Glossary of Terms
EPS (Earnings Per Share)
Widely used as a measure of a company's performance and is important in;
1. Comparing the results of a company over time
2. Comparing the performance of on company's equity shares against another.
The EPS put simply is the earnings of the company divided by the number of equity share in the company. The figure to be taken should be the one that complies with FRS 3 (Financial Reporting Standard) in the accounts, as other versions may appear, but may not be necessarily comparable with other companies.
Equity Shares
These are the 'normal ' shares that the Pony Club would trade in. They entitle us to receive a dividend from the company if funds should be available after paying holders of preference shares.
Market Capitalisation
This is the total value of the company listed on the market. It is arrived at, by multiplying the total number of shares in issue by the share price.
Return on Capital Employed (ROCE)
States the profit as a % of the capital employed (value of the company's net assets or the Capital employed figure from the balance sheet - they should be the same!)
Dividend Cover
This shows the proportion of profit of the year available for distribution as dividend. DC of 1 = 100% distribution, 2 = 50% etc….
Gearing
The proportion of debt to equity in the business (Debt is not a bad thing here, although any more than 50% should probably be seen as a warning sign depending on the company/industry)
Retained Profit
The amount of overall profit which the company will keep i.e. after paying out dividends for re-investment.