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Investor ratios

Most of the investor ratios that we might need to use are relatively simple both to use and to understand. We can contrast these ratios with others, such as stock and debtors' turnover; and the relationships between the ROCE and the profit margin and assets turnover ratios, at the top of the pyramid of ratios.

That's good news, then!

The basic five ratios we are interested in are:

• Earnings per share
• Dividends per share
• Dividend yield
• Dividend cover
• P/E ratio

As before, we'll take each ratio in turn and use the Carphone Warehouse and Vodafone accounts to apply them.

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