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Chapter 19

Financial ratios

Outcome

By the end of this session you should be able to:

 calculate return on capital employed (ROCE) with data provided

 explain the meaning and usefulness of a calculated ROCE figure

 calculate earnings per share (EPS) and price/earnings (PE) ratio with data
provided

 explain the meaning and usefulness of an EPS figure and a PE ratio

 calculate return on equity (ROE) with data provided

 explain the meaning and usefulness of a calculated ROE figure

 calculate dividend per share (DPS) with data provided

 explain the meaning and usefulness of a DPS figure

 calculate dividend yield with data provided

 explain the meaning and usefulness of a dividend yield figure

 calculate total shareholder return (TSR) (dividend yield plus capital growth) with
data provided

 explain the meaning and usefulness of a TSR figure

 select appropriate ratios to measure changes in shareholder wealth within a
scenario and discuss the relevance of the findings

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