Investing, as an exercise, has its own language or lingo. Understanding its language is key to properly manage your time and money in this endeavor. Information culled, to make sound decisions to either buy or sell, needs to be sifted from the deluge of information available online. The following are some key investment jargon that all newbies need to understand.
This term refers to the stock of a large company, be it a national or international company, who has exhibited a solid history of stable earnings over long periods of time. Alongside the stable revenue generated is a long record of dividend issuances as well as a solid reputation for stable management and high-quality products. These shares of stock are often said to be immune to the sudden changes in the market, providing returns in the long run.
This is a payout made by a corporation. They give it to their shareholders as the way of sharing profits and other earnings during the year. Companies deposit dividends to the shareholder’s bank account or they issue new shares. The latter is a dividend reinvestment plan.
ROE or return on equity is the annual income divided by shareholders’ equity. In essence, this is the company’s assets less its liabilities. Another term for ROE is book value which is reported in the balance sheets of a corporation during its annual meeting. This is a good measure of a company’s profitability against another competitor. However, ROE is not a measure of the company’s future market performance.
EBITDA is an accounting system that calculates the net earnings of a company before deducting interest expenses, taxes, depreciation, and amortization. This particular investment jargon stands for the company’s operating profitability. It is also a generally accepted accounting principle used to measure a company’s performance for a given period of time.
This is a ratio that measures its ability to pay for short-term debt obligations. When the ratio is high, it means the company is very liquid. One could get the current ratio by dividing the current assets by the current liabilities. When the current assets are twice the value of the current liabilities, then the company is financially strong in the short term. If the current liabilities exceed current assets, then the company has a problem paying for short-term obligations.
This is a form of corporate equity ownership which has features on its own. A stock purchase agreement (SPA) is proof of this ownership. Although second only to bonds, preferred stockholders get dividends first before common stockholders. The payout terms of preferred shares of stock are indicated in the corporation’s articles of association.
This is a form of corporate equity ownership also evidenced by a stock purchase agreement or a statement of account. This stock receives the remaining amount after all the company’s assets have paid bonds, creditors, salaries, and preferred stockholders. Common stocks increase or decrease in value in stock market trading.
This investment jargon refers to a venue wherein services are provided for stock bonds and traders and their transactions. Those include the purchase or sale of stocks, bonds, and other securities. Another feature of a stock market is its provision of facilities for the issuance and redemption of securities as well as other financial instruments. This service also includes payouts of income and dividends for shareholders.
The basics of business investing: What you need to know
There are rules that investors should follow in business investing. Some of these include starting early and investing what you...
Most Americans agree to decriminalize marijuana
More than 60 percent of Americans surveyed want to legalize the use of marijuana, an increase from the 40 percent...
Dow Jones earnings hit a new all-time high
Following the US midterm elections, the Dow Jones advanced 2.13 percent with more all-time highs to follow before the year...
Gold and silver dip as the greenback continues to climb
Gold and silver prices are continuing to go down in favor of a stronger U.S. dollar, so what happens now?
A light that never goes out: Longtime Marvel writer and publisher Stan Lee passes away at 95
Stan Lee, a well-known publisher and writer of Marvel Comics, died this Monday in his Los Angeles home. Lee was...
Featured4 days ago
Portfolio diversification: How to allocate eggs in several baskets
Featured4 days ago
Why women must step up their financial knowledge
Business4 days ago
How can artificial intelligence make ed-tech industry bloom?
Featured2 days ago
How Americans still have money for favorite leisure activities despite loans
Featured3 days ago
Examining the importance of organizational health
Featured3 days ago
Smart money management: 7 apps to keep your finances in order
Business3 days ago
How costume designs contribute to the success of a show
Economy3 days ago
Why pay taxes? It’s a surprising secret to living the good life