An example of a market value ratio is dividends per share. The dividends per share formula is dividends divided by shares outstanding. We get the total dividends distributed by the firm from the income statement. Let's calculate dividends per share for the year 2018. Dividends is equal to $2.5 million divided by shares outstanding of 10 million shares.
which is equal to $0.25 per share. The unit of measurement for dividends per share is dollars per share. This means that the company distributes dividends of $0.25 for every share outstanding.
Mature companies have a DPS which is higher, while growth companies have a lower or no DPS at all. Distributing dividends is a sign of a healthy cash flow. But at the same time, distributing dividends indicates a lack of potentially profitable investment opportunities.