This text from “Investing in Stocks and Shares” by Dr. John White explains different aspects related to the performance of a company such as shares, assets, nominal value, dividend, P/E ratio and yield.
First, it explains that a share in a company gives the owner a share in its dividend, a stake in the company´s assets and property and also a vote in the annual general meeting.
An asset is the subtraction of the liabilities (in the form of borrowings or payments) minus the company`s stock of raw materials, cash and property.
The nominal value represents the asset value of the company. This means that a share can be sold at a different price form its nominal value. There is another type of share that is represented with the suffix “A”, the main characteristic of this kind of shares is that the investor doesn`t have the right to vote. This shares weren`t successful because they are traded at a lower price and they are becoming old-fashioned.
The dividend of a company is defined as the proportion of the profits that the company pays to its owners or shareholders. The part that is left is used to fund internal growth of the company. The cover of the dividend is the number of times that a company could have paid its net dividend.
The price to earnings ratio (P/E ratio) tells us the number of years of earnings per share at the actual share price needed to pay for the share.
The last term explained in the text is yield; which is expressed as a net percentage of the current share price. The yields are normally lower than the interest.

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