FREQUENTLY ASKED QUESTIONS (2)

Hi,Friends please see the details below.

(1)    P/E – Price Earning Ratio. The P/E ratio indicates the number of times the earning per share are covered by the price of the share.It is calculated as given below.
P/E  = price of each share / earning per share (EPS)

(2)    EPS- is another universally used investment indicator which tells one what each share earns. It is calculated by dividing the profits after tax ( PAT) of the company by the total number of equity shares issued by the company. In order to arrive at an accurate estimate of EPS, the amount paid out as dividends to preference share  holder is deducted from the profits after tax. It is calculated as follows.
EPS  = Profit after tax (PAT) _ preference share dividends/ No. Of shares issued by the company.

(3) ROCE  ( Return on Capital Employed ) tells what returns a business is generating on the capital it uses.

(4)    DER (Debt Equity Ratio) which divides a Company’s total loans by shareholder funds, indicates how indebted a company is.

(5)    DEBT FREE COMPANY – is the Company’s debt equity ratio is 0.00,  then that Company is debt free.

(6)    BONUS SHARE – A Bonus Share is the distribution of shares in addition to cash dividend to existing share holders.  Bonus shares are issued to existing share holders without any payment of cash.  The aim of a bonus share is to capitalize the free reserves.  The Bonus issue is made out of free reserves built from generic profit or share premium collected in cash only.  The bonus issue can be made only when all party paid shares are fully paid up.  The issue of Bonus shares enables shareholders to sell shares and get capital gain while retaining their original shares. (to be Contd.).

Thanking you,                                                                         See you later.