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Earnings yield |
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Earnings yieldThe ratio of earnings per share, after allowing for tax and interest payments on fixed interest debt, to the current share price. The inverse of the price-earnings ratio. It is the total twelve months, earnings divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is shown in percentage terms. We often look at earnings yield because this avoids the problem of zero earnings in the denominator of the price-earning ratio.Earnings yieldThe earnings of a company are its annual profits after deduction of tax, dividends to preference shareholders and bondholders. They are usually expressed on a per-share basis (e.g. 7p), and the earnings per share (EPS) figure is calculated by dividing total earnings by the average number of shares in issue for the relevant accounting period.e.g. earnings or £2m, with 10m shares in issue would give an EPS of 20pThe earnings yield is the EPS as a percentage of the current market price of the share. So if the EPS was 7p and the current market price is 116p, the earnings yield7 / 116 x 100 = 6.03%Earnings yield is not used as commonly as its reciprocal measure, the P/E ratio. On the same figures, the P/E would be:116 / 7 = 16.6Similar MatchesNormalized earningsNormalized earningsEarnings that have been adjusted in order to take into account the effect of cycles in the economy. Taxable earningsTaxable earningsThe amount of an individual's annual income on which tax is payable defined as:Taxable earnings = Income - Reliefs - AllowancesThe main reliefs are pension contributions and donations to charity. The main allowances are the 'personal allowance' which every individual has (£4,615 for people under 65 in 2003-2004) and the Married Couples Allowance for couples where one spouse is 65 or over.So someone with Income of £20,000 who has made pension contributions in the year of £1,000 will have Total Income of £19,000, and his Taxable Income will be £19,000 less a personal allowance of £4,615 = £14,385.The amount of tax he has to pay will be determined by the tax bands in operation in the year in question. For 2003-2004, the bands are:£1-£1,960: tax rate is 10% (starting rate) - tax on band is £196£1,961-£30,500: tax rate is 22% (basic rate) - tax on band is £6,278.58Over £30,500: tax rate is 40% (higher rate) Earnings factorEarnings factorThis is a theoretical earnings figure that is used for working out state pensions or guaranteed minimum pensions. Fully diluted earnings per sharesFully diluted earnings per sharesEarnings per share expressed as if all outstanding convertible securities and warrants have been exercised. EarningsEarningsThe annual profits of a company after deduction of tax, dividends to preference shareholders and bondholders. Earnings are usually expressed on a per-share basis (e.g. 7p), and the earnings per share (EPS) figure is calculated by dividing total earnings by the average number of shares in issue for the relevant accounting period.E.g. earnings of £2m, with 10m shares in issue would give an EPS of 20pYou may see earnings used in several ways:Reported earnings: the figure in the company's accountsUnderlying earnings: the figure derived from reported earnings by excluding any one-off items (e.g. profit from the sale of land which is not part of the company's normal business)Diluted earnings: earnings after adjustment has been made for shares that may be issued in the future if holders of options, warrants and convertibles choose to exercise their rights. Further Suggestionsretained earningsAccounting earnings adjusted earnings net relevant earnings Earnings before interest and, taxes (EBIT) Retained earnings Earnings Earnings band earnings State Earnings Related Pension Scheme lower earnings limit earnings per share Quality of earnings Earnings retention ratio earnings cap Earnings before interest after taxes (EBIAT) price earnings growth factor normalised earnings price earnings ratio (P/E ratio) Earnings momentum Primary earnings per (common) share Earnings before interest, taxes, and depreciation (EBITD) Pretax earnings or profits Earnings response coefficient Earnings price ratio |
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