RETURN ON SHARHOLDERS FUNDS

abhishreshthaa

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Significance:

1. The ratio is of practical significance for the prospective investors. If the ratio is higher they feel confident and encouraged to invest in the company.


2. The effect of high ratio will be seen in the market price of the share and such share will be frequently traded in the share market.


3. It is possible for the company to raise finance from the external sources if the ratio is satisfactory.


4. Shareholders can expect the company to capitalize its reserves and bonus shares when the ratio has been high for reasonable period
 
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