Meeting Shareholder Expectations: Key Factors to Consider

Discuss how you would ensure that the five key share holder expectation
continue to be met or how you will ensure that you address any
shortcomings?
Key Expectations :
Credit Rating
Image rating
earning per share
Stock Price
Return on equity
Solution:
Credit rating defines the company ability to pay back its debt and financial due obligations and the
likeliness of default is very low. In order to keep a good credit rating of the company the company
should ensure that it has stable debt equity ratio i.e. 2:1 ratio, cash flow of the company should also be
stable. Interest coverage ratio stable, company should have the capacity to meet its working capital
requirement on a daily basis, cash conversion cycle should be low, company should have the new
exploration and innovation technique for the future growth and prospects of the company.
Image rating means how you define the company image in front of outsiders. The company image is
defined through its past histories, advertising, facts, mission and vision of the company that play
together to form a positive public image in front of public and strong bonding with the outsiders.
An entity image can be improved by keeping in mind all the above factors depicted above for long term
sustenance of image in front of public.
EPS which stands for Earning per Share which tells the shareholders about the company profit making
capability in relation to per share outstanding. It is also an indicator of dividend that is distributed to
shareholders and the strong EPS is a positive sign of growth and the company can only distribute EPS if it
has a strong earning potential. Generally before investing in a company investors go with the company
who has strong EPS.
For a company to maintain a strong EPS it must ensure that the company does not carry a very high
debt and the company EPS can also be distorted if there are mergers and acquisitions and the main
thing to be considered is that the entity must have a strong cash flows. (Limitations of Earning Per
Share)These relevant points will ensure that the investors expectation is meet regarding EPS of the
company.