The Meaning & Importance of Return to Investors
- A financial return is the money made or lost on an investment over a period of time
- Shareholders - and potential shareholders - look for financial returns on investments in the form of
- Increased share price
- Increased dividends
- A series of ratios can be used to determine whether an initial or ongoing investment in a company is worthwhile
- Poor investment performance can cause shareholder discontent, which may lead to changes to the board of directors at the AGM
- Poor investment performance can cause shareholder discontent, which may lead to changes to the board of directors at the AGM
The main Investment Ratios
Dividend Yield |
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Price/Earnings Ratio |
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- Financial advisors and the media are also interested in these ratios, as they can be used to report on business performance