equity shares in issue and there’s your earnings per share
You know dividend per share from the previous calculation
Therefore you can calculate dividend cover
price earnings
current market value of the share
__________________________
earning per shareYou’re told the current market value and you’ve just calculated earnings per share
Therefore you can calculate the P/E ratio
earnings yield
earnings per share
_________________________ x100
current market value of the shareThis is the obverse of the P/E ratio
You’ve calculated the earnings per share and you’re given the current market value per share
Therefore …
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