FT Guide to Using and Interpreting Company Accounts, 4th Edition

12

The investors’ perspective

Introduction

You already know why people invest in shares – they want to make money! No one would invest in a company unless they thought they were going to make money, and preferably more money than they can get from a building society. There are two ways to make money from shares – either the price rises and you have a capital gain on your investment that you realise when you sell the shares, or you receive dividends. Some shares attract investors looking for growth (capital gain), and others attract those looking for income (dividend payments). You’ll find this reflected in some of the ratios that analyse the company’s performance from the investors’ point of view.

Investors are interested in:

• The return ...