Shares8888

The text is an extract taken from an article of the book written by Dr John White, named 'Investing on Stock & Shares' where are explained some necesary concepts in the world of enterprises.

Shares are part of the ownership of a company. A person who buys a portion of a company's capital becomes a shareholder in that company's assets and as such receives a share of the company's profits in the form of an annual dividend. It also gives a vote at the company’s AGM according to the size of the investor’s holding.

The assets are composed by cash-in-hand, property and work-in-hand, less its liabilities in the form borrowings or payments to creditors. Most shares have a nominal value; and this is the value granted to the owner at the time of emission (usually 25p) which at first represented the asset value of the company.

The dividend is the fraction of the benefits paid to it's owners, the shareholders. In many times the enterprises don’t distribute all the benefits: only a part of them.

The company´s profits are known as its earnings. When the earnings are divided by the number of shares in existence, we get the “earnings per share”.

The P/E Ratio indicates how many years of earnings will be necessaries for cover the price of the share with the actual prices.

The last concept is the yield, that usually is expressed by a percentage that reveals the enterprises´s activity level.Yields in general are lower than the interest.

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