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Ah, the investor. EPS, P/E, Dividend Yield,and Dividend Payout are very popular measures and most financial...

Ah, the investor. EPS, P/E, Dividend Yield,and Dividend Payout are very popular measures and most financial websites will prominently display them if you look up a stock on their site. Discuss the importance of these ratios to the individual investor.

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Answer #1

Formulas,

EPS = Net income available after Tax - Preference Dividend / Number of Common Shares Outstanding

P/E Ratio = Market price per Share / Earning Per shares

Dividend Yield = Cash Dividend per share / Market Value per shares

Dividend Payout = Total Dividends / Net Income

Importance of these ratio to individual investors is as below,

EPS : This ratio will help to understand the investors to what is Earning per shares of the company it means against one shares outstanding what is the net income is coming

P/E RAtio : This ratio will help to understand what is the ratio of earning per share against the market price per shares

Dividend Yield : This ratio will show the actual earning , because this ratio will calculate the earning against market price of the shares.

Dividend Payout : This ratio will shows the paying pecentage of dividend against the net income.  

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