Research and Statistics Module assignment Essay

Research and Statistics Module assignment - Essay Example ve shareholders as to their decision to continue maintaining money in the stocks which they have already invested or for future investors, to invest in stocks of companies. The earnings per share will give the investor one of the major factors in stocks investment. Between two or more companies, the investor is advised to invest in the company with the higher, or even highest, earnings per share. For if we apply probability here, if the company has a very high earnings per share and the earnings per share thru the many years of operation is increasing or remains the same, income producing, for the many years of historical experience, then this company is a very wise investment alternative. Gearing.( www.bized.ac.uk/compfact/ratios/gearing1.htm) is generated by dividing long term liabilities (Stickney, C & Weil, R, Financial Accounting 8th ed. Page 10 Dryden Press, Florida 1997) by equity shareholders’ funds. We should also study Gearing because the definition of gearing mean the relationship between long term liabilities has and the capital investment employed. The gearing ratio gives us a tip on which investment to invest our money in. The ideal situation is that the capital investment balance should be more than the liabilities or loan balance. Liabilities refers to both short term (loans payable within one year after the end of the balance sheet[Spiceland, D & Sepe, J, Intermediate Accounting, Page 212, McGrawhill, 1998, USA] date) or long term liabilities ( loans payable for more than one year after the end of the balance sheet date.) The accounting equation ( this formula is the one presented in the balance sheet) is Total assets ( includes cash, receivables from customers, inventory, buildings, office equipment, factory equipment, land, other items that is owned by the corporation either bought thru cash or loan agreements) is equal to the sum of all liabilities ( already explaine d above) and total capital. Capital includes the investments