Earning Ratio
Table of Contents
Related to Investments
The profitability of the firm is also measured in relation to investments. The term investment may refer to total assets capital employed or the owner’s equity. the efficiency of an enterprise is judged by the amount of profit.
Return on Shareholder’s point of view
In this ratio, the profitability from the shareholder’s point of view can be calculated.
Return on shareholder’s investment = Net profit / Shareholder’s Funds*100
Return on Equity capital
Return on Equity Capital = Net profit – Pre-dividend / Equity Share Capital.
Earnings Per Share(EPS)
Earning Per Share = Net profit – Preference dividend / No. of Equity Shares.
Dividend Yield Ratio
Dividend yield Ratio = Dividend per share / Market Value per share
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