As you probably know, a share of stock means a share in the company’s revenue, earnings, cash flow and equity. For the individual investor, a share of ownership entitles you to a share of all dividends. Even if the company’s stock does not currently have a dividend yield, there always remains the possibility that at some point in the future there could be.

Buying stock essentially means you’re acquiring a piece of the company.  Before deciding how much to spend on its stock, you’ll want to know how much money that company makes.

The most common way of evaluating the worth of a stock is to look at the company’s profits against the stock price (more…)