Glossary - General
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
Alternative Investment Market (AIM) - A junior market compared with the main London Stock Exchange with less onerous listing requirements so it tends to attract smaller companies that have been trading for a short period of time.
Acquisitions - Purchase of a business or a business line from another entity.
AGM - See General Meetings.
back to top
Balance Sheet - The balance sheet provides a quantitative summary of a company's financial position at a given point in time. This takes into account assets, liabilities and net worth with the first part of the balance sheet showing all the productive assets a company owns, and the second part showing all the financial methods.
Bid Price - The price at which a market maker will buy a security.
Broker Recommendation - A stockbroker's opinion of the investment quality of a company's shares at the time that it's reviewed in comparison to other stocks in the sector.
Bulletin Board - A place on a website where private investors can post comments and questions.
back to top
Called up Share Capital - Nominal value of shares of the company that are issued and fully paid.
Capital Employed - Fixed assets plus current assets minus current assets. Capital employed is the value of the assets that contribute to a company's ability to generate revenue.
Cash Flow - This provides a measure of the company's financial health. This equals cash receipts minus cash payments over a given period of time.
Cash Flow Statement - Gives a summary of a company's cash flow over a given period of time.
Closing Price - The last closing mid price quoted for the company.
Corporation Tax - A tax paid by limited companies on their profits.
Creditors - People to whom the company owes something, usually cash or a claim to services.
back to top
Debtors - People who owe the company something, usually cash or a claim to services.
Director Dealings - When directors buy or sell shares in their company.
Disposals - Sale of a business or business line to another entity.
Dividends - A payment made to shareholders by companies out of profits.
Dividend Cover - A company's ability to pay ordinary dividends to shareholders out of profits earned and is calculated by dividing the adjusted Earnings Per Share (EPS) by the total dividend per share.
Dividend Payment Date - The date on which the most recent dividend will be paid to shareholders.
Dividend Per Share Growth - The percentage change from the previous year in the dividend paid on each share.
Dividend Yield
Dividend Yield is the percentage of a company's share price that it pays out as dividends over the course of a year. The Dividend Yield is calculated as
(Total Dividend/ Share Price)*100
Dividend Yield is displayed as a percentage.
back to top
Earnings Per Share - A company's profitability expressed on a per share basis and calculated by dividing the company's annual earnings after tax by the number of shares in issue.
EGM - See General Meetings.
EPS Growth
EPS Growth shows the relative growth of a company's earnings over the last year. A negative value indicates the company's earnings fell in the last year. It is calculated as:
[(Current year EPS - Last year EPS)/Last year EPS]*100.
EPS Growth is displayed as a percentage.
Exchange traded Fund (ETF)- ETFs are a kind of collective investment fund competing with investment trusts and unit trusts for investor's money. ETFs are a lot like conventional tracker funds, pooling the cash of a large number of investors and investing it a basket of shares in companies that make up an index. ETFs are open ended but they do not usually have initial charges and their annual management charges are much lower.
Ex-Dividend Date - The date at which a new shareholder is no longer entitled to the most recent dividend payment.
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.
General Meetings - A meeting of the shareholders of a company usually held on an annual basis - commonly known as an AGM - at which business such as the reception of the directors' report and accounts, declaration of dividends, election of directors is held.
If something happens within the company that requires the shareholders to meet before the next scheduled AGM, then an extraordinary general meeting is held, commonly known as an EGM.
Gross Gearing - Calculated by dividing gross borrowings by shareholder funds.
back to top
High/Low price - The highest and lowest prices for a security over a certain period - most usually quoted for the day (intraday high/low) and for the year (52 week high/low).
back to top
Index - An index is a statistical indicator representing the value of the securities that constitute it. Indices are often used to measure a market or industry's performance. An index may be grouped by market cap (e.g. FTSE 100), business type (e.g. the technology companies in the FTSE Techmark index), sector (e.g. Telecoms) or some other parameter.
Intangible Assets - A company's long-term assets that are usually non-physical in nature, but represent a right or expected future benefit. Examples are goodwill, brands and trademarks.
Interest - Monies charged by a bank or other financial organisation for borrowing money. This can also refer to the return earned on an investment, including money on deposit at a bank.
Interim Dividend - A dividend which is declared and distributed before the company's annual earnings have been calculated. These dividends are usually distributed six-monthly or quarterly.
Interim Results ("Interims") - The results reported by a company for the first six months of its financial year. Generally, interim results are made public within three months of the end of the interim period.
Introduction - When a company comes to the market without making any money on admission.
IPO - Initial Public Offering, the term used for any company joining the stock market. It is a way for companies to raise cash and increase and diversify the current shareholder base.
Investment Trusts - a collective fund in the form of a listed company holding a portfolio of securities on behalf of its own shareholders. An investment trust and its shares are tradable in the same way as other companies and shares.
ISIN - International Securities Identification Number. A unique international 12 digit code which identifies a security issue.
back to top
Market Capitalisation - The market value of a company, calculated by multiplying the current share price by the number of shares in issue.
Minority Interest - Represent the share of the assets of the business in subsidiaries that are not wholly owned.
back to top
Net Assets - The total figure for all assets less all liabilities.
Net Asset Value - The value of the shareholders interest in a company, calculated by subtracting liabilities from assets.
Net Asset Value (Funds) - The price of each share of a mutual fund. It is calculated by subtracting the fund's liabilities from its total assets, and dividing that figure by the number of shares outstanding. The NAV is the amount of money that an investor would receive for each share if the mutual fund sold all of its assets, paid off all of its outstanding debts, and distributed the proceeds to shareholders.
Net Gearing - Net Gearing is a general measure of indebtedness. This ratio is calculated as:
[ (Total Liabilities- Cash at Bank & in Hand)/Shareholder Funds ] *100
Net Gearing is displayed as a percentage.
New Issue - See IPO.
Next Year Dividend Yield - Estimated figure for the annual dividend per share that the company will pay out next year. This is a consensus figure calculated from a range of analysts that produce investment research on the stock.
Next Year EPS Estimate - Estimated figure for next year's Earnings Per Share figure. This is a consensus figure calculated from a range of analysts that produce investment research on the stock.
Next Year Forecast P/E Ratio - Estimated figure for next years Price to Earnings ratio. This is a consensus figure calculated based on the EPS figure expected from a range of analysts that produce investment research on this stock.
back to top
OFEX - A British share trading and information service that enables investors to buy and sell shares in companies whose shares are not traded on the London Stock Exchange
Offer Price - The price at which a market maker will sell a security.
Official List - The UK Listing Authority's list of all listed securities.
Operating Margin - This is the trading margin for each period reported, showing trading profit as a percentage of sales, or total trading revenues.
The calculation is as follows:
Trading profit/total sales x 100 = margin (%)
Operating Profit/Loss - A company's profit after deducting operating costs from gross profits.
back to top
P/E Ratio - The PE Ratio or Price to Earnings is used as a measure of how highly a company is valued, sometimes referred to as it's "rating". The P/E ratio also gives an indication of how quickly the company is expected to grow - a high PE indicates that a company is expected to see EPS grow quickly in the future. For example, technology stocks tend to have much higher P/E ratios than utilities. This means that P/E ratios are only a useful comparison for similar stocks, for example stocks in the same sector.
The P/E is calculated as share price/EPS.
Digital Look uses the adjusted EPS figure for this calculation.
PEG Ratio - A stock's P/E ratio divided by its yearly growth rate. In general, the lower the PEG, the better the value, because the investor would be paying less for each unit of earnings growth. PEG or Price to Earnings Growth ratio is used by some investors to find undervalued stocks.
The PEG is calculated as P/E Ratio/EPS Growth and is expressed as a number.
Placing - A form of issue of securities in the UK, typically with a predetermined number of non-retail investors.
Portfolio - A collection of securities owned by an investor.
Post-Tax Profit - A company's profit after tax has been deducted.
Preference Shares - Fixed dividend shares that rank above ordinary shares if a company is wound up. Preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders.
Preliminary Results - Listed companies have to announce the annual financial results for the company, also know as prelims or finals. They are considered preliminary until they are reviewed, adjusted and approved by audit. They also have to announce interim results and some companies also announce quarterly figures.
Pre-Tax Profit - A company's operating profit before tax is deducted.
Pre-Tax Profit per share - A company's profit after expenses but before tax divided by the number of shares in issue.
Profit and Loss account - The profit and loss account provides a record of a firm's trading activities and whether it has made a profit or lost money over a particular period of time. It differs from the balance sheet that records the financial position of the business at a particular snapshot moment in time.
Profit Warning - When a listed company expects profits to fall below analysts' forecasts by more then 10%, the directors are required to issue a profits warning through the London Stock Exchange.
Public Offer -The making available of a new securities issue to the public through an underwriting also called offering. The public can ask for a prospectus and apply to buy shares prior to the companies admission.
back to top
Reserves - In asset-based lending the difference between the value of the collateral and the amount lent. Also, funds set aside for emergencies or other future needs. Reserves can arise from the retention of profits or from events such as the issue of shares at a premium or the revaluation of assets.
Regulatory News Service - The means by which UK listed companies make announcements to the London Stock Exchange.
RiskGrade - Helps investors measure and compare the risk of financial investments to other companies at the same point in time. Visit http://www.riskgrades.com/retail/what_is/what_is.cgi to learn more about RiskGrades.
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 charging borrowing costs.
back to top
Sales Per Share - A ratio that shows the total revenue earned per share over a 12-month period. This ratio can be compared to the company's share price to understand the value that the markets are putting on a unit of the company's sales.
Sectors - Grouping of companies having similar products or services.
SEDOL - The Stock Exchange Daily Official List number, a code used by the London Stock Exchange to identify stocks, especially those that aren't actively traded in the U.S. and don't have a CUSIP number.
Shares - A unit of ownership that is a proportional amount of a company. The standard class of shares are usually referred to as "Ordinary Shares" but a company may have more than one class of share, including Preference Shares.
Share Premium Account - Surplus of proceeds from share issue over the nominal value of shares issued.
Shareholder Funds - The sum of all company assets less all liabilities.
Shares in Issue - This is the number of shares currently issued for that company
Spread - The difference between the Bid Price and the Offer Price of an investment.
Stock Exchange - A stock exchange is an organization of brokers and investment bankers which has the purpose of providing the facilities for trade of company stock and other financial instruments - usually a central location and recordkeeping. The trading of stock on stock exchanges is called the stock market.
Stocks - The combined value of raw materials, work in progress or under construction and finished goods held.
Note that this is also the American term for 'shares'.
back to top
Tangible Assets - Physical assets owned by a company or individual that can be seen or touched such as buildings, goods for sale or machinery.
Time and Sales - The official record of trades executed on a stock exchange during the day.
Ticker - The three- or four- letter trading symbol assigned to the share (and some types of fund - investment trusts and ETFs) by the exchange on which it trades. Investors often refer to shares by their ticker symbols because of their brevity and because they often remain the same even if a company's name changes.
Total Assets - The sum of all company assets; both fixed and current.
Trading Statement - A statement made by a company regarding current business activities and sales experience.
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.
back to top
Volume - The number of shares traded over a given time period, usually one day.
VWAP (Volume weighted average price) - A measure of the price at which the majority of a given day's trading in a given security took place. This is calculated by dividing the value of trades executed by the volume of shares traded over a given period.