### Investment Ratio Analysis & Example

List of investment ratios and formulas:

1) Dividend cover = Profit after tax / dividends
2) Dividend yield = ( Dividend per share/ Market price per share ) * 100 %
3) Earnings per share (EPS) = Profit available to equity shareholders / Number of equity shares
4) Price earnings ratio (P/E) = Market price per share / Earnings per share
5) Price to sales ratio = Market price per share / Sales per share
6) Price earnings growth (PEG) ratio = Price per earnings / Annual EPS growth
7) Price to book value (PBV) = Market price per share / Balance sheet price per share
8) Payout Ratio = Dividend per share / EPS

Examples:

1) Camry Ltd made a net profit of \$80,000 that is available to ordinary shareholders, and the dividend declared is \$20,000, then:
Dividend cover =  80,000 / 20,000 = 4 times

2) An investor bought a share at \$6.00 and he received a dividend of \$0.30 on it, then:
Dividend yield = (0.30 / 6.00) * 100 % =  5 %

3) Company ABC has an annual earning of \$140,000 dollars. Total dividends of \$70,000 are to be paid out, and the company has 350,000 outstanding shares.
Solution:
Earnings per share (EPS) = \$140,000 / 350,000 = \$0.40
Dividend per share = 70,000 / 350,000 = \$0.20
The dividend payout ratio = 0.20 / 0.40 = 50%

4) Sports Ltd has ordinary share capital of 200,000 shares at \$1 each. It made a net profit of \$400,000 that is available to the ordinary shareholders. The market price of a share is \$6.00.
Then:
EPS = \$400,000 / 200,000 = \$2 per share
P/E ratio = \$6 / \$2 = 3

* Next: Liquidity Ratio Analysis & Example