Financial Glossary

Cash Flow

A measure of a company’s financial health.

Current Asset

Represent the value of all assets that expected to be converted into cash within one year. It includes cash, accounts receivable and inventory.

Current liabilities

A company’s debt that is due within one year. It includes short term debt, accounts payable and other debt.

Debt equity ratio

A measure of a company’s financial leverage. A high debt/equity ratio generally means that a company has been aggressive in financing its growth by debt.

Earnings per share (EPS)

Portion of a company’s profit allocated to each outstanding shares of common stock. EPS is generally considered to be one of the most important variables in determining a share’s price.

Gross profit

Calculated as sales minus all costs directly related to those sales.

Market capitalization

Market value or size of a company traded on a stock exchange. It can be calculated by multiplying the number of share by its current stock price.

Net income (NI)

A company’s total earnings – calculated by taking revenues and adjusting the cost of business and others expenses.

Non-Current Asset

Opposite of current asset and are not expected to be turned into cash within one year. It includes buildings, land and equipment.

Non-Current liabilities

Opposite of current liabilities. Debt no due to be paid within the next year.

Operating income

The amount of profit realized from a business’s own operations but excluding operation expenses.

Operating margin

It is used to measure a company's pricing strategy and operating efficiency.

Outstanding shares

shares of a company that have been issued and are in the hand of the public.

Price

Current stock price

Price earning (P/E)

Valuation of a company’s current share price compared to its per-share earnings. Can be calculated by dividing the current share price by EPS.

Price to book (P/B)

This ratio is used to compare a stock’s market value to its book value. A low price to book could mean that the stock is undervalued.

Price to sales (P/S)

This ratio is used for valuing a stock relative to its own past performance. It can vary substantially across industries therefore is has to be compared to similar companies in the same industry.

Quick ratio

Indicator of a company’s short-term liquidity. It measure a company’s ability to meet its short-term obligations with its most liquid assets

Return on Assets (ROA)

Indicator of how profitable a company is relative to its total assets. It gives an idea as to how efficient management is at using its assets to generate earnings.

Return on equity (ROE)

A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested. It can be calculated as follow : net income / shareholder’s equity.

Sales/Revenue

Amount of money brought into a company by its business activities. It is calculated by multiplying the price at which good or services are sold by the number of unit sold.

Shareholders' Equity

Is the money that was originally invested in the company plus retained earnings which the company is able to accumulate over time thought its operations. It is calculated as follow : total assets – total liabilities.

Total asset

Sum of current and non-current Asset.

52-week high/low

The highest and lowest price which a stock has traded in the past 12 months. A stock at 52 weeks low can be a possible value play as a starting point.