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FINANCIAL TERMINOLOGY

*BADLA………..carry forward trading


*BID…………….the highest price at which someone is willing to
buy a security.
*BLUE-CHIP……it refers to the stocks of well known companies
who have a stable business and their stocks are actively traded in
the markets
*BOOK-VALUE…..the value at which an asset is recorded in a
balance sheet.
BUY—BACK…when a company re-purchases it’s stock or bonds
from the market.
FORWARD TRADING…..it refers to a trading process whereby a
contract is made between the buyer and seller to purchase/sell
stock or securities a t a future date but with a rate decided as per
the contract.
IPO…….it refers to initial public offer..this is the first offer for
equity shares made by a company..before making an ipo the shares
are held by a few selected members of the company itself.
MARKET CAPITALISATION…..it is the total no . of equity
shares listed by a company multiplied by the market value of it’s
shares in the respective stock exchange.
NET WORTH……the value of total assets-total liabilities.
SCRIP……..another name for stock
B1 GROUP-------it consists of big co shares of high volumes
B2 group…consists of low valued and stocks which are rarely
traded.

Few formulae
Current Assets
. Current Ratio
Current Liabilities
Quick Assets
2. Liquid Ratio
Quick Liabilities

3. Absolute Liquid Absolute Liquid Assets


Ratio Liquid Liabilities

4. Proprietary Proprietor's Funds


Ratio Fixed Assets + Current Assets

Funds entitled to fixed rate of interest or dividend


5. Capital Gearing
Funds not so entitled to fixed rate of interest or
Ratio
dividend

6. Stock - Working Stock


Capital Ratio Working Capital

Long Term Debts


Shareholders' Funds
7. Debt Equity
OR
Ratio
Long Term Debts
Shareholders' Funds + Long Term Debts

Revenue
Statement Ratio Gross Profit x 100
8. Gross Profit Net Sales
Ratio

Expenses Ratios
Cost of Goods Sold x 100
9.a Cost of Goods
Net Sales
Sold Ratio

b. Operating Total Operating Expenses x 100


Expenses Ratio Net Sales

c. Group of Relevent Group of Expenses x 100


Expenses Ratio Net Sales

d. Individual Individual Expenses x 100


Expenses Ratio Net Sales

10. Operating Cost Cost of Goods Sold + Operating Expenses x 100


Ratio Net Sales

11. Net Profit Ratio Operating Net Profit x 100


Net Sales
OR
Net Profit (Before Tax) x 100
Net Sales

12. Stock Turnover Cost of Good Sold


Ratio Average Stock

Combined Ratios
13. Return on
Net Profit Before Tax + Interest x 100
Capital
Capital Employed
Employed or
Investment

14. Return on
Net Profit Before Interest & Tax x 100
Total
Fixed Assets + Current Assets
Resources

15. Return on
Net Profit (After Tax) x 100
Proprietors'
Proprietors' Funds
Funds

16. Return on Net Profit (After Tax) - Preference Dividend x 100


Equity Capital Equity Share Capital

17. Earning Per Net Profit (After Tax) - Preference Dividend


Share No. of Equity Shares

18. Dividend Equity Dividend Paid x 100


Payout Ratio Net Profit (After Tax) - Preference Dividend

19. Price Earning Market Price of Share


Ratio Earning Per Share

20. Interest Net Profit Before Tax + Interest


Coverage Ratio Fixed Interest

21. Debtors' Net Credit Sales


Turnover Ratio Average Creditors + Average Bills Payable

22. Creditors' Net Credit Purchases


Turnover Ratio Average Debtors + Average Bills Receivable

23. Average Average Debtors + Average Bills Receivable x 12 /


Collection 52 / 365
Period Net Credit Sales

Average Creditors + Average Bills Payable x 12 / 52 /


24. Average
365
Payment Period
Net Credit Purchases
25. Fixed Assets Sales
Turnover Ratio Fixed Assets

26. Fixed Assets to Fixed Assets


Turnover Ratio Sales

27. Dividend Yield Dividend Per Share x 100


Ratio Market Value Per Share