Shares1000

The article talks about shares and other ways for measuring a company's results.

A share is one of a number of equal portions of the capital of a company, entitling the holder to a proportion of distributed dividends, which are declared once or twice a year. The investor who acquires a share, "buys" part of the company, so he can be defined as one of the owners, that's why his sare represents a stake in the company's assets and property and a vote at his annual general meeting (always proportional to the value of his shares). There is also a kind of share which doesn't include the option of vote, so they have a lower price than the others and are not generally demanded by major investors.
A company issues shares in order to obtain funding. At first, its nominal value is the price of th assets represented, but once they are in the market, it can vary depending moreover in the company's capacity to make money.
Normally a company doesn't consider all his profit as dividends, because it has to retain caertain part in order to invest it in its iternal growth and stock provision. The number of times that the profit exceed the dividends is called "the cover", for example, if it's three times, then it is said that the dividend it's covered three times.

There are also other ways of measurin the company's performance, these are the price to earning ratio and the yield.
First, the price to earning ratio considers how many years of profit will be needed to pay the shares (at market current price).
And finally, the yield, which is a percentage return pad on the share (current share price) related to the price you acquire it. The yield is different in each country, and it's usually lower than the interest given by safe investments (such as bonds). The reason why people are still shareholders is because taking risk can also give higher returns and because dividend payouts tend to grow while the interest given in safe investments don't.

Mark = 8

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License