Glossary - Fundamentals
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Associated Companies/Joint Ventures - These are companies where the investing company holds approximately 20% - 50% of the ordinary shares. The Profit and Loss Account will include a company's share of the profits of an associated company or joint venture whilst the Balance sheet will include its share of the net assets.
back to top
Beta - A measure of the volatility of a given company relative to the overall market. A beta greater than 1 is more volatile than the market, less than 1 is less volatile.
Borrowings Analysis - This is a breakdown of when a company's debt is due for repayment.
back to top
Capital Employed - Capital employed is the value of the assets that contribute to a company's ability to generate revenue. This is comprised of fixed assets plus current assets minus current liabilities (excluding short term borrowings) minus other long-term creditors minus intangible assets.
Capital Expenditure per share - Net additions to fixed assets (after depreciation) divided by the number of shares in issue.
Cash at Bank - Cash held by a company that is immediately available.
Cash & Near Cash - Cash held by a company that is immediately available plus cash held on short-term (under 3 months) deposit.
Cash Increase/Decrease Per Share - The net change in a company's cash balance over a given period divided by the number of shares in issue.
Cash on Short Term Deposit - Cash held by a company on a short-term (under 3 months) deposit
Current Investments - A company's investments that are not held on a long-term basis.
Current Ratio - Current assets divided by current liabilities
back to top
Depreciation - Measure of the wear and tear on a company's fixed assets.
back to top
Earnings Per Share - Basic - This is based on the actual profits and shares in issue.
Earnings Per Share - Diluted - This is based on the profits and the number of shares in issue if the company were to issue ordinary shares arising from the full conversion of any relevant stocks (eg. Convertible Loan Stock).
Earnings Per Share - Adjusted -This is the EPS provided by a company that excludes items from its profit and loss account that it considers to be exceptional and therefore distorting. This would allow a better comparison from year to year of a company's normal trading performance.
EBITDA - Earnings Before Interest Tax Depreciation and Amortisation. This can be used to compare companies and industries because it eliminates the effects of financing and accounting decisions.
EBITDA/EV - Earnings Before Interest Tax Depreciation and Amortisation divided by Enterprise Value.
Enterprise Value - This is a measure of a company's value and is often used as an alternative to market capitalisation. It is calculated as market capitalisation plus total borrowings minus cash and equivalents.
back to top
Forecasts - These are estimates of a company's future performance in terms of sales, earnings and dividends.
back to top
Gearing - Companies are financed by a combination of debt and shareholders equity. A gearing ratio will tell how much a company has borrowed in relation to the amount of shareholders funds in the business.
Gross Borrowings - The total borrowings of a company.
Gross Cash Flow - The operating cash flow of a company plus cash flows from investments, the servicing of finance and tax.
Growth Metrics - Indicators of a company's growth potential.
back to top
Interest Cover - The ability of a company to cover its finance charges. This is calculated by dividing the profit before interest payable by interest payable.
Invested Equity Capital - Equity shareholders' funds plus provisions.
back to top
Major Shareholders - Shareholders in a company owning more than 3% of the ordinary shares.
Minority Interest - Where a subsidiary is not wholly owned, this represents the share of the assets or the share of profits of subsidiaries that belong to someone else.
back to top
Net Asset Value - The value of the shareholders interest in a company, calculated by subtracting liabilities from assets, deducting intangible assets and dividing by the number of shares in issue.
Net Borrowings - Total borrowings excluding cash and near cash.
Net Cash Per Share - Cash and near cash plus short term listed investments divided by the number of shares in issue.
Net Interest - Interest payable net of interest received.
back to top
Operating Cash Flow Per Share - This is the cash generated from operating activities divided by the number of shares in issue.
Operating Profit/Loss - A company's profit after deducting operating costs from gross profits. It is the profit before net interest, investment income and share of associated companies/joint ventures profits.
back to top
Payment Date - The date when a dividend becomes payable.
Price to Tangible Book Value Ratio - A measure to compare a company's market value to its book value calculated by dividing the price by the net asset value.
Price to Cash Flow Ratio - This provides a measure of how the market views the future financial health of a company calculated by dividing the price by the gross cash flow per share.
Price to Research & Development Ratio - A measure of the relationship between a company's value and the amount spent on research and development.
Profit after Tax - A company's profit after tax has been deducted.
Profit and Loss Account - Normalised - This shows profits and key financial data excluding the effects of items that are considered to be exceptional.
Profit and Loss Account - Unadjusted - This shows profits and key financial data based on the figures as presented by the company.
Profit Before Tax - A company's operating profit before tax is deducted.
Provisions - Where a company provides for a future potential liability.
back to top
Quick Ratio - Current assets (excluding stocks) divided by current liabilities.
back to top
Record Date - The date established by a company to determine who should receive a dividend.
Return on Equity - Equity shareholders' earnings divided by the invested equity capital.
ROCE - (Return on capital employed). This is a measure of the return from invested and borrowed capital. The return is the pre-tax profit earned before net borrowing costs divided by net assets (excluding intangibles). Where detailed annual data is available the return is measured by dividing the profit before interest payable by net assets excluding intangibles but before deducting provisions and total borrowings.
back to top
Tangible Fixed Assets Analysis - A detailed breakdown of the movements in fixed assets, split between property and other fixed assets over the period.
Tax Rate - This is arrived at by dividing the total group tax (excluding associated companies/joint ventures) by the profit before tax (excluding associated companies/joint ventures).
Turnover - Also known as sales, the amount derived from the provision of goods and services falling within a company's normal activities after the deduction of trade discounts, VAT, etc. For banks this is represented by the total operating income, for insurance companies it is represented by gross premiums and for investment trusts it is represented by investment income in the Revenue Account.
back to top
Value Metrics - Indicators of a company's value.
back to top