A stern measure of a company's ability to pay its short term debts, in that stock is excluded from asset value. (liquid assets/current liabilities) Also referred to as the Quick Ratio.
Anything owned by the company having a monetary value; eg, 'fixed' assets like buildings, plant and machinery, vehicles (these are not assets if rentedand not owned) and potentially including intangibles like trade marks and brand names, and 'current' assets, such as stock, debtors and cash.
Measure of operational efficiency - shows how much revenue is produced per £ of assets available to the business. (sales revenue/total assets less current liabilities)
The Balance Sheet is one of the three essential measurement reports for the performance and health of a company along with the Profit and Loss Account and the Cashflow Statement. The Balance Sheet is a 'snapshot' in time of who owns what in the company, and what assets and debts represent the value of the company. (It can only ever nbe a snapshot because the picture is always changing.) The Balance Sheet is where to look for information about short-term and long-term debts, gearing (the ratio of debt to equity), reserves, stock values (materials and finsished goods), capital assets, cash on hand, along with the value of shareholders' funds. The term 'balance sheet' is derived from the simple purpose of detailing where the money came from, and where it is now. The balance sheet equation is fundamentally: (where the money came from) Capital + Liabilities = Assets (where the money is now). Hence the term 'double entry' - for every change on one side of the balance sheet, so there must be a corresponding change on the other side - it must always balance. The Balance Sheet does not show how much profit the company is making (the P&L does this), although pervious years' retained profits will add to the company's reserves, which are shown in the balance sheet.
In a financial planning context the word 'budget' (as a noun) strictly speaking means an amount of money that is planned to spend on a particularly activity or resource, usually over a trading year, although budgets apply to shorter and longer periods. An overall organizational plan therefore contains the budgets within it for all the different departments and costs held by them. The verb 'to budget' means to calculate and set a budget, although in a looser context it also means to be careful with money and find reductions (effectively by setting a lower budgeted level of expenditure). The word budget is also more loosely used by many people to mean the whole plan. In which context a budget means the same as a plan. For example in the UK the Government's annual plan is called 'The Budget'. A 'forecast' in certain contexts means the same as a budget - either a planned individual activity/resource cost, or a whole business/ corporate/organizational plan. A 'forecast' more commonly (and precisely in my view) means a prediction of performance - costs and/or revenues, or other data such as headcount, % performance, etc., especially when the 'forecast' is made during the trading period, and normally after the plan or 'budget' has been approved. In simple terms: budget = plan or a cost element within a plan; forecast = updated budget or plan. The verb forms are also used, meaning the act of calculating the budget or forecast.
The value of all resources available to the company, typically comprising share capital, retained profits and reserves, long-term loans and deferred taxation. Viewed from the other side of the balance sheet, capital employed comprises fixed assets, investments and the net investment in working capital (current assets less current liabilities). In other words: the total long-term funds invested in or lent to the business and used by it in carrying out its operations.
The movement of cash in and out of a business from day-to-day direct trading and other non-trading or indirect effects, such as capital expenditure, tax and dividend payments.
One of the three essential reporting and measurement systems for any company. The cashflow statement provides a third perspective alongside the Profit and Loss account and Balance Sheet. The Cashflow statement shows the movement and availability of cash through and to
the business over a given period, certainly for a trading year, and often also monthly and cumulatively. The availability of cash in a company that is necessary to meet payments to suppliers, staff and other creditors is essential for any business to survive, and so the reliable forecasting and reporting of cash movement and availability is crucial.
cost of debt ratio (average cost of debt ratio)
Despite the different variations used for this term (cost of debt, cost of debt ratio, average cost of debt ratio, etc) the term normally and simply refers to the interest expense over a given period as a percentage of the average outstanding debt over the same period, ie., cost of interest divided by average outstanding debt.
cost of goods sold (COGS)
The directly attributable costs of products or services sold, (usually materials, labour, and direct production costs). Sales less COGS = gross profit. Effetively the same as cost of sales (COS) see below for fuller explanation.
cost of sales (COS)
Commonly arrived at via the formula: opening stock + stock purchased - closing stock. Cost of sales is the value, at cost, of the goods or services sold during the period in question, usually the financial year, as shown in a Profit and Loss Account (P&L). In all accounts, particularly the P&L (trading account) it's important that costs are attributed reliably to the relevant revenues, or the report is distorted and potentially meaningless. To use simply the total value of stock purchases during the period in question would not produce the correct and relevant figure, as some product sold was already held in stock before the period began, and some product bought during the period remains unsold at the end of it. Some stock held before the period often remains unsold at the end of it too. The formula is the most logical way of calculating the value at cost of all goods sold, irrespective of when the stock was purchased. The value of the stock attributable to the sales in the period (cost of sales) is the total of what we started with in stock (opening stock), and what we purchased (stock purchases), minus what stock we have left over at the end of the period (closing stock).
Cash and anything that is expected to be converted into cash within twelve months of the balance sheet date.
The relationship between current assets and current liabilities, indicating the liquidity of a business, ie its ability to meet its short-term obligations. Also referred to as the Liquidity Ratio.
Money owed by the business that is generally due for payment within 12 months of balance sheet date. Examples: creditors, bank overdraft, taxation.
The apportionment of cost of a (usually large) capital item over an agreed period, (based on life expectancy or obsolescence), for example, a piece of equipment costing £10k having a life of five years might be depreciated over five years at a cost of £2k per year. (In which case the P&L would show a depreciation cost of £2k per year; the balance sheet would show an asset value of £8k at the end of year one, reducing by £2k per year; and the cashflow statement would show all £10k being used to pay for it in year one.)
A dividend is a payment made per share, to a company's shareholders by a company, based on the profits of the year, but not necessarily all of the profits, arrived at by the directors and voted at the company's annual general meeting. A company can choose to pay a dividend from reserves following a loss-making year, and conversely a company can choose to pay no dividend after a profit-making year, depending on what is believed to be in the best interests of the company. Keeping shareholders happy and committed to their investment is always an issue in deciding dividend payments. Along with the increase in value of a stock or share, the annual dividend provides the shareholder with a return on the shareholding investment.
From the seller's point of view an FOB price must therefore include/recover his costs of transport from factory or warehouse.. knowing that this price is 'free' or inclusive of all costs and liabilities of getting the goods from the seller to the port and on board the craft or vessel. An importing buyer would typically ask for the FOB price. eg.
FOB .. Taxes. EBIT = Earnings Before Interest and Taxes. Depreciation. and EBITDA = Earnings Before Interest. It's in this listing because it's commonly misunderstood and also has potentially significant financial implications. FOB meant originally (and depending on the context stills generally means) that the seller is liable for the goods and is responsible for all costs of transport. insurance. (which is now now often linked to a port name.'free on board'
The FOB (Free On Board) abbreviation is an import/export term relating to the point at which responsibility for goods passes from seller (exporter) to buyer (importer). and that thereafter the buyer assumes responsibility for the goods and the costs of transport and the liability. permanent staff wages. depreciation of capital items.
A cost which does not vary with changing sales or production volumes. FOB Hamburg or FOB Vancouver). rates. because the seller is unable to charge these costs as extras once the FOB price has been stated. etc. building lease costs. dividends received from other investments). EBIAT = Earnings Before Interest after Taxes. Logically FOB also meant and still means that the seller is liable for any loss or damage up to the point that the goods are loaded onto the vessel at the FOB port. eg. equipment. Depreciation is the non-cash charge to the balance sheet which is made in writing off an asset over a period. Amortisation is the payment of a loan in instalments. and Amortization..There are several 'Earnings Before.
Assets held for use by the business rather than for sale or conversion into cash. fixtures and fittings. insurance and loading. (Earnings = operating and non-operating profits (eg interest. until and including the goods being loaded at the (nominated FOB) port. buildings. EBITD = Earnings Before Interest. eg. Taxes and Depreciation.' ratios and acronyms: EBT = Earnings Before Taxes. The FOB expression originates particularly from the meaning that the buyer
is free of liability and costs of transport up to the point that the goods are loaded on board the ship. which is technically incorrect. used alone. So. In recent years the term has come to be used in slightly different ways. not for agreeing payment terms. usually the relationship between long-term borrowings and shareholders' funds. In summary: FOB (Free On Board). While liability and responsibility for goods passes from seller to buyer at the point that goods are agreed to be FOB.it means the exporter is liable for the goods and pays transport costs up until delivery to the customer. but the point at which goods are 'FOB' is no longer likely to be just the port of export . insurance and costs of transport until the goods are loaded (or delivered)..
. if you are an exporter.the principle is the same. which is a matter for separate negotiation. FOB is a mechanism for agreeing price and transport responsibility. terms such as 'FOB Destination' have entered into common use. most commonly 'Freight On Board'. the FOB principle does not correlate to payment terms. seller has liability for goods.
The ratio of debt to equity. While technically incorrect also. ie.
Any surplus money paid to acquire a company that exceeds its net tangible assets value.it can be any place that it suits the buyer to stipulate. nowadays FOB (Free On Board or the distorted interpretation 'Freight On Board') has a wider usage . originally meant that the transportation cost and liability for exported goods was with the seller until the goods were loaded onto the ship (at the port of exportation). If in doubt ask exactly what the other person means by FOB because the applications have broadened. meaning that the insurance liability and costs of transportation and responsibility for the goods are the seller's until the goods are delivered to the buyer's stipulated delivery destination. In modern times FOB also applies to freight for export by aircraft from airports. beware of buyers stipulating 'FOB destination' . even to the extent that other interpretations are placed on the acronym.
See 'budget' above.
the exporter needs to know that the goods will be paid for. For investors IPO's can risky as it is difficult to predict the value of the stock (shares) when they open for trading. to the seller. Also referred to as gross profit margin. and the customer pays this cost. The common system. See also 'net profit'. which has been in use for many years. which should obviously reflect the agreement between the seller and buyer. a letter of credit is a guarantee from the issuing bank's to the seller that if compliant documents are presented by the seller to the
. (Also called 'export letters of credit. The customer's bank charges a fee to issue a letter of credit.
initial public offering (ipo)
An Initial Public Offering (IPO being the Stock Exchange and corporate acronym) is the first sale of privately owned equity (stock or shares) in a company via the issue of shares to the public and other investing institutions. and often should seek professional advice and guarantees to this effect from their own financial services provider. This gives the supplier an assurance that their invoice will be paid. The letter of credit essentially guarantees that the bank will pay the seller's invoice (using the customer's money of course) provided the goods or services are supplied in accordance with the terms stipulated in the letter. IPOs typically involve small. or gross profit. and often abbreviated to simply 'margin'.
letters of credit
These mechanisms are used by exporters and importers.Sales less cost of goods or services sold. beyond any other assurances or contracts made with the customer. and usually provided by the importing company's bank to the exporter to safeguard the contractual expectations and particularly financial exposure of the exporter of the goods or services. In short. is for the customer's bank to issue a 'letter of credit' at the request of the buyer. An IPO is effectively 'going public' or 'taking a company public'. Letters of credit are often complex documents that require careful drafting to protect the interests of buyer and seller. In other words an IPO is the first sale of stock by a private company to the public.) When an exporter agrees to supply a customer in another country. young companies raising capital to finance growth. and 'import letters of credit'. The seller should also approve the wording of the buyer's letter of credit.
letters of guarantee
There are many types of letters of guarantee.
.This guarantees that the goods or services are delivered in accordance with contract terms and timescales. Typical obligations covered by letters of guarantee are concerned with: Tender Guarantees (Bid Bonds) . failed to meet the terms. then the buyer's bank will pay the seller the amount due. It is important therefore for sellers to understand all aspects of letters of credit and to ensure letters of credit are properly drafted. and are issued by the supplier's or customer's bank depending on which party seeks the guarantee.whereby the bank assures the buyer that the supplier will not refuse a contract if awarded. It is common for exporters to experience delays in obtaining payment against letters of credit because they have either failed to understand the terms within the letter of credit. Advance Payment Guarantee . checked. and in the event of the supplier's or customer's failure to meet obligations to the other party then the bank undertakes the responsibility for those obligations. method for.buyer's bank. and as with letters of credit.This guarantees that any advance payment received by the supplier will be used by the supplier in accordance with the terms of contract between seller and buyer. The 'compliance' of the seller's documentation covers not only the goods or services supplied. While a letter of credit essentially guarantees payment to the exporter. but also the timescales involved. For this reasons suppliers and customers alike must check and obtain necessary validation of any issued letters of guarantee. including obligations concerning customs and tax. It is also important for sellers to use appropriate professional services to validate the authenticity of any unknown bank issuing a letter of credit. etc.
There are other types of letters of guarantee. The supplier's or customer's bank is effectively giving a direct guarantee on behalf of the supplier or customer that the supplier's or customer's obligations will be met. These types of letters of guarantee are concerned with providing safeguards to buyers that suppliers will meet their obligations or vice-versa.
Performance Guarantee . these are complex documents with extremely serious implications. format of and place at which the documents are presented. or both. a letter of guarantee provides safeguard that other aspects of the supplier's or customer's obligations will be met. approved and their conditions met.
Corporations generally develop their own rules for NPV
. NPV provides a consistent method of comparing propositions and investment opportunities from a simple capital/investment/profit perspective. a new product line. NPV is essentially a measurement of all future cashflow (revenues minus costs. largely due to the interpretation of the 'discount rate' used in the calculations to enable future values to be shown as a present value.
net current assets
Current Assets less Current Liabilities.liabilities
General term for what the business owes. (current assets/current liabilities) Also referred to as the Current Ratio. Long term liabilities.
net present value (npv)
NPV is a significant measurement in business investment decisions. While there are many other factors besides a positive NPV which influence investment decisions. minus the cost of the investment. The other side of the balance sheet will show Current Liabilities along with various Assets. by measuring the relationship between current assets (ie those which can be turned into cash) against the short-term debt value. a proposition. along with Share Capital and Reserves make up one side of the balance sheet equation showing where the money came from. Logically if a proposition has a positive NPV then it is profitable and is worthy of consideration.
net assets (also called total net assets)
Total assets (fixed and current) less current liabilities and long-term liabilities that have not been capitalised (eg.
Indicates the company's ability to pay its short term debts. showing where the money is now. Liabilities are long-term loans of the type used to finance the business and short-term debts or money owing as a result of trading activities to date . also referred to as net benefits) that will be derived from a particular investment (whether in the form of a project. or an entire business). If negative then it's unprofitable and should not be pursued. short-term loans). There are different and complex ways to construct NPV formulae.
including discount rate. As earnings per share are a yearly total. A steadily increasing P/E ratio is seen by the investors as increasingly speculative (high risk) because it takes longer for earnings to cover the stock price. NPV is not easy to understand for non-financial people . notably after deduction of fixed costs or fixed overheads. prospects and investment risk of a public company listed on a stock exchange (a listed company).calculations. the P/E ratio is also an expression of how many years it will take for earnings to cover the stock price investment. Net profit normally refers to the profit figure before deduction of corporation tax. P/E ratios are best viewed over time so that they can be seen as a trend.
Net profit can mean different things so it always needs clarifying. not an absolute measure to rely on by itself. Step by step.
p/e ratio (price per earnings)
The P/E ratio is an important indicator as to how the investing market views the health. performance. in which case the term is often extended to 'net profit before tax' or PBT. P/E ratios should also be compared over time. Net profit normally refers to profit after deduction of all operating expenses. More meaningful P/E analysis is conducted by looking at earnings over a period of several years. with other company's P/E ratios in the same market sector. Obviously whenever the stock price changes. This contrasts with the term 'gross profit' which normally refers to the difference between sales and direct cost of product or service sold (also referred to as gross margin or gross profit margin) and certainly before the deduction of operating costs or overheads.
See explanation under Cost of Sales. and with the market as a whole. Net strictly means 'after all deductions' (as opposed to just certain deductions used to arrive at a gross profit or margin). so does the P/E ratio.wikipedia seems to provide a good detailed explanation if you need one. to calculate the P/E ratio:
. The P/E ratio is also a highly complex concept .it's a guide to use alongside other indicators. The P/E ratio is arrived at by dividing the stock or share price by the earnings per share (profit after tax and interest divided by the number of ordinary shares in issue).
eg. Divide this by the number of shares issued.1. Basically the P&L shows how well the company has performed in its trading activities.
profit and loss account (P&L)
One of the three principal business reporting and measuring tools (along with the balance sheet and cashflow statement). generally a gross profit margin (sometimes called 'contribution'). The P&L is essentially a trading account for a period. 4. endowment or pensions investment. 5..
The accumulated and retained difference between profits and losses year on year since the company's formation.
Same as the Acid Test. which often has little to do with cash. 3. The P&L typically shows sales revenues. A sterner test of liquidity. Divide the price of the stock or share by the earnings per share. It shows profit performance. fixed overheads and or operating expenses. and then a profit before tax figure (PBT).
Establish total profit after tax and interest for the past year.
. This gives the Price/Earnings or P/E ratio.
These are funds used by an organisation that are restricted or earmarked by a donor for a specific purpose. The relationship between current assets readily convertible into cash (usually current assets less stock) and current liabilities. but only because of all the weird and wonderful policies and conventions that the company employs. usually a year. stocks and assets (which must be viewed from a separate perspective using balance sheet and cashflow statement). which can be extremely specific or quite broad. cost of sales/cost of goods sold. but also can be monthly and cumulative. A fully detailed P&L can be highly complex. This gives you the earnings per share. 2.
An expense that cannot be attributed to any one single part of the company's activities.
such as debt. A company's book value might be higher or lower than its market value).profit depends on various circumstances. after all it's what most business is aimed at producing . foundations and trusts. N. a
.B. or the investment could relate to a part of a business.
return on capital employed (ROCE)
A fundamental financial performance measure. such as goodwill. Many business managers and owners use the term in a general sense as a means of assessing the merit of an investment or business decision. private donations. Strictly speaking Return On Investment is defined as: Profits derived as a proportion of and directly attributable to cost or 'book value' of an asset. A glaring example of misuse of restricted funds would be when Maxwell spent Mirror Group pension funds on Mirror Group development. otherise you might as well put your money in a bank savings account. etc. The practical implication is that restricted funds are ring-fenced and must not be used for any other than their designated purpose.research (in the case of donations to a charity or research organisation). liability or activity. or a particular project with agreed terms of reference and outputs such as to meet the criteria or terms of the donation or award or grant. grant-awarding bodies. This term means different things to different people (often depending on perspective and what is actually being judged) so it's important to clarify understanding if interpretation has serious implications. The source of restricted funds can be from government. 'Return' generally means profit before tax. In simple terms this the profit made from an investment. A percentage figure representing profit before interest against the money that is invested in the business. etc and liabilities. bequests from wills. which may also entail specific reporting and timescales. In this sense most CEO's and business owners regard ROI as the ultimate measure of any business or any business proposition. net of depreciation. not least the accounting conventions used in the business. philanthropic organisations.maximum return on investment. (profit before interest and tax/capital employed x 100)
return on investment
Another fundamental financial and business performance measure. The 'investment' could be the value of a whole business (in which case the value is generally regarded as the company's total assets minus intangible assets. with which the organisation using the funds must comply. trademarks. but clarify this with the person using the term .
A cost which varies with sales or operational volumes. to finance stock. which needs to be taken into account when arriving at the correct figures. Bear in mind that costs and profits can be ongoing and accumulating for several years.
The balance sheet nominal value paid into the company by shareholders at the time(s) shares were issued. a new piece of plant. commonly used/required for import/export trade. representing the required investment.new product. fuel. eg materials. cable or telex. continually circulating. The main point is that the term seeks to define the profit made from a business investment or business decision.
t/t (telegraphic transfer)
Interntional banking payment method: a telegraphic transfer payment. Also called a cable transfer. debtors. a new factory.
Current assets less current liabilities.
. or any activity or asset with a cost attached to it. The terminology dates from times when such communications were literally 'wired' before wireless communications technology. commission payments. and work in progress.
A measure of the shareholders' total interest in the company represented by the total share capital plus reserves. between a bank and an overseas party enabling transfer of local or foreign currency by telegraph.
if shares of stock you own in a company have risen from five to ten. Changes in interest rates have greater impact on f
. Most analysts specialize in a single industry or business sector. He performs investment research and makes recommendations to ins hold.
A mechanism used by the Stock Exchange to fulfill its obligation to the buyer of a security. usually one year.
The process of dividing your funds among different classes on investment such stocks.
Average Daily Share Volume
The number of shares traded per day. it has " describe your blood pressure after you finds you have just invested in a dud stock.
Buying in one exchange and selling in another to take advantage of price difference. you have to sign a waiver that no liability attaches to the analys true. For example. Only these shares wil This list of approved securities is periodically revised.American Depository Receipt (ADR) Analyst
A certificate of trading on a U. The problem is that no two analysts are usually in agreement is a "Consensus Rating" below. bonds or real estate. you should learn to make your own judgments company whose shares are recommended by the analyst's reports.
The average time to maturity of securities held by a mutual fund. money is the medium of all excha stock exchange is always in terms of money. It is done when the seller is unable to d question is offered by a member who has ready possession of the script. stock exchange that represents shares of a foreign corpora
A person with expertise in evaluating financial investments.S. You could further al foreign. Helps in determining the level of activity of currently active stocks. In the stock market. averaged over a period of time. etc.
Any possession that has value in exchange in the sense that it has buyers. u
An increase in any investments value. Do not blindly follow analyst's recommendations.
A contract sold by life insurance companies that guarantees a specified payment at some future time.
Average Maturity Average P/E Ratio
Average price/earnings ratio of stocks owned by a mutual fund.
The list that tells you which shares are approved for the purpose of pledging them with the bank against loan.
(For instance. though the number of total shares increase.also known as deferred load. Hence.Backend load Balance Sheet
Sales charge paid when selling a mutual fund . with little investment risk and a history of earnings and dividend paym a portfolio and allow for higher gain (and higher risk) speculation in other stocks. For instance. the strategy would also be reversed but be cau stock is going to reverse direction than to predict when a rising is likely to fall. a ten basis point increase means th point change is 1 per cent. alimony can be sai
A financial statement listing a company's assets (what it owns) and liabilities (what it owes) as of a specific date. A long term promissory note issued by a corporati other entity such as state or municipal governments or the Central Bank of the country. usually the last day between a company's assets and liabilities is termed its net worth or shareholder's equit
One basis point is 0.
Book value Bottom line
Total shareholder equity from the balance sheet divided by the number of shares outstand
. This is the reverse of the bull market. you are in effect lending money to the entity which issues the bonds for a specified period in return for a fixed point you get back your principal investment. the proportional ownersh
A company closes its register of members for updating the records to facilitate payment of dividends or issue of tights of bonus sha this process is done and deliveries are not affected in the clearing house.
Blue Chip Stock
Shares of well-established and financially strong corporations. in hope (usually) fulfilled if you wait long enough) of an upturn.
A weak and falling market where buyers are absent (Usually because they burnt their fingers when they held on too long to their sh correlates with recession. An opportunity to buy at low prices. Lo holding on to stocks for a long period. When the market expects a company the shares normally goes up. Best to allocate a portion of your annual income for the purchase of inves
A bond is a debt instrument issued by an entity for the purpose of raising capital.
A grade evaluating the quality of a bond. In simpler word.
Shares allotted to the existing shareholders by capitalizing the reserves into additional capital. Usually used to describe changes in bond yields. Bonds normally have a set maturity (term them. Investment in such stocks is more for capital app most blue chips trade at high market prices.01 per cent. Following a bonus issue.
An operator who expects the share price to fall.
multiplied by the total number of shares that have been issued. For example.
When costs of items such as buildings. The fraction amount depends on the security being traded.50 it would be up +1.
The value of a company as measured by the market price of its common shares.
Annual total Revenue as a percentage of total assets.50.50 is the change in stock price. equipment and other items with a useful lifetime exceeding one year are categorized as assets to be depreciated over a number of years.
Capital Gains Distribution
Payments to mutual fund shareholders of profits from the sale of securities in a fund's portfolio.
A mechanism used to restrain the market when it gets overheated. rather than being expensed in the year of purchase. The Exchange may relax the limit after a cooling off period of about half an hour.Call Option
An option where the buyer gets the right to buy the underlying security at a specified future date.
Total liabilities and equity less non-interest bearing liabilities. and is now selling for 11. if stock XYZ opened at 10.
Change in Stock Price
The change in stock price is recorded in points. The change in stock price is the difference between the opening stock price and the current price the stock is selling at. The +1. Capital gains distributions (if any) are usually made annually.
Cash Flow per Share
Cash flow from operating activities divided by average number of shares.
Difference between the price at which a financial ashes is sold and its original cost (assuming the price has gone up).
Payment for transactions done in one settlement on the due date.
Settlement where positions are carried forward from one settlement to another settlement.
Investors of such a fund buy shares from other share holders and sell shares to other investors. Can be encased by the bank if you default in any way on repayment of interest or principle of your loan or other obligations. Stockholders participate in a company's profits or losses through dividends and changes in the stock's market value. metals.S. The netted purchase and sale positions of the trading. try defaulting on a loan . It is the average of analyst's recommendations for single entity. Share price is determined by supply and demand for fund shares.
It is a legal counter party to both legs of every trade.
A fee charged by brokers for their service in facilitating investment has to be handled through brokers registered on that exchange. Banks are reluctant to authorize loans against assets which have encumbrances and prefer a clear title. As many brokers have different ratings systems. It includes negotiable instruments.
Articles of commerce or products that can be used for commerce or used as raw materials in producing other goods. you cannot trade your boss here. products traded on an authorized commodity exchange. sold. the companies send back the certificates received for transfer citing reasons for their inability to do so. The letter sent by the company is known as Company Objection. but not (yet) in India . temporarily or permanently.
It is used to provide a guarantee for a loan.A. Types of commodities include agricultural products. foreign currencies. rented or otherwise transferred. shares or goods and titles to immovable assets.
This method is prevalent in the U.
Equity or ownership in a corporation.Clear Title
A title to an asset proves your legal ownerships of that asset. That asset be mortgaged. This represents an encumbrance on the title. The previous close is the price a stock closed on the previous day. Members are settled through the clearing house. their recommendations are standardized so that a consensus can be calculated
In some cases. No. If you feel that your bank works at a snail's pace.
The closing price is the last traded price for the stock on a particular day. petroleum. In a narrow sense. financial instruments and indexes to name a few.the bank will encase your collateral so fast you'll never know what hit you till it is too late. to another person.
This consensus recommendation appears as the mean (average) of the assigned values. A share is described as cum bonus dividend when the purchaser is entitled for current dividend. for tax. Buy 3.
Cost of Sales
Cost of materials and labour required to produce products or services.
A bond that can be exchanged for shares of stock. India. where the Mumbai Stock Exchange building is located. The owners are liable only to the extent of their investment.The I/B/E/S ratings are calculated using a standard set of recommendations. not moving significantly up or down. Strong Buy 2.
A share is described as cum rights when the purchaser is entitled for current rights
A street in Mumbai. purposes is a legal entity and has continuity of existence and easy stock transfer procedure.
The interest rate on a bond. Hold Under perform. 4. Assigning a numeric value to the broker text enables I/B/E/S to calculate a consensus recommendation. A corporation's owners are the shareholders. if an organization Tanks the maximum you can lose is the value of your equity holding. each with an assigned numeric value: 1. and 5.
Convertible/Equity Related Loan
Loan convertible into equity as per pre-agreed terms.
A share is described as cum bonus when the purchaser is entitled for current bonus.
A technical analysis term meaning a stock price is in trading range. Sell
Each recommendation received from the analysts is mapped to one of the I/B/E/S standard ratings. A corporation has limited stock liability. Gross profit is sales minus cost of sales.
A business organization that. A street paved with hopes and broken dreams. maintained by I/B/E/S.
. that is.
In other words. Minimum net worth stipulation required by SEBI for registering a DP is Rs.
Depository Participant (DP)
A DP is a representative of the depository in the system.
Balance sheet liability reflecting expenses shown on the income statement that haven't actually been paid. etc.
It is a process by which an investor gets physical certificates converted into electronic balances maintained in his account with the Depository Participant (DP). financial institutions (FI's). the shares are 'dematerialized'. It holds securities in an account. showing the relationship between long-term funds provided by creditors and funds provided by shareholder. 100 crore. facilitates transfers of ownership without having to handle securities and facilitates safe-keeping of shares. transfers securities between accounts on the instruction of the account holder. It can be compared with a bank. According to SEBI regulations. low ratio may indicate low risk.
A non-cash accounting charge representing the loss in value of hard assents such as buildings and machinery over the accounting period. banks. can become DPs.
Debt to Equity Ratio
Long-term debt divided by shareholders' equity. on request in electronic from through a registered Depository Participant (DP). The DP maintains the client's securities account balances and keeps him informed about the status of holdings.
Debt to Equity (long term)
Total long term debt divided by total shareholder equity.
When a share is bought or sold for the purpose of receiving or effecting deliveries. stockbrokers.
Debt to Equity (Total)
Total (short and long term) debt divided by total shareholder equity. A DP is offered depository services only after it gets proper registration from SEBI. a high ratio may indicate high risk. custodians.
Failure to pay back a debt.
An organization which holds securities of investors. It is comparable with a branch of a bank if a Depository is likened to a bank.Day Order
The quantity that remains untraded is not cancelled until the end of the day.
Options and similar other instruments are examples. the end of a financial year. A stock dividend gives the shareholders additional shares of stock or a fraction thereof. The value is totally 'derived' from the value of the underlying asset such as securities. This. the value of a call option on reliance (derivative) fluctuates with the price of reliance stock.
. currency. For example. but many times it is less. it is not going to find many investors. requires that you take into an account innumerable factors that could affect the health of the industry. etc. You can do it!
Cash payment made to the shareholders out of the profits of the company. (Dividend rate x nominal value of share)/100. Of course. etc. you can always take an analyst's help. it is any hybrid contract of a pre-determined fixed duration such as forward. A precept common to all businesses: buy low sell high. future.or mid-term future. the percentage of corporate earnings paid out runs from 40 to 80 per cent. For instance. One usually gets into trouble when giving in to the thoroughly human instinct for the gap to increase (in case of gains) or decrease (in case of losses). Of course. bullion. Any increase over your purchase price is a gain. diversification is essentially for investors not traders. At the same time. It is not mandatory for accompany to distribute dividends. even zero. This calls for clear thinking and common sense. A lot of thought goes into deciding on investment avenues because you are not looking so much at the present status of the industry but at its short. in turn. for instance. The price used is usually the market price at the end of the period under review. an investor would not want to combine large investment positions in airlines.
Total of 12-months' dividend paid (historical or forecast) divided by the latest share price. and vice versa. Book your profits (or cut your losses) as you go. commodities.
The difference between a bond's face value and when to trade a security.
Dividend Per Share
The amount of dividend paid out per share. Never forget. rather than cash. live stock.
The acquisition of a group of assets in which returns on the assets are not directly related over time. but you should also learn to recognize factors that may impact a particular industry. where the corporation keeps its entire earnings. option. linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities. An investor seeking diversification for a securities portfolio would purchase securities of firms that re not similarly affected by the same variables. Proper investment diversification is intended to reduce the risk inherent in particular securities. trucking and automobile manufacturing because each industry is significantly affected by oil prices and interest rates. 'highs' and 'lows' are relative not absolute.Derivatives
A financial contract between two or more parties based on the future value of an underlying asset. Generally. don't allow them to accumulate too long.
A drop in the price of a stock that is temporary making it the ideal time to buy the stock. if a company is stingy on its dividend policy. Cash dividends are paid out of corporate earnings and the percentage of earnings paid out varies from corporation to corporation.
General Motors and IBM. You will not be directly concerned at what happens on the Dow. Coca-Cola. Just a few of the 30 companies in the DJIA are: American Express.
The process whereby an in-depth examination of a company's business prospects is conducted. Dow Jones & Company. also calculates averages for utility stocks. Chevron. AT&T. In this index. transportation stocks and bonds. Bethlehem Steel. there are 30 industrial stocks thought to be representative of industrial stocks in general. But remember. Disney. But in this case it is based on the market values of shares put up as collateral against a loan. you also have to keep in touch with global trends. Is that fat fee you are paying your stock analyst looking more reasonable now?
Drawing Power Valuation
Valuation in stock markets affects your drawing power and hence your loan taking ability as it is reviewed from time to time as per the applicable market value adopted by the bank.
. The wonders of globalization! You don't have enough problems trying to understand the trend of Mumbai stock prices. The limit fluctuates in line with the market price of the shares. sale or acquisition of a company is intended. a financial and investment publisher based in New York . It is like an overdraft limit. Usually when a merger. Boeing.
Dow Jones Industrial Average (DJIA)
A stock index (one of many) commonly used as an indicator of changes in the general level of the stock market prices in United States . the Dow average is global leader and is usually reflected by exchange around the world.Documentation
The papers that are needed to process your loan application.
And when a bank feels insecure. The seller remains the beneficiary.
Effective Interest Rates
The compounded interest rate calculated on the actual inflows and outflows of cash. If you think you can save s EMI agreement does not contain a pre-payment penalty. If the market price is greater than the equity per share.
Developing countries. lenders prefer that you do not repay your loan befo
Another name for shares.
Equated monthly installments to be paid by the borrower in repayment of the loan taken (includes principal and interest).
The limit allowed to the broker by his exchange or to the customer by broker. it increases you the return of the loan. The
A share is described as ex rights when the buyer is not entitled for the Rights. Ex rights shares are cheaper than investment oriented players. what happens in the famous Hollywood movie 'Indecent Exposure' is nowhere the bank co
Exposure Limit Extended Hours Trading
Trades executed before or beyond normal market hours. It is the total value up to which one is allowed to hold o
. The seller remains the beneficiary. Also known as operating income.
Equity per Share
Shows how much of a company's equity one share represents.
Effective before interest and taxes. In the bizarre world of loan finance. the market believes that the by number of shares at the close of the period.Earning Per Share (EPS)
Profit after tax and minority interest divided by average number of shares.
When the value of your asset/product pledged with a bank against loan is reduced by market price fluctuation or for other reasons.
A Share is described as ex dividend when the buyer is not entitled for the dividend.
The date and time after which a writer of an option cannot exercise his rights.
bonds stocks. While there is nothing wrong in depending on an analyst. b stores find it easier to wind up their yearly accounting on January 31 instead of December 31. For example. find a good analys understand a balance sheet and profit and loss account. If you are among them. treasury bo
Capital provided to an entrepreneur who has a proven product. not covering market expa
Any Consecutive 12-month period of financial accountability for a corporation or government. The delivery period.
. For ex year covers the period June 1 to May 31 of the following year. it is also reduced when the interest rates falls (yes.
A method of stock analysis based on the management of the company. Futures are traded either electronically or via open outcry on a traded either electr Exchange offering the particular contract. in many English speaking countries. British Babus didn't want to work throug babus.Face Value
The nominal value of a security.
Financial Futures First Stage Capital Fiscal Year
Legally binding agreements to buy or sell financial instruments at a future date (for example. don't want to work at all period.Fiscal year is often abbreviated FY with a date. to start commercial production and marketing. A futures contract is a legally binding agreement to buy financial securities at fixed time in the future at a price agreed upon today.
Free Cash Flow
Operating cash flow minus amounts spent on plant and equipment and minus dividends
Sales charge paid when purchasing a mutual fund. In India . it will add immensely to your co conclusions.
An agreement between parties for specified asses for performance on a fixed day in future. most of the time.
Float Floating Rate of Interest
The number of shares outstanding minus what is owned by insiders and what the company is holding back (tre
The interest rate varies with the change of interest rates over the loan period. past and projected financial and profitability. Remember. Do you know how to read a people who play the market cannot analyze a balance sheet or cannot draw valid conclusions from it. quantity and quality of a futures contract is standardiz contract is opened and is negotiated between buyers and sellers. if you opt for a floating bank rate it could be either good with a rise in the bank rate.
Flat Rate of Interest
Percentage representation of the amount of annual interest on the total loan amount. this has been known to happen in th
Foreign currency exchange markets. the Fiscal Year of the Government is 1 st April to the 31 st March of the n fiscal cannot be January 1 to December 31 to correspond with the calendar year. This is a British legacy.
25? Sell. Gross profit is sales minus cost of sales. Strictly for long term investors who have a vision for the future and are not interested in maximizing short term profits. What would you do if.
Stocks that pay low dividends. In securities trading. and monthly or for a 52-week period. A hedger takes an equal and opposite position in the futures market to the one he holds in the equity market.
A practice of taking one market position to offset potential losses in another.
Profit a company makes on goods and services before considering overhead expenses.Goodwill
The amount by which a company's shareholder equity exceeds the value of its hard assets. For example.which does not mean that you will not lose your collateral if you default on repayment. For example using a futures a contract to reduce the impact of price fluctuations in a cash or physical market. but the high for the year can be 50. Never let him down. the lender can sell your collateral to realize his payments. It helps to know the price history of a security over a period of time as an additional support for current buy or sell decision.
An agreement allowing the lead underwriter to buy additional shares of an IPO at the offering price after the IPO begins trading.10. but are expected to grow. The same old choice: should I sell now and make a profit or wait for a while in hope that the price will go up further?
Pledging assets against a loan using properties such as securities as collateral for loan.
The highest price that was paid for a security during a certain time period. the high for the day can be 20. He's like money in a bank. or wait for a further increase.
A person who promises to pay your debts if you are unable to pay them yourself.
Gross profit divided by sales. This can be expressed daily. If you find a good guarantor.
A stock whose price rises quickly the day it goes public. since there is no win or place. on the first day of listing on the exchange it is quoted at Rs. weekly. Let's say you buy a new offering at Rs. hand on to him. you have to look for another investment avenue where the return is less but the risk is also correspondingly less. With a little paper work. Like when you may like to cover possible loss by also backing the horse for a place. but not transferring legal ownership to the lender .
Utili particular sector. each of them havin industry. banks. they represent anything up to 85 per cent. mutual fund.
Interest Interest Coverage Intraday
Stock trading tracked in periods shorter than one day. If you can't le
An important economic indicator. For the stock market player. you can afford to speculate in higher risk stocks.
Any knowledge about a company. Payment made at periodic investments on a
A measure of a company's ability to pay interest on its debt (operating income divided by interest expense
. it means it is rising at the rate of 2 percent per anything you buy will now cost you 2 percent more than it did last time. in number. So. W inflation do you part if you have good base of income stocks. financial institutions. For instance the trades during the first two hours or last two hours
Money charged by a lender to a borrower for the use of his or her money. stocks of that exchange. this means he pays more for what he uses. buy more or sell? Try and figure it out. Sectored indices like Industrial. The rate at which prices are rising. The BSE Sensex is based on 30 stocks as is New York 's Dow average. These 30 stocks. when the inflation rate is 2 percent. If you are holding cement shares. there really are such stocks. For instance if yo large public limited organization and lets fall during a family get-together that his company is planning to buy company XYZ and you immediately place a buy o legally in most countries for anyone to make a securities trade based on what they believe to be inside trading result in large fines or imprisonment or both. banking. In but the system is so widespread and disparate and the judicial system. Contrary to what you might think after some time on the stock exchange. trademarks. Usually they represent about 80 to 85 percent of the market capitalization and trading.
Increase in the prices for goods and services. a surge in construction activities or higher government taxes? There could be a number of reasons.
Soft assets such as patents.
An index is managed and publishes either by a stock exchange or a professional financial and investment body.
Companies in related businesses.
Stocks that have consistently paid high dividends. which it's numerous levels of appeals. etc. For the common man.Income Statement
A record of a company's sales and expenses over a particular year or quarter. so time consuming and cumbersome that most system is being tightened up so think twice before you place that buy order for XYZ shares. or securities not generally available to the public gained from a source inside the company. should you hold on to them. But remember you have to keep an eye on th mean ?for ever?. etc. it could be both because there is a shortage in output. It is representative of the market sentiment.
Shares of a company owned by pension funds. its products. are a miniscule percent of the total lis capitalization.
security. Depth of market to absorb buy and sell activity of even large orders at prices appropriate to supply and demand. he repays the broker the loan amount and keeps the profit himself. warrants.100 on the market against which you are given a loan of Rs. The lender is immediately going to ask you to pledge more stocks (or pay cash) to bring the level up to 200 per cent of the loan. Shareholders benefit from this financial leverage to the extent that the return on the borrowed money exceeds the interest costs of borrowing it. or commodity. futures and option contracts also provide leverage. Rights.Lead Underwriter
Brokerage house in charge of IPO. This is when the market falls and we have what is known as a ?bear' market.
A financial obligation or debt. the greater the financial leverage.
A measure of the number of shares. Now suppose the market value of the pledged stocks goes down to Rs. it refers to the ratio of debt (in the form of bonds and preferred stock outstanding) to equity (in the form of common stock outstanding) In the company's capital structure. contact.) only if the price rises to a specified level.
A sales commission paid when you buy (front-end) or sell (back-end) a mutual fund. which is a percentage of the market value of the stocks pledged. Liquidity is one of the most important characteristics. Multiply this instance by thousands and you can imagine the margin pressure that is exerted on the market. An order to a broker to buy a certain stock (future.50 (50 per cent). or money value of shares traded daily. not through debt but by offering the prospect of a high return for little or no investment. financial leverage is popularly called ?trading on the equity'.75.
Leveraged Buy Out
Take over of a public corporation using borrowed funds. Say you have pledged stocks worth Rs. Mutual funds and other institutional buyers prefer high liquidity stocks so they can easily move in and out of positions. leverage can involve debt. If the stock goes up. The downside: most individuals pledge existing stocks with their bankers or brokers for the loan. For corporations. The more long-term debt there is. To buy or hold a long position is the state of actually owning a stock. etc. as when an investor borrows money from his broker ?on margin' and so is able to buy more stock than he otherwise could. Because of this effect.
Any means of increasing value and return by borrowing funds or committing less of one's own money.
. For individuals. This decision-making is necessary to cut losses due to lower prices or sudden reverses in rising share prices.
Mutual funds that carry a sales commission. The market must also adapt quickly to new information and incorporate that information into the stock's price.
A bull position in a security. The market value of the company rises and so do its shares.
A market order that specifies the highest or lowest price at which the customer is willing to trade securities. It is the opposite of a short position. By borrowing money he has achieved a higher return on his investment than if he had paid for all the stock himself.
weekly. or for a 52 week period. A U. So is taxation based on those classifications? This is one of the reasons investors buy and sell stocks around the world.
The lowest price a security or commodity has reached in a certain period of time such as a daily low or annual low.S. This can be expressed daily.S. can make more money on an investment on the BSE than the U. 10.the FII sees a better opportunity elsewhere in the world. etc. investor (FII). the low for the day can be 10. 50 or 100 shares depending on the face value of shares.
. For example. The legal definition of short term and long term capital gains varies from country. today. but the low for the year can be 5.Long-term Gain
A gain on the sale of a capital asset where the holding period was twelve months or more and profit was subject to the long-term capital gains tax. That's where the money will go.
A fixed minimum number in which shares are bought and sold. bourse. The day-even minute . monthly. Such number makes round lots. Trading lots can comprise 5. Helps you understand whether today's price is an aberration or a logical extensive of a trend.
Balance sheet item reflecting investments in other companies. anything less makes odd lots.
in case of IDBI Bank the shares to be offe It is in your interest to pledge the shares of an number of companies when you take a loan.Margin
An upfront payment made by the customer to take a position in the market.
An order where no price specification is mentioned at the time of placement and market prices apply. For example. the market
Market Order Market Price
It is the price a particular stock is currently selling for during the operating hours of the stock market.
The minimum trading lot on a stock exchange. Additionally. Authorization for a broker to buy or sell securities at t
A measure of the bullish or bearish attitude of the crowd. strong earnings growth. Margins are at the sole discretion of the bank and may even
Mark to Market
A notional profit or loss of a long or short position as compared to the current market price. If one shares worth Rs.On compulsorily dematerialized shares for all classes of investors. The di amount sanctioned. The margin for physical shares is 50 percent (that is you can borrow only up to 50 percent of the values of your pledged shares.
Usually involves looking for stocks in a strong uptrend (high relative strength). whose shares have to be offered as security for obtaining loans. His exposure limit is fixed based on the margin money brought in by him.
Total market value of the company on the stock exchange. and increasing earnings forecasts. The Reserve Bank of India attempts to control the growth of the economy by regulating the increas
. The margin for demat shares is35 percent.
Minimum Number of Companies Accepted
The minimum number of companies. In today's
The amount of money in circulation.
Momentum Analysis Money Supply Money -market Funds
Mutual funds that invest in short -term securities. Total number of shares multiplied by the official price quoted on
Use to track money flow into and out of the markets. IPO's reduce market liquid
Market lots Market Open/Close Price
It is the last sale price of a particular stock on the previous day. Positive cash flow can serve as an indicator that fund managers have cash to put into the markets at th flow may indicate that fund managers may need to liquidate some holdings to meet redemption requirements.200. if the value of some shares drop in the market they may be offset also profitability of a number of companies.
and is related
Net Asset Value (NAV)
Net Asset Value (NAV) is the market value of the securities held by the scheme of a Mutual Fund. divided by number of shares. based common stocks listed on the NASDAQ stock Market.NASDAQ Composite Index
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.
Net Profit Ratio
Profit from operations as a percentage of revenue. is calculated throughout the trading day.
Mutual funds that do not carry a sales commission. if you hold a unit in a mutual fund.
Expenses not due to the basic business of company.The Index is mar security affects the Index in proportion to its market by total shares outstanding.To simplify.
Income not derived from basic business of company
Normalized Earnings NSCCL NSE
National Stock Exchange
Profits a company can be expected to achieve taking out cyclical effects and unusual events such as one-time write-offs caused by late product re
National Securities Clearing Corporation Limited.NAV varies on a day-to-day basis since the market value o divided by the total number of units of the scheme on a specific date is the NAV. The Clearing Corporation of the National Stock Exchang
.S. the NAV
Net Asset Value per Share
Equity excluding minority interests.
Also applies sometimes to overbought situations. Also see Free Cash Flow.
A limit order that does not expire at the end of the trading day.
The price at which a company offers its shares to the public through issue of a prospectus. and is based on a percentage of the last traded of the previous day.Odd Lots
Stocks sold in quantities of less than a specified minimum number. and if XYZ st maximum or minimum opening price the following day will be 22.
Refers to a stock that has risen sharply in price or to the market as a whole after a period of vigorous buying which. earnings excluding special items or operatin
Sales minus all expenses except income taxes and other items not relaxed to basic business. Changes in levels of i also affect cash flow. Usually. it is sometimes s
The reverse of over-bought.
A facility available in the trading system where one is allowed to modify an earlier order. or just about anythin earnings look better. depreciation and amortization charges. is the stock exchange has a upper or lower limit of 10.
A facility available in the trading system where one is allowed to cancel the order placed earlier. it costs less to trade in round
The price at which a share is available in the market.
Earnings without considering certain expenses such as inventory write downs.
Operating income divided by sales.
Opening price is normally determined by the price at which a stock finished selling on the previous day. severance pay.00 and 18. it is believed has declined to an unreasonable level. this is where everybody starts s starts a probe. Generally. A single security or a market which. Most exchange has limits of how high or low the sto circuit. Also known as core earnings. ongoing earnings.00. For example. This reduces the scope of overnight off-market
Operating Cash Flow
Surplus cash generated from a company's basic operations without regard to income tax entries such as depreciation and amortization.
The designated day on which the members pay securities and fund to the clearin
Percentage of earnings paid out in dividends. If interest rates fall. In India they are called low-Capped stocks and BSE has a separate index find the index for these stocks outpacing the Sensex. a company could issue rights to purchase shares preferred shares giving holders the right to redeem their shares at a discount after
Portfolio Post-Offering Shares
The number of shares that will be outstanding after an IPO. the price is equivalent to ten years earnings. Co stock according to predetermined conditions. and should earnings rise significantly the preferred holder is stuck with the same fix income stream of preferred stock makes it similar in may ways to bonds. Frequen stocks have developed into investment-caliber issues. the greater the expectations for a com
Par Value Pay In Pay Out
The designated day on which the Clearing House effects payment and deliveries to
The face value or the price of a share. You are stuck with a fi the other hand.P/E (Price/Earnings Ratio)
Shows a share's market price in proportion to its earnings. debenture. For instance. or bond that is written on the certificate. The figure illustrates expectations of future company growth.
This term is typical to the USA stock markets. These stocks offer larger returns b
To deposit securities with a lender as security for money borrowed. Mostly these types of stocks pay a fixed dividend regardless of corporate earnings dividends. It is like a fixed deposit in a bank. For a portfolio. Low-priced issues. Preferred shareholders are paid a head of common stock holders in the event the corporation is liquidated. it carries no voting rights.
A collection of stocks. often highly speculative. In c same field. you can congratulate yourself on a wise de
. selling at less than $1 a share. mutual funds or other securities that is owned by an inv
Power of Attorney Preferred Stock
Legal document which gives someone the right to act on your behalf in legal m
Debt instruments. However. Calculated by dividing the share price by the reported or forecast ann the P?E ratio is 10.
Steps taken by a corporation to thwart a hostile takeover attempt. the ratio is the weighted average P/E.
The sale of securities to a small group of investors that is exempt from the elaborate requirements of a public issue.For bonds and preferred stock.which. or par value.Not fully established in India . after all. the company seeks temporary delega contains details on the corporation's executive compensations plans.
Put Option Pyramiding
An option where the buyer gets the right to sell the underlying security at a specified future da
So called because it is akin to building a pyramid. you have to pay a little extra upfront if you want to be shielded from the fluctuat
It sets up the upper and lower limits for share's movement on any given day. For options marke other words.
Publicly Held Corporation
A corporation that allows anyone in the public to purchase its stock. A measure to check price volatility. the PEG ratio takes into consideration growth by dividing the P/E ratio by current annual gro estimates.
Investment strategy that uses computers programmed to buy or sell large numbers of securities to take advantage of price disc stocks represented in those averages (see Arbitrage). It is very difficult to judge initially whet activity or price rigging. It involves pledging shares with a banker or broker to raise a loan to buy mor These shares are pledged again to secure a further loan to buy additional shares of the same company in a self-feeding cycle whi price to rise further and increase the operator's profit. the premium is the amount by which the price exceeds the face. It is based on the previous days trading closing price set limits. The private placement results in the len
Bottom line (after tax) earnings divided by sales.
A process where persons collude to artificially increase or decrease the price of a security. In a bear market this cause
Price Earnings Growth (PEG) Ratio
Commonly used for growth stocks. is the objective o
Prospectus Proxy Statement
A document circulated to potential investors prior to an IPO describing a company's b
Material given to stockholders when the corporation solicits shareholder votes. Private place lending institutions from whom the issuing company takes or intends to take. This probably the nearest you can get to a co buy and sell to the alternative with the highest price . In effect. a loan.
. The highest bid to buy and the lowest offer to sell any stock at a given time.
Prices at which a share can be bought or sold.Quick Ratio
Cash and cash equivalents plus accounts receivables divided by current liabilities.
Presentations made by underwriters and IPO company officials to institutional buyers to create interest in the offer
A point where a stock price has fallen to support.
Research and Development (R&D)
Costs of developing new products and services.
Fee charged when you sell a mutual fund.
Historical price level at which rising prices have stopped rising and either moved sideways or reversed direction. usually seen as a
After tax income divided by total assets. it is issued in a fixed ra
Road Show Rollover Round Lots
Stocks sold in specified share quantities.
Issue of new shares to the existing shareholders at a price which is normally lower than the current market price of the old shares.
Process of converting the shares from electronic form to physical form.Profit after tax and minority interests as a percentage of aver
After tax income (latest 12 months) divided by total of shareholders equity plus long term debt. plus other long term lia
Rights Issue Risk
The potential to lose money (principal and any earnings) or not to make on an investment. and then reverses the up or down trend convin
Resistance Return on Assets Return on Equity Return on investments Revenue
A company's sales. Profit from operations plus financial income as a percentage of average capital e
After tax income (latest 12 months) divided by shareholders equity (from balance sheet). if you have not held the fund for the prescribed minimum time. or risen to resistance.Record Date
The date on which the beneficial owner of the corporate benefits is determined.
One has to pledge one's shares when availing of "loan against shares". This is popularly called security swapping. or utilities.
Documents proving debt or ownership that may be bought or sold. They are normally conducted through the relevant exchange on which they are listed. Commonly referred to as the "load" in a mutual fund.
Second Stage Capital
Capital provided to expand marketing and meet growing working capital needs of an enterprise that has commenced production but does not have positive cash flows sufficient to take care of its growing needs.S&P 500 (Standard & Poor's 500 Stock Index)
An index of 500 stocks widely traded on the New York Exchange.
When stocks or bonds are traded or resold.
Mutual funds specializing in particular industry sector such as computers.
A holding in securities.
Sector is another word for industry. such as healthcare. technology. the regulatory body and watchdog controlling the functioning of Stock Exchange in India . Later on the person may withdraw some shares and pledge new ones to replace the shares he has withdrawn. they are said to be sold on a secondary market.)
. Sector (or industry) fund groupings usually focus on a single industry. Sales and revenue mean the same thing. or healthcare. This index is used as a measure of performance of the overall market. (Unlike wife swapping.
Services and products sold by a company.
Sales per Share
Annual sales divided by the number of shares outstanding.
A transaction fee or commission paid for an investment instrument.
A very long-term trend. it is a permitted practice. The majority of all securities transaction takes place on a secondary market. Considered by many to be a much more accurate picture of the market in general.
The Securities Exchange Board of India.
typically provided by angel (venture) investors.
A unit representing a measure of ownership in a corporation.
To sell a stock you do not currently own.
Borrowing that must be repaid within one year.Seed Capital
A small amount of capital provided to an entrepreneur. Most stock transactions must be settled within three business days. or future contracts sold and not covered as of particular date. Theoretically.
The reverse of the usual stock market technique.
Stocks and other liquid securities.
The difference between the totals of assets and liabilities shown on a company's balance sheet. To go short you "borrow" stock from the broker/dealer. A short sale can only take place on an "up tick"" or 'zero-plus tick'.00. there is more risk involved with short selling because a stock price could continue to rise forever and the short seller's loss could be infinite.
A person who buys stock in a corporation.
Stock options. beta stage development. with the intent to buy the stock back at a lower price than you had initially sold it for.
. if you sell short 100 shares of XYZ Corporation at 50.00. Carefully check all tips on short sales before deciding to act on them. This does not mean you should walk into a Reliance office and ask for a glass of water. not covering launch expenses. short selling is based on the anticipation that a particular security price will go down. Most stock exchange have a rigid rules regarding short selling. your profit is 15. as of a particular date. For instance. and make a profit. or 1500. unless you are very sure of yourself. etc. or receiving credit from your broker for the stocks you sell. you buy back an equal number of shares on the open market and use them to cover the shares you borrowed from your broker. pilot projects. but it will be accompanied by some odd looks.Book value is the shareholders equity divided by the number of outstanding shares. Short sellers lose when the price of the stock ascends rather than descends. The player should ascertain these rules from a registered broker of the exchange.
Buying stock to return stock previously borrowed to make delivery on a short sale. only fall to zero and that is the maximum loss that would be incurred. and therefore becomes a part owner of the corporation. Then as the price of that security declines. however. A stock purchased at 10.00 a share and the price of the stock drops to 35. Not for the common investor. then sell the stock. usually for product development. You will get the water as a matter of courtesy.00 a share.00 a share can.
The process of paying for stocks you purchase. commercial production or marketing.
The profit realized from the sale of securities or other capital assets held twelve months or less. Short position also means the total amount of stock an individual has sold short and has not covered. The practice of short selling involves borrowing shares of a security from your broker and immediately selling them at the current price.
This increase in the number of shares result in the proportionate decrease of share price. a reverse stock split brings about the decrease in the number of shares in a corporation. It is placed to minimize the losses and the order cab be either for a purchase or a sale. This is usually n\brought about by the division of existing shares. For examples. As in a split the total stock holders equity remains the same. A buy is placed above current prices and a sell is placed above current prices and a sell is placed below current prices. (Also called cash trading)
The spread is the difference between the bid price and the offer price.These order types instruct the broker to execute at market once a specific price level is reached and traded at.
Stop Loss Order
An order placed with a "trigger price". A reverse split is where the total number of shares is decreased and the stock price increases proportionally.
Trading in commodities that will be delivered immediately. a two-for-one split means that shareholders will receive two new shares for each old share. The shareholders equity does not change.
A measure of a mutual fund or stock's historical volatility.
Can be either a buy or a sell stop. because it prevents the security from falling below a certain price.
Investors who seek large capital gains through relatively risky investments. This order is very often referred to as a "stop loss" order. a company declares a "3 for 1 " stock split.
An increase in the number of outstanding shares in a corporation. a shareholder with 100 shares before the split would have 300 shares after the split with a value of 20 a share.
Contract allowing holder to buy or sell given number of shares of a particular stock at a given price by a certain date. For example. Alternately.Solvency Ratio
Equity excluding minority interests as at year-end as a percentage of liabilities and equity at year-end.
An order to buy or sell a security conditioned on a specific price. or portfolios (established outside India ) whether incorporated or not and corporate and individuals on whose behalf investments are proposed to be made in India by a Foreign
The actual document that is evidence of stock ownership.
An increase in the number of shares outstanding. the price of the stock is currently 60 a share. making a total of three.
A sub-account includes institutions (established or incorporated outside India ) and those funds. usually watermarked and patterned to make it hard to forge.
Don't try to understand it unless you are a maths gold medalist.
Historical price level at which falling prices have stopped falling and either moved sideways or reversed direction. the symbol ?f? on the New York Stock Exchange (U.S. The method includes analysis of price patterns. Today. product development etc. usually seen as a price chart pattern. The tick becomes especially important when large market movements trigger the implementation of certain circuit breakers meant to stabilize the market. and (2) Foreign corporate and foreign individuals who are not allowed to exceed 5 percent of the issued capital. For example. ticker symbols can be submitted to an electronic ticker quote retrieval system to find information about a particular security instantly.
. The best measure of a firm's total debt. etc of a particular stock.
Trailing Twelve Months (TTM)
The last four reported quarters. volume.
A ticker symbol represents a particular security (company.Institutional Investor.) on the exchange it is trading on and is used to retrieve information about that security from that exchange. acquisitions. option. NRIs and overseas Corporate Bodies (OCB) are not eligible for registration as sub-accounts.
Tangible Book Value
Book value minus goodwill and intangible assets.
The tick is the direction in which the price of stock moved on its last sale.
Third Stage Capital
Capital provided to an enterprise that has an established commercial production and basic marketing set-up. Ticker symbols can be used to retrieve information from a financial publication such as your daily paper's business section.
All monies owed regardless of how classified on the balance sheet.
A ticker is a trading screen information display showing the current price.
A technical analysis term meaning the stock price is going down from here. option etc. A zero-plus tick means the transaction was at the same price as the one before. etc.
An analysis of a stock or future based strictly on numbers. There are two categories of sub-accounts : (1) broad-based/proprietary sub-accounts which are allowed to individually invest up to 10% of the total issued capital. An up-tick means the last trade was at a higher price than the one before than the price was at a higher price than one before it and a down -tick means the last sale price was lower than the one before it.A) will bring you information about Ford Motor Company. typically for market expansion.
An employee of a broker/dealer or other financial institution who specializes in handling purchases and sales of securities for the firm or its clients. but still higher than the nearest preceding price. future. ?ONGC? will show you the information of the Oil and Natural Gas Commission on the National Stock Exchange of India.
This is the total monetary value of all trading in a security for the market day.
Shorts-term debt issued by the central government. or other units of a security traded in a certain time period
. It is calculated by multiplying the volume traded by the average sale price.
An investor involved in financing a company's operations before going public.
Turnover is the relationship between the float and the average monthly volume of a stock. he's taking all the risks on an untried idea. buy) into its own books. The higher the turnover rate. changes all the stocks in its portfolio once a year.
How often a mutual fund changes its portfolio holdings. etc. then. Some countries also provide for underwriting on best effort basis. including the broker's commission and taxes. Offsetting the high risk the investor takes is the promise of high return on the investment.Transaction Costs
The costs of trading securities. brand-equity. If you have a good idea that can be commercialised and you can convince the venture capitalist of the workability of your idea and of your own ability in seeing it through.
Professional moneys co-invested with the entrepreneur usually to fund an early stage.
A measure of the fluctuation in the market price of the underlying security. business contacts. the venture capitalist will nurse you through.
The total number of shares. strategic advice. Commission varies with the size of the trade. in exchange for an ownership percentage. 100 per cent turnover means a fund.
Debt securities issued by the central government that mature over a specified number of years. on average. bonds. failing which the firm would take the securities being offered (that is. Mathematically. His return is high but. volatility is the annualist standard deviation of returns. the more volatile the stock and the greater potential for wider swings in price (both ways). A venture capitalist not only brings in moneys as ?equity capital' (that is. without security/charge on assets) but also brings onto the table extremely Valuable domain knowledge. more risky venture. sold at a discount and redeemed at full face value.
A stock trading below its fair value. He is a fixed interval investor. whom the entrepreneurs approach without the risk of ?takeover'.
An investment banking firm committed to successful distribution of a public issue.
the bank guarantees the beneficiaries (The person named in the guarantee to receive the guaranteed sum under stated circumstances). Warrants may be issued over securities such as shares in a company. if its customers fail to deliver. Also the effective interest rate on a bond. Under finance guarantee. even in the later case. For instance.
2. showing all transactions recorded for the period in question. Actually bill in the banking parlance means a bill of exchange drawn by a seller on the buyer whenever he sells goods or services on ?payment later? basis. which is traded on a Stock Exchange's equity market. Bill .
. if a bond pays 1. The bill is routed through the bank for collection of amount from the buyer.
1. certain amount on behalf of its customers who has commercial relationship with the beneficiary.
In stocks and bonds. including the number of times the account was past due or over limit.Usually mistaken for commercial invoice.A periodic record of a customer's account that is issued at regular intervals. the buyer is required to pay on a specific date a certain amount with or without interest to him or to any other directed party.
Current assets minus current liabilities. Commercial invoice is a part of the document submitted to the bank by the seller. the amount of money returned to investors on their investments.Bank Guarantee could be a finance guarantee or a performance guarantee.00/10.
Acceleration . Bank Statement . the yield is (1.A standard clause in a mortgage instrument permitting the lender to demand full payment of principal from the borrower upon default of the obligation Account History .00) 10 per cent. Under performance guarantee. New York where several major brokerage firms and stock exchanges are located. and is selling for 10.
A warrant is a financial instrument issued by a bank or other financial institutions. Such a transaction is also referred to as a credit transaction.00. the bank guarantees performance of a contract or goods/ services supplied under a contract by its customers. However. an index or a commodity.
3. Bank Guarantee .The payment history of an account over a specified period of time. A bill of exchange is an order made to the buyer by the seller that in exchange for the goods or services sold by him on credit. obligation of its customer. the bank does not fulfil the contract. it settles the claim of the beneficiary in money terms only.
4. Dalal Street is the Indian counterpart in Mumbai. a currency.Wall Street
A street in the city of Manhattan . Also known as rate of return.00 interests annually.
5. Interest and dividends paid to mutual fund shareholders as a percentage of share price (Net Asset Value).
You can seek confidential informations about your prospective customers about whom you do not have sufficient knowledge. overdraft. There are accepted abbreviations internationally for denoting the soundness or the lack of it of a business enterprise. for this.10. The purpose of cash credit is for working capital. The cash credit facility is unique to India. The banker provides good platform for knowing something about the business enterprise with which you are likely to deal. At other times it is also called customer?s confidential report.
Step No 1. This acts as a buffer to the bank. 1233/-. and less for business. drawing Rs.through out the year. as in most of the countries it is called overdraft. cash credit etc. And the bank cannot lend this money. This means that on a 365 days per year basis. e. most of the times.100 Bn and is required to maintain a CRR of say 5%. These abbreviations are commonly used in such reports.a. With the growth of commerce within a country and abroad.Called in short CRR. Suppose a bank has total deposits of Rs. on a daily product basis the interest is determined as under. This much amount is impounded and kept in the free form.000/.98. subject to availability of sufficient security with the bank. the latter is extended only to business bodies. Some banks do take 360 days in a year also.g A bank has given a customer an overdraft facility to the extent of Rs.
Cash Reserve Ratio . on annual basis. 5 Bn. In India. like loan. Calculation of interest at 6% p.
7. Further the cash credit facility is more or less on a permanent basis so long as the business is going on. i. The banker provides this information for a fee which includes the fees that they have to remit to international credit agencies.6. 450000/365=Rs. The operations are similar to overdraft.
9. This means that the bank should maintain in current accounts with the central bank or any other approved bank balances. Bankers report also means the same.for 45 days at 6% p.
. 10000/.e.This is the basis on which interest is usually determined on credit facilities. not less than Rs.06= Rs. 73.
8. Daily Product Basis .A credit facility under which a customer draws up to the preset limit. At times it is referred to as credit information report. 1233/. held by the bank. Determination of annual average as rate of Interest is on annual basis i. There is no hard and fast rule in this behalf. Step No 3. trade is done with the organizations about which you are in the dark.for 45 days is equivalent to drawing Rs.
Cash Credit . Internationally at the end of specific period the overdraft facility is withdrawn and the customer is required to pay back the amount lent by the bank. Credit Report . the basis is 365 days in a year.It is called by different names. 10000*45 days= known as product= 450000 Step No 2.e. The difference between an overdraft and cash credit account is that while the former is extended more to individuals. RBI decides from time to time and at present it is 5% of the deposits.a is equal to 1233*0.
Interest may be recovered separately from the customer who is called borrower or combined with the installment. Then. 2/.
Discount . The commitment is dependent upon the seller fulfilling specific conditions as per the L/C.Seller ?A? enters into contract with Buyer ?B?. the rule is interest is paid on the minimum balance in the account between the 10th and the last day of every month. Under this facility. One of the terms of supply is that buyer will establish a letter of credit in favour of the seller through his bank. Loans against property and for the purpose of owning flats/ apartments/ houses are known as mortgage loans. Rs 98 is the discounted value of the bill for Rs. the buyer?s bank will pay the amount of bill drawn by the seller on the buyer under this agreement. Margin Money Margin money is like a security deposit retained by the bank till the loan is fully settled. and repayment over a period of time in monthly or quarterly.
12. This means that any credit to the account after the tenth of the month is ignored for the particular month.is known as ? discount?. while debit is taken into account. especially in the case of those bills for which payment will be forthcoming after a specific or extended period. 100/and in case the bank gives the finance against the same.
11. The following minimum credit balances
13. If interest is recovered separately it is usually on a quarterly basis. The percentage of margin requirements varies as per RBI guidelines. The banks sanction the credit limit after retaining a margin on the value of the security offered. or half yearly or annual (very rarely) installments.A lump-sum amount given to the customers. 98/-. If the value of the bill is Rs. either in one installment or in two or three installments. Monthly Product Basis .In India.
. International letter of credit are by and large. say Rs.Less than face value. 100/-. in the savings account. the buyer?s bank gives commitment of payment to the seller through his bank. Discount is the interest recovered upfront. The buyer approaches his bank.
10. In case it is combined with the installment it is called equated installment.This means that by adopting daily product basis we are converting the amount drawn for a period less than a year to its annual equivalent so that the rate of Interest. while the difference of Rs. The conditions are: The seller should furnish proof of dispatch of goods or services and submit all the documents required under the L/C. 100/-.
Loan . Accordingly let us say for example. the product is taken on a monthly basis.
14. ?irrevocable? (cannot be cancelled by the buyer without the consent from the seller). the amount of finance will be less than Rs. Letter of Credit . on certain conditions. which. which is universally on annual basis can be applied to determine the quantum of interest. agrees to extend this facility.
makes the funds available to the customer or any other specified party at the required place.in
3.33 and the interest at 3.An extension of current account in which the customer is allowed to withdraw more than the credit balance lying in the account. This is the way the interest is found out on a monthly product basis. Telegraphic Transfer (TT). This is not so in the case of personal loans.
. The annual equivalent amount is RS 233. 2005 May. settlement of payments on an individual order basis are done on continuous basis.17. That is interest although levied. 2005 June. not recovered for a specific period. In case the overdraft is given to the business enterprises and it is for day-to-day operations. 2005 February.5% p. RTGS system is also defined as a gross settlement system. Electronic mail transfer (EMT) through computer networking (or satellite channel). within the same country or abroad. for the half year on this work out to be Rs 8. Although there may be a period of non-recovery of Interest. Again if this is the case interest on interest is recovered. by which its customers at one place makes funds available to the bank and the bank in exchange. If permitted on a regular basis. 2005
Suppose the Interest is payable every half-year and accordingly this customer will be entitled to 1.
18. without netting debits with credits across the books of a central bank. 2005 April. withdrawals are allowed up to a ceiling (called ?a limit?). In order to determine the correct half yearly interest.5 800 150 250 300 300
January.a. on real time basis).75 % for the half year ending June 2005. you need to find out the annual equivalent of the deposit that the customer has kept in his savings account. Remittance ? A facility. in which both processing and final settlement of funds transfer instructions take place continuously (i. The period is longer in the case of industrial loans and minimum or absent in case of personal loans. RTGS refers to the settlement system where. Repayment Holiday . Thus we can say that RTGS system
16. the repayment does not start immediately.e.Whenever a loan is taken especially for acquiring fixed assets. The period during which there is no repayment is known as repayment holiday period. It starts after the fixed assets starts giving a return especially in the case of business enterprises. mail Transfer (MT).
17. It should be noted that during this period. subject to availability of sufficient security with the bank. International Money Order (IMO) etc. This may be a temporary accommodation to tide over temporary cash crunch or on a regular basis. Remittance can be in the form of Demand Draft (DD). it is known as ?working capital?. This is also known as moratorium period.
15. 2005 March. Interest is charged and there is no period on non-levy of interest. Then divide the sum of the monthly products by 12.
Should not be confused for granting of loans. Credit risk arises when a counter party fails to meet an obligation for full value on due date and thereafter
19. enabling them to use the funds immediately without exposing themselves to risk. One of the main attraction of the RTGS systems is that payee banks and their customers receive funds with certainty. This will be kept in easy-to?encash securities like. In stock and receivable audit. This can happen due to various reasons. during the day. auditor ensures himself about the quantity. quality. by granting a portion of it. settlement risk consists of two components namely credit and liquidity risks. Thus. Settlement risk refers to the risk when a settlement (in a transfer system) does not take place as expected. composition and actual value of the stock and the debtors.g. Even if the arranging bank participates in the loan. An Indian company wants a foreign currency loan of 100 mn Rs. syndication is different from it. The bank may or may not participate in the loan process.
. In the above example. 25 Bn. RTGS is regarded as the centerpiece of an integrated payments system.
Statutory Reserve Ratio ? Called in short SLR. or so-called finality. treasury bills of the government and any other approved securities. but would assume responsibility for getting ?in principle? sanction from all participating banks and financial institutions. this means that over and above CRR the bank is expected to keep aside an amount of Rs.reduces settlement risk because inter-bank settlements are done throughout the day. Syndication ? Making arrangement for loans for borrowers. For example. Stock & Receivables Audit is one of the most important aspects of the overall exercise of audit of any organization. Syndication fees are part of non-interest income as no funds are involved in the activity. In India at present it is 25%. rather than just at the end of the day. e.
21. one party may default on its clearing obligations to one or more counter parties. RTGS is a system where both the processing and final settlement take place on real time basis.
20. It gets paid separately for this activity. suppose the bank is supposed to maintain SLR of 25%. This again acts as buffer to the bank and prevents the bank from lending the entire amounts of deposits kept with it by various customers. Making arrangement for this is known as syndication.