Explain Miscellaneous Group Ratios.
Under this group following ratios are calculated.
- Capital Gearing Ratio measures the fixed income bearing securities which consists of preference share capital, debentures and long term loans to equity capital. A company is said to be highly geared if the fixed income bearing securities are more than the equity capital in the capital structure. On the other hand, company is said to be less geared if the equity capital is high than the fixed income securities.
Formula to calculate Capital Gearing Ratio = Fixed income bearing securities/ Equity capital
- Earning Per Share (EPS) measures the profits available to the equity shareholders on a per share basis. It is calculated on the current profits. It indicates increasing trend of current profits per share.
Formula to calculate EPS = (Net profit after taxes - Preference dividend) / Number of equity shares outstanding
- Price Earning Ratio (P/E Ratio) measures the expectation of the investors. It basically indicated the price actually being paid in market for each rupee of Earning per Share (EPS). This ratio is important from investor’s point of view because if the P/E Ratio is high it will indicate the possibility of increase in EPS.
Formula for calculation P/E Ratio = Market price per share / Earning per share
- Dividend Payment Ratio (D/P Ratio) measures the relationship between earnings of the shareholders per share and the amount of dividend paid on per share to the shareholder. It indicates the management policy to pay dividend in cash.
Formula for calculation D/P Ratio = (Dividend Per Share/ Earning Per Share) X 100< /STRONG > < BR>