Book Value per Share (net assets) Represents what the shareholder owns of the company, after netting total liabilities from total assets. It includes both tangible and intangible assets. It is measured by dividing shareholders equity by the number of shares outstanding, as of the year end balance date. Dividend Yield The average of the actual dividend over the last 12 months, and the consensus projected dividend for the next 12 months, all divided by the current price. The dividend yield calculation excludes special dividends. Dividend Yield (after tax) Calculated by including the effect of imputation credits from franked dividends or, in the case of property trust dividends, by including the effect of tax-free and tax-deferred dividends. For the purposes of the calculation, it is assumed the shareholder is on the top marginal tax rate of 48.5 percent. Shareholders on a lower tax rate will have a higher after-tax dividend yield. Payout Ratio The percentage of net profit paid out as dividends. It is calculated by dividing the total dividend payout during the year by net profit before abnormals. Payout ratio is important for a couple of reasons. First, it gives an indication of the sustainability of a company's dividend. A very high payout ratio means the company does not have a large buffer in annual earnings and may need to cut dividends if earnings fall over time. Second, the payout ratio provides a clue to the growth orientation of the company. A low payout ratio means that the company is reinvesting a larger proportion of earnings in future growth. If the investments are successful it should lead to higher future earnings. If it does not, then the company will be destroying future shareholder wealth. Price Earnings Growth Ratio (PEG) Ratio of the stock's P/E to its prospective earnings per share growth rate. In general, the P/E should equal the long-term growth rate in percent. A ratio of one is considered to represent fair value and a ratio greater than one indicates a more "expensive" stock. This ratio is a useful high level check to see whether the P/E is justified. PEG can be a little simplistic in some cases as it does not factor in interest rates or risk factors. Lower interest rates, for example, would justify a higher P/E ratio but would not necessarily change the growth prospects for a company. This could lead to a PEG ratio greater than one but leave the company still reasonably valued. Price/Earnings (P/E) Ratio The current price divided by the average of the last actual earnings per share figure and the projected EPS figure for the next year. The two figures are weighted based on the elapsed time between each period. Use both forecast and historical EPS to give a more balanced P/E ratio than using either one alone. Return on Equity An evaluation of profit earned in relation to equity resources invested (the viewpoint of equity holders). It is calculated by dividing net profit before abnormals by shareholders equity. By comparing return on capital to return on equity, investors can determine whether a company's financial leverage has benefited shareholders. If return on equity is higher than return on capital, it indicates the companys debt has provided a positive return to shareholders. If the opposite is true, it indicates the company's current leverage is reducing returns to shareholders.