What is spread?

Generally speaking, spread refers to the difference between the lowest ask price and the highest bid price.  If the lowest ask price for a share of ABC stock is £25, and the highest bid price is £24.75, then the spread for ABC stock is £0.25.  In reference to brokerages and their spread, they increase the different between the buy and sell and keep the difference as a payment.

 

What are dividends?

Dividends are normally given out from companies as a cash payment. They are normally paid out via a companies profit, though not all companies do. Some companies pay the dividends out through selling assets of the company or taking out extra debt, this normally results in a dividend cut or paying no dividend at all.

 

Payout ratio

The payout ratio correlates to the dividend payment. The percentage of the payout ratio is how much of the profits is being paid out, any more than 100% means the company is doing one of 3 things. 1. they are using debt to pay for dividends 2. They are selling assets to cover their dividend or 3. they have made a new acquisition of another company, reducing their income and increasing their debt which can swing the payout ratio to over 100%.

 

Ex dividend date

The ex dividend date of a dividend paying company is the date which you need to hold the stock before to receive the dividend. You are able to sell the stock the day after the ex dividend date and still recieve the payment.

 

Price to earning ratio (P/E ratio)

The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). The price-to-earnings ratio is also known as the price multiple or the earnings multiple.

 

Earning per share (EPS)

Earnings per share (EPS) is calculated as a company's profit divided by the outstanding shares of its common stock. The resulting number is used as a indicator of a company's profitability. The higher a company's EPS, the more profitable it is thought to be.

 

BETA

Beta is a measure of a stock's volatility in relation to the overall market. By definition, the market, such as the S&P 500 Index, has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market.

 

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