Interpretations of market based ratio''s, Financial Management

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Market based Ratio's

 

PE:           The Price-to-Earnings ratio is calculated by market price per share to earnings per share and is expressed in terms of times. It shows how many times earning per share are covered by its market price. The analysis of this ratio is very important for financial forecasting. Higher number always stands for company's overall success.

 

P/BV:       The Price-to-Book Value ratio is calculated by market price per share to book value per share and is expressed in terms of times. It shows how many times earning per share are covered by its book value per share.

 

DY:          The Dividend Yield Ratio indicates the rate of dividend received by the shareholders not on the face value of shares but on the market price of the shares. This ratio is very much useful to the new investor of the company.

 

 


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