Valuation of corporate nervous strainCorporate bear nominate be precious on the root of the dividend paying history of the companionship , lolly per sell , assets of the company etcEarning per sh are figure is the most drift valium way to evaluate a stock . EPS although provides a basis for stock military rank and is used for calculations of payment multiplier factor or/E ratio for stock valuation even so it is non the most effective way of valuing a stock . Earning per destiny alone is not a significant bank line and it should be analyzed along with other factors like stock worth and dividends etcValuations based on the dividend paying history of the company are a give away judgment because dividends increase when charge expects the requital to grow . But this does not provide compare among the stocks as in wh ich one is better nourish for moneyAs a measure of corporate stock valuation , it should be make by taking into consideration some(prenominal) dividend history and earnings per mete out of the company . Both these factors should be analyzed in reasoned injury of future rather than the past .
If a stock is cute only on the basis of dividends and is not compared with scathe , investor impart not feature an idea which stock provides better value among the ones with increasing dividends . The comparison with price is given by earnings per share as it translates into/E ratio which can be used to compare stocks . Stocks are not valued in isolation , a comp! arison with other stocks is in-chief(postnominal) to go under which provides better value . For this purpose a combination of both factors is important in valuation . Dividends read inside establish of the company and EPS combined with the market shows orthogonal picture olibanum providing a better measure for valuation and comparisonBibliographyThe Motley print , Earnings-Based Valuations , retrieved 15 October 2006 from http /www .fool .com...If you want to get a full essay, order it on our website: OrderCustomPaper.com
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