Investor Glossary
AGM
Annual General Meeting. The annual meeting for shareholders at which routine matters, such as the election of directors and the laying of reports and accounts are put to the vote of shareholders.
Assets
Fixed assets include land, machinery, equipment and buildings; current assets consist of cash, money owed, stock, investments and work in progress; intangible assets are goodwill, trade marks, patents, etc; liquid assets are funds kept in cash or in a form that can be quickly and easily turned into cash.
Bear
A person who expects prices of shares and/or stock markets to fall.
Bear market
A period of falling share prices; a pessimistic state of affairs.
Bid Price
The price at which market makers will bid for stock, ie the price at which investors sell their shares to the market maker.
Blue chip
A stock considered reliable with regard to dividend income and capital value.
Bond
A certificate of debt issued to raise funds. Bonds typically pay a fixed rate of interest and are repayable at a fixed date.
Brokers forecast
Estimates of future company performance issued by stockbrokers and bank analysts.
Bull
A person who expects the price of shares, and/or stock markets, to rise.
Bull market
A period of rising share prices; an optimistic state of affairs.
CAGR
Compound Annual Growth Rate, being the rate of growth over a period, expressed as a single annual average figure
Closed-end investment funds
Investment funds with a fixed share capital. As opposed to open-ended funds which expand or contract according to investor demand.
Close period
The period prior to the company’s release of its half yearly or Preliminary results, during which the directors are not permitted to trade in the shares of the company. Normally two months, or, if shorter, the period from the relevant financial period end up to and including the time of such publication.
Cum dividend
Purchase of a share cum dividend means that the buyer of a share is entitled to the next dividend payment. Opposite of ex-dividend
Current assets
Assets of a company which can be realised in cash, sold or consumed within one year. Typically the sum of cash, cash equivalents, receivables, stocks, prepaid expenses and other current assets.
Current liabilities
Liabilities of a company that the company expects to satisfy within one year. Typically accounts payable, short term debt, notes payable, taxes payable, dividends payable and other current liabilities.
Debt/equity ratio
A ratio which describes the leverage or gearing of the company and is calculated as total debt divided by shareholders’ equity expressed as a percentage.
Depreciation
The reduction in the balance sheet value of a company asset to reflect its loss of value through usage in the business.
Dividend cover
The number of times a company could pay its most recent dividend out of its net profit (profit after tax).
Dividend re-investment plan
If offered by the company, shareholders can sign a mandate to the effect that all future dividends be used to purchase additional shares in the company on the stock market and added to their existing holding.
Dividends
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.
Earnings per share (EPS)
Earnings divided by the number of ordinary shares outstanding.
EGM
Extraordinary General Meeting. A meeting of shareholders which may be called to approve special events such as a take-over, or a major acquisition.
Ex dividend (XD)
Purchase of a share Ex dividend means that the buyer of a share is not entitled to the next dividend payment. Opposite of cum.
Ex-Dividend Date
The key date to remember for dividend paying stocks is the ex-dividend date. The Record Date, or Date of Record determines the Ex-dividend date, when you must own the stock.
Financial year
A 12-month accounting period over which a company reports its profits. Financial year of the Group ending 31st March and Starts from 1st April
Flotation
The process of listing a company’s shares on a stock exchange.
Gearing
Used to describe the relationship between debt and equity and is calculated by dividing the company debt by the shareholders’ equity. A highly geared company is one that carries a lot of debt.
Half yearly results
Unaudited first half figures that provide an indication of the company’s trading and profit performance since the last full year accounting period.
Institutional investor
Institutional investors are organizations which pool large sums of money and invest those sums in companies. They include banks, insurance companies, retirement or pension funds, hedge funds and mutual funds etc.
Intangible assets
An identifiable non-monetary asset without physical substance i.e. patents, goodwill, leaseholds, equities, trademarks and copyrights.
Interim Dividend
A dividend paid out by the company when the directors have received the interim (half year) financial results. The final dividend is paid when the final profits are shown in the final accounts.
Joint venture
A form of business organization composed of two or more persons to conduct a single enterprise for profit.
Liabilities
The debts of a company and other financial obligations; or can say opposite of assets.
Liquidity
The proportion of cash or cash equivalents in a company’s assets. Sometimes used as a measure of the near term financial health of a company. Also a measure of the volume of shares being traded, which may affect the ability of buyers or sellers to build/unwind large holdings without a substantial impact on the price.
Long term debt
All interest-bearing financial obligations which mature in more than a year.
Margins
Profit margin is profit as a percentage of revenue (or turnover). Normally calculated before tax.
Market capitalisation
Value at current market prices of a company’s equity capital. It is calculated by multiplying the current share price by the number of shares outstanding.
Market Price
The price at which a share can currently be traded in the Stock market.
Mid Price
The mid point between the bid and offer price quote in the market.
Net income
Income (profit) shown after all operating and non-operating income and expenses, after taxes but before ordinary dividends.
Nominal return
Return that takes no account of the effects of inflation.
Offer Price
The price at which market makers offer shares, ie the price at which investors buy shares from the market maker.
Operating profit
The difference between revenue (or turnover) and the costs incurred during operations (total operating expenses).
Option
The right (but not the obligation) to buy or sell securities at a given price (exercise or strike price) before a given date (expiry date).
P/E Ratio
The price of a stock divided by its earnings per share. P/E is generally used as a barometer for how the market thinks the company will perform in the future; a higher P/E generally indicates favorable expectations for earnings growth.
Profit
The surplus of revenue generated over expenses incurred for a particular accounting period. Operating profit refers to the profit generated before interest and tax have been taken into account.
Return on assets
Ratio which measures the return a company generates from its total assets.
Rights issue
Issue of new share to the existing shareholders at a price which is normally lower than the current market price of the old shares. It is issued in a fixed ratio to the those shares which are already held.
Securities
A financial instrument issued by a company and traded on a stock exchange.
Securities and Exchange Board of India (SEBI)
The Regulatory body for the securities and futures markets in the india. Formed in 1988 SEBI is having headquarter in the popular business district of Bandra-Kurla complex in Mumbai
Short term debt
The portion of debt that is payable within one year. Falls under current liabilities on the company balance sheet.
Spread
Usually the difference between the Bid and Offer prices.
Stock split
A stock split or stock divide increases or decreases the number of shares in a public company. The price is adjusted such that the market capitalization of the company remains the same after the split, so that dilution does not occur.
Tangible assets
Assets owned by a firm that have an actual physical presence. Tangible fixed assets represents cash, accounts receivable, inventory, property, plant and equipment, etc after the deduction of depreciation.
Yield
The dividend yield or the dividend-price ratio on a company stock is the company’s annual dividend payments divided by its market cap, or the dividend per share, divided by the price per share. It is often expressed as a percentage.
Current Dividend Yield = Most Recent Full Year Dividend/Current Share Price
Comments (2)
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