Which of the following ratios would be the most helpful to an investor who is investing in ordinary shares primarily for dividends rather than for appreciation in market price?
A) dividend yield.
B) current ratio.
C) rate of return on ordinary equity.
D) return on total assets.

Question

Quizplus · Accepted Answer

Dividend yield is the ratio that measures the annual dividend paid per share by the company to its stockholders relative to the current market price of the stock. This ratio is used to calculate the income earned for each dollar invested. Therefore, it is the most helpful ratio for an investor who is investing in ordinary shares primarily for dividends rather than for appreciation in market price.

Which of the Following Ratios Would Be the Most Helpful