In the text we come upon to, an extract of the book Investing in stocks and shares the author starts formulating a question (“What are shares?”) to indicate the lector what the text is going to account for. First of all, he explains the importance of shares and what they can guarantee to a company’s investor: asset’s ownership and vote in the annual general meeting, according to the investor’s participation within the company. Later on, the author carries out with a division in five paragraphs linked up with shares. Firstly are the assets of a company, which represents the cash-in-hand, property and stock of row materials less liabilities to creditors. Secondly, the author explains the nominal value of each share, which usually represents the assets value of the company. We can also highlight some unpopular non-voting shares that enjoy most of the benefits of other shares which are designed by the suffix “A”.
Thirdly, the author explains the meaning of a dividend, which refers to the proportion of profits that goes to the company owners. The remaining profits are intended to afford the internal growth of a company. On the other hand, the number of times that a company could have its net dividends paid is the cover of the dividend.
Fourthly, we can see the P/E Ratio that indicates us the number of years necessary of earnings per share at the actual share price that is necessary to pay for a share. Moreover, the author shows us an example where we can observe that in Great Universal the P/E Ratio is 13.7 years.
Finally, another tool to measure a company’s performance is the yield, which is expressed as a net percentage. It is usually lower than the interest.
Mark = 5