51
Cash Flows per share
Operating Cash Flows- Preferred Dividend
Common Shares Outstanding
Table 2.28: Formula of Cash flow per share
From: Invetopedia (n.d)
Unfortunately, cash flows per share do have limitations. According to White
et al
(2003, p.151)
the
limitations
include things such as the activity is fully
depended on the accounting method, the result is vary from year to year, and
last
but
not
least
the cash
required
for
debt
payments
and
maintenance
of
productive capacity are not reflected.
f)
Capital Expenditure Ratio
According
to
Mills
and
Yamamura
(1998,
p.58)
capital
expenditure
ratio is
used to measure the company’s ability to maintain and acquire its plant and
equipment as well as paying the company’s debt. On the other hand, a ratio
of
1
indicates
that
a
company
is
having
the
ability
to
pay
off
its
debt
and
fulfill
its capital expenditure (Mills and Yamamura 1998, p.58). The
higher
the ratio shows that the company is having more funds to make a new
investment
and
pay
off
its
debt.
The
following
formula
can
be
used to
calculate the capital expenditure ratio
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