Investor ratios

2. Earnings per share

This ratio is calculated by dividing the net profit/loss by the total number of outstanding shares of
the company. It shows the prevailing market price of the share along with the earning capacity of
the firm. Higher the EPS, higher are the dividends and bonus to the shareholders which increase the
market value of the firm.

EPS= 𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡(𝑙𝑜𝑠𝑠) ÷ 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 𝑠ℎ𝑎𝑟𝑒𝑠

RATIO CALCULATION
2017 2016 2015 2014
net profit/loss -6079 -5122 7477 -3818
ordinary shares
outstanding 270 253 273 253
=-6079/270 =-5122/253 =7477/273 =-3818/253
-22.5 -20.25 27.33 -15.08

The EPS of Vodafone is decreasing since the past three years which will portrait a negative image of
the firm. It may be because of decreasing market price and increase in expenses of the firm which
has reduced the net profits of the company.

Gearing ratio

2. Equity ratio

It is also known as proprietary ratio or net worth to assets ratio. It shows the relationship between
shareholders funds and total assets.

Equity ratio=𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦 ÷ 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

RATIO CALCULATION
2017 2016 2015 2014
total equity 73719 85136 93708 67,317
total assets 1,54,684 1,69,107 1,69,579 1,33,713
=73719/154684 =85136/169107 =93708/169579 =67317/133713
0.47657806 0.50344456 0.55259201 0.503444

This ratio shows the amount of capital introduced in the business by the owner. Higher the ratio, it is
better for the organization since more owned funds are used rather than depending on outside
funds, thus less pressure and interference on the organization. Vodafone needs to introduce more
equity and reduce the usage of outside funds since the ratio is less than 50% in the current year and
has decreased as compared to the previous years