A share (equity or stock) is a financial instrument which turns the shareholder in an ownership of the company. That means that the shareholder has an stake in the company’s assets and the right to vote in the annual general meeting.

The assets of a company are everything of value owned by a company. Eventhough the company must deduct, from the assets, the liabilities, which contains the ways the assets are financed.

The nominal share value is used as a reference to show the asset value of the company and if it is profitable. The issued share capital is the total is the total of the nominal share value of a company.
Nevertheless, it exist a non-voting share which has the same caracteristics as the normal shares but they don’t let the shareholder take part in the decisions of the company. This kind of share was created to avoid the founding family to control the company. Nowadays this shares are trade at a lower price and they are changing into voting shares.

The dividend of a company is the protion of its profits given to the shareholders. The rest of the profits remain in the company to ensure its growth.
The cover of the dividend is the earnings of the company divided by the dividend of the shares.

The P/E (price to earning) ratio indicates in how many years the price per share will be covered by the earnings per share.
However the shares are not sold every year because it is supposed that the dividend of the shares will increase every year. Although they can be sold at any time at the market price.

The yield is an important measure for the company. It is expressed as a net percentage of the current share price.
In every country, the yield is lower than the interest which means that investing in local securities will be safer and more advantageous than a risky investment. However a risky investment is usually more profitable than a safe investment.

Mark = 5

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License