When an investor has a share in a company he/she gains a share in its dividend, a stake in the company’s assets and property, and vote in the company’s Annual General Meeting(AGM), it being proportional to the investor’s holding. The company’s shares can also be referred to as the equitaty or stock of the company.
The company’s assets are formed by its property, its cash-in-hand, its work-in-hand and stock in raw materials minus its liabilities (borrowings, payments and creditors).
The majority of shares have a nominal value which represented the asset value of the company. The company’s shares were initially sold at a market value representing both the value of the assets and their capability of making money. The nominal sum of all the issued shares gives us the issued share capital of the company. Certain company’s have non-voting shares usually labbelled with the suffix ‘A’. These shares benefit from other shares in the company and their holders have no vote. The initial reason for this was to ensure the control of the founding family over the company, the voting stock. However, major investors do not invest in these shares, they trade at a lower price than the voting shares which means they are becoming very unpopular and are being converted from non-voting to voting stock.
The proportion of the company’s profit paid to its owners is the dividend. The rest of the profit is generally kept for the company’s internal growth or kept as a safety net for the company. The number of times the company could have paid its dividend with this remaining profit is denoiminated as the ‘cover’ of the dividend.
We can find the ‘earnings per share’(eps) of a company by dividing its profit or earnings by the existent number of shares. The price to earnings ratio (P/E) will measure the number of year earnings per share needed to pay for the share ( at the current share price).
Companies hope their earnings and dividends rise annually. By doing so they reduce the repayment time of the share price and dividends become pure profit. However, the stock does not have to be always held, it can be sold at the ‘market price’.
The yield of a company is expressed after income tax, a net percentage, of the currant shared price. The yields in each countery are often lower than the interest. In general risk takers have the possibility of obtaining a higher return than ‘safe’ investments. Therefore the lower return shows the increase of dividend payouts, which generally does not take place with ‘safe’ investments.

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