Market ratio

Market ratio is a quotient that expresses the relationship between the market worth of company stock especially the public owned ones and the investors’ diverse reaction to the same. These ratios have got many uses by both the potential and current investors in an organization.

In the following categories we are going to discuss the formula, the users, interpretation of the quotients and how applicable they are on daily decision making by various stakeholders.

1) Earnings Per Share (EPS)
   (a) Types of Earnings Per Share (EPS)    
   (b) Steps of Computing Basic EPS    
   (c) Steps of Computing Weighted EPS    
   (d) Market Interpretation of EPS    
   (e) Importance of EPS    
   (f) Applicability of EPS in Investment Decision Making
   (g) Advantages of Earnings per Share (EPS)
   (h) Disadvantages of Earnings per Share (EPS)    
   (i) Factors Affecting Earnings per Share (EPS) of a Business    
2) Price Earnigs Ratio (P/E)
   (a) Computation of P/E Ratio    
   (b) Steps of Computing P/E Ratio    
   (c) Market Interpretation of P/E Ratio
   (d) Importance of P/E Ratio
   (e) Applicability of P/E in Investment Decision Making
   (f) Advantages of P/E Ratio
   (g) Disadvantages of P/E ratio
   (h) Factors Affecting P/E of a Business
3) Dividend Payout Ratio - DPR    
   (a) Computation of Dividend Payout Ratio (DPR)
   (b) Steps of determining DPR    
   (c) Importance of Dividend Payout Ratio
   (d) Advantages of Dividend Payout Ratio
4) Retention Ratio
   (a) Importance of Retention Ratio    
   (b) Advantages of Retention Ratio    
   (c) Disadvantages of Retention Ratio
   (d) Dividend Payout Ratio vs. Retention Ratio    
   (e) Difference between Dividend Payout Ratio and Retention Ratio    

5) Dividend Cover Ratio
   (a) Importance of Dividend Cover    
   (b) Advantages of Dividend Cover Ratio    
   (c) Disadvantages of Divided Cover Ratio    
   (d) Dividend Payout Ratio vs Dividend Cover
6) Dividend Yield Ratio
   (a) Steps of Computing Dividend Yield Ratio
   (b) Importance of Dividend Yield Ratio
   (c) Advantages of Dividend Yield Ratio
   (d) Disadvantages of Dividend Yield Ratio
   (e) Difference between Dividend Payout Ratio and Dividend Yield Ratio

7) Types of dividend policy and dividend payout ratio 

8) Market To Book Value Ratio 
   (a) Computation of Market to Book Value Ratio
   (b) Importance of Market to Book Value Ratio    
   (c) Advantages of Market to Book Value Ratio    
   (d) Disadvantages of Market to Book Value Ratio

About the Author - Dr Geoffrey Mbuva(PhD-Finance) is a lecturer of Finance and Accountancy at Kenyatta University, Kenya. He is an enthusiast of teaching and making accounting & research tutorials for his readers.