EPS:

- Is the portion of a company's profit allocated to each outstanding share of common stock.
- Earnings per share serves as an indicator of a company's profitability.
- It is generally considered to be the single most important variable in determining a share's price
- It breaks down a firm's profits on a per share basis
- Even if company’s earnings increased, it doesn’t mean EPS increased, depending on if the
company increased the # of shares outstanding.

EPS = (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares

P/E ratio:

- The P/E ratio measures the market price of a company’s stock relative to its corporate earnings,
which can then be compared with other companies.
- Rule of thumb, a high P/E suggests that the stock price is relatively high compared to earnings
and might point to it being overvalued. Likewise, a low P/E can signal the market is
undervaluing these shares. Investors, analysts and corporate managers alike all look to the P/E
ratio as an important indicator on how a company is doing relative to others in its industry or to
the market more broadly, as well to how it has performed in the past.

P/E = Company's share price/ EPS

Beta:

Measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the

market as a whole.

Working Capital

Cirrent Asset – Current liaibilities

Current ratio

Current Asset/Current laiibilities

<1 not good should boost up inventory, borrow more money,

<>1.5-3 good
>3 too much ie : too much cash in bank, toomich stocks in inventory. Assets are not working
enough to shareholders
Dividend on preferred stock

1. Find the percentage dividend stated in the prospectus of the preferred stock. Normally the annual dividend
amount is stated as a percentage of the par value (original asking price) of the stock. If you don’t have the
prospectus available, you can usually find the information posted on the company’s investor relations website.
Alternatively, your broker can provide the information.

2. Convert the dividend percentage into dollars. Multiply the par value for the preferred stock by the dividend
percentage. For example, if the dividend percentage is 7.5 percent and the stock was issued at $40 per share,
the annual dividend is $3 per share.

3. Obtain the current market price of the stock. Stock quotes are available from the stock exchange where the
preferred stock is traded, and on many financial websites that provide current stock quotes. You can also ask
your broker for a current price quote.

4. Calculate the dividend yield. Yield is the effective interest rate you receive if you buy shares of the preferred
stock, and is equal to the annual dividend divided by the current price. Suppose a preferred stock has an annual
dividend of $3 per share and is trading at $60 per share. The yield equals $3 divided by $60, or 0.05. Multiply
by 100 to convert to the percentage yield of 5 percent.