FINANCIAL DICTIONARY

Here you can find the legend regarding the financial words included in the video.

Market value
 

Value of a company as determined by the market price of its issued and outstanding common stock. It is calculated by multiplying the number of outstanding shares by the current market price of a share.

Turnover
 

A comapny’s annual total sales volume. At the end of its fiscal year, all companies report these figures. Every quarter, US companies have to publicly report them to the SEC through the 10-k form.

Net Income
 

Difference between total sales and total expenses. Total costs comprise cost of goods sold, including depreciations. Total expenses comprise selling, general and administrative expenses. Net income after taxes is commonly known as bottom line; dividends are normally paid out of this figure.

Net Financial Position
 

The difference between total cash position (cash, cash equivalents and marketable securities) and total financial debt (bank overdrafts, current portion of long-term debt and long-term debt). Net financial position is not a U.S. GAAP measure, however we believe it provides useful information for investors because it gives evidence of, the financial health of the company, either in terms of net indebtedness or net cash, by measuring capital resources based on cash, cash equivalents and marketable securities and the total level of financial indebtedness.

Beta
 

Coefficient measuring a stock’s relative volatility in relation to the rest of the stock market. The S&P500 has a beta coefficient of 1. Any stock with a higher beta is more volatile than the market, and any stock with a lower beta can be expected to rise and fall more slowly than the market. For instance, if the company has a beta of 1.2 and the daily performance of the S&P has been 1%, there is a good chance that the performance of the company’s stock was close to 1.2%.

Price Earnings
 

Price of a stock divided by its earnings per share. The P/E ratio gives an idea of how much investors are paying for a company’s earning power. Higher PE stocks are riskier then lower ones since it is easier to miss high growth expectations. In order to smooth out business cycles and special charges and credits Benjamin Graham worked on 3 -year average earnings.

Price Book Value
 

A company’s market value divided by its net asset value (total assets minus intangible assets, liabilities, current and long term). P/B can guide if the value of the company is higher or lower than the ultimate value of a company in liquidation.

Dividend Yield
 

A percentage of return earned by an investor of a common stock or preferred stock. The yield is determined by dividing the amount of dividends per share by the current market price of the stock. Growth stocks tend to not distribute any dividend.

Price To Sales
 

A company’s market value divided by its turnover (corporation’s annual total sales volume).

EV/EBITDA
 

Enterprise value calculated as market value plus debt, minority interest and preferred shares, minus total cash and cash equivalents divided by its Earnings before interest, taxes, depreciations and amortizations. This valuation parameter, which takes debt into account, is very useful to compare different companies.

CURRENT RATIO
 

Current assets divided by current liabilities. The ratio shows a company’s ability to pay its current obligations from current assets. Many growth stocks have a consistent cash position that can alter the ratio.