Q7. List of stock market related ratios
What are the key financial ratios that use information from the stock market?
A7.
Stock market related ratios are calculated as follows:
(1) Price earnings (P/E) ratio
= Market price of common stock per share / Earnings per share
(2) Price to book ratio
= Market to book ratio
= Market price of common stock per share / Book value of common stock per share
(3) Dividend payout ratio
= Cash dividends declared on common stock / Net income
(4) Dividend yield
= Annual dividends per share of common stock / Market price of common stock per share
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