Investor Glossary of Terms

Reduction of debt by regular payments of interest and principal sufficient to pay off a loan by maturity, as opposed to paying it off by a simple lump-sum payment.

Individuals working for a research or brokerage firm. They make forecasts about companies' future earnings, revenues, growth rates, and stock price (price target). They also make recommendations regarding buying, selling, or holding a particular stock.

Cash spending on fixed assets, such as buildings or equipment.

A form of payment that is just like cash, such as a traveler's check or cashier's check.

Measurement of cash provided for investment (capital spending, acquisitions and other investments) and financing activities. This is also referred to as "Operating Cash Flow."

Short-term renewable loan to finance the seasonal working capital needs of a business, such as the purchase of inventory or production and distribution of goods.

Shares held in a public company that give holders of those shares voting rights and the right to receive dividends when they are declared by the board of directors. In general, there are 2 types of shares: common and preferred stock. Common stock holders share in the success when a company profits; however, they are also at risk if the company falters. In the event of liquidation of the corporation, common stock has lower priority than preferred stock and bonds (debt).

The practices, principles, and values that guide a company and its business every day at all levels of the organization.

Resources that are reasonably expected to be realized in cash, sold or consumed within the next 12 months.

Obligations whose liquidation is reasonably expected to require the use of current assets or the creation of other liabilities within the next 12 months.

Securities such as bonds, notes, mortgages and other forms of paper that indicate the intent to repay an amount owed. A cash payment of interest and/or principal is made at a later date in time. This is in contrast to an equity investment where there is an exchange of shares of common stock or ownership of the company.

Amortization of fixed assets, so as to allocate the cost of an asset over its estimated useful life.

Distribution of earnings to shareholders in the form of cash or stock. The amount is decided by the board of directors and is usually paid quarterly.

The date for the payment of a cash or stock dividend to those who held shares on the record date.

The date by which a shareholder must officially own shares in order to be entitled to a dividend.

Annual common stock dividends per share divided by the current stock price.

When an analyst reduces a recommendation for a stock. Examples include changing a "buy" recommendation to a "hold" or a "hold" to a "sell." 

The net income or profit for a company. This amount consists of revenues minus all costs (including taxes).

An analyst's prediction about a particular company's earnings for a future quarter or year. It is an estimate whether a company will increase, decrease, or remain flat in its operating income and overall profitability.

The date on which an analyst makes an annual or quarterly earnings estimate for a stock.

The profit per share for a company. This amount is equal to earnings (net income) divided by the number of shares outstanding for that company.

A 12-, 13-, or 14-week (3-month) period designated as a quarter (of a year) by a particular company, which is used for financial reporting and tax purposes. 

A 52- or 53-week (12-month) period designated as a year by a particular company, which is used for financial reporting and tax purposes.

A prediction about the future, concerning a company's earnings, revenues, stock prices, or other financial data.

The value of a corporation as determined by the market price of its issued and outstanding common stock. This equals the price per share multiplied by the number of common shares outstanding.

The difference between the interest earned on loans and investments, and the interest paid on deposits and borrowings.

Earnings before interest and taxes.

Shows the relationship between a stock's price and a company's earnings. The P/E ratio is calculated by dividing the current price of the stock by the earnings per share (either the company's trailing annual earnings per share or the company's expected earnings per share). This is used to compare the relative value of different stocks. The P/E ratio is also called the multiple, and gives investors an idea of how much they are paying for a company's earnings power.

A stock price that an analyst forecasts will be reached by some future date.

The total of net interest income plus non-interest income generated by the company.

The increase in value of a stock or portfolio over a specified period of time.

Net income divided by total assets. ROA is a key ratio of profitability indicating how efficiently a financial institution's assets are employed.

Net income divided by total equity; a profitability ratio that measures how well equity capital is used.

Unit of equity ownership in a company.

The number of shares issued by a company, net of any shares repurchased by the company.

A financial instrument reflecting an equity ownership position in a company.

Annual return on investment, including appreciation and dividends.

When an analyst improves a recommendation for a stock. Examples include changing a "hold" recommendation to a "buy" or a "sell" to a "hold."