Financial Ratios – Dividend Policy Ratios

These ratios give an insight into the dividend policy of a company.

Dividend Yield   =  Dividend per share / market value of the share

This ratio doesn’t show the future growth.

Payout ratio = Dividend per Share / Earnings per share

Price Earnings ratio (P/E ratio):

This ratio comes under valuation ratios as this is useful in assessing the value of a share.

Price earnings ratio = Market value of a share / Earnings per share

This is a very important factor people consider while investing in share market. It gives a picture of historical performance, risk characteristics, liquidity and shareholder orientation.

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May 31, 2009 | Filed Under Fundamental Analysis 

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