AGM
Annual General Meeting. The meeting for shareholders at which matters such as the election of directors, approval of reports and accounts, and approval of the proposed final dividend, are put to the vote of shareholders.
Assets
Assets include tangible fixed assets, intangible fixed assets and current assets.
Base rate
Annual interest rate on which lending charges are calculated by British banks.
Bid Price
The price at which shares may be sold in the stock market.
Blue chip
An investment considered reliable with regard to dividend income and capital value.
Bond
A certificate of debt issued to raise funds. Bonds typically pay a fixed rate of interest and are repayable at a fixed date.
Capital gain
Profit made on the sale of shares, property or land.
Cash flow
Measure of the cash generated by a business rather than the accounting profit.
Close period
The period prior to the company's release of its Interim or Preliminary results, during which the directors are not permitted to trade in the shares of the company (normally two months).
Current assets
Assets of a company which can be realised in cash, sold or consumed within one year. Typically comprises cash and cash equivalents, receivables, inventories, prepaid expenses and other similar assets.
Current liabilities
Liabilities of a company that the company expects to satisfy within one year. Typically made up of accounts payable, short term debt, taxes payable and accrued liabilities.
Debt/equity ratio
A ratio which describes the leverage or gearing of the company and is calculated as total debt divided by shareholders' equity expressed as a percentage.
Depreciation
The reduction in the balance sheet value of a company asset to reflect its loss of value through age, use and wear and tear.
Dividends
The portion of a company's profit that it pays to its shareholders, usually declared as a dividend per share (DPS). Dividends are normally paid in two parts; an interim dividend during the financial year and a final dividend once the final results are known.
Dividend cover
The number of times a company could pay its most recent dividend out of its net profit (profit after tax).
Earnings
Profit available to ordinary shareholders, after all operating expenses, interest charges, taxes and preference dividends have been deducted.
Earnings per share (eps)
Earnings divided by the number of ordinary shares in issue. Diluted earnings per share adjusts the number of shares in issue to reflect the potential number of shares after the exercise of options or the issue of shares under employee share schemes.
EGM
Extraordinary General Meeting. A meeting of shareholders which may be called to approve special events such as a major acquisition.
Employee Share Ownership Plan (ESOP)
A trust established by a company for the allocation of shares to employees.
Equity
The net worth of a company, represented by its share capital and reserves.
Ex dividend
Purchase of a share Ex dividend (xd) means that the buyer of a share is not entitled to the next dividend payment.
Exceptional items
Exceptional items are events or transactions that fall within the activities of the group but which by virtue of their size or incidence are disclosed separately in order to improve the reader’s understanding of the financial statements.
Gearing
Gearing is used to measure the strength of a company’s balance sheet. The gearing ratio expresses net debt as a percentage of net assets.
Gross profit
The difference between total revenue (sales) and the total cost of sales.
Gross profit margin
Gross profit expressed as a percentage of revenue (sales).
Hedging
Reducing exposure to risk of loss resulting from fluctuations in exchange rates, interest rates etc.
Holding company
Company whose main assets are shareholdings (usually controlling) in other companies.
Initial Public Offering
The process of taking a privately owned company public, by listing its shares on a stock exchange.
Institutional investors
Large financial institutions such as pension funds, unit or investment trusts and insurance companies.
Intangible fixed assets
Long-term assets that do not have a physical, tangible existence. Intangible assets include goodwill, computer software and capitalised development expenditure.
Interim results
Unaudited first half figures that provide an indication of the company's trading and profit performance since the last full year accounting period.
Inventories
Also known as stock, this relates to items that have been manufactured or acquired for resale, including finished goods, work in progress and raw materials. Appears as a current asset on the balance sheet.
Joint venture
Co-operation on a project or business between two or more corporate bodies.
Liabilities
The debts of a company and other financial obligations; the opposite of assets.
Liquidity
The proportion of cash or cash equivalents in a company's assets. Sometimes used as a measure of the near term financial health of a company.
Long term debt
All interest-bearing financial obligations which mature in more than a year.
Margins
See gross margin and operating margin.
Market Price
The price at which a share can be traded in the stock market.
Market capitalisation
Value at current market price of a company’s equity capital. It is calculated by multiplying the current share price by the number of shares outstanding.
Mid Price
The mid point between the bid and offer prices quoted in the stock market.
Minority interest
A shareholding in a company that is less than a controlling interest, generally less than 50%.
Net income
Income (profit) shown after all operating and non-operating income and expense, income taxes, minority interest and exceptional items but before preference and ordinary dividends.
Offer price
The price at which shares may be purchased in the stock market.
Operating profit
The difference between revenue (sales) and the costs incurred during operations (total of cost of sales and operating expenses) ), calculated before interest charges and tax.
Operating profit margin
Operating profit expressed as a percentage of revenue (sales).
Option
The right (but not the obligation) to buy or sell shares at a given price (exercise price) before a given date (expiry date).
Ordinary share
The most common class of share representing the owners’ interest in a company.
Preference shares
Shares with a fixed dividend. The holders of preference shares are entitled to their dividend before ordinary shareholders and rank above ordinary shareholders should the company be wound up.
Prelims
The first release of a company's results for the financial year to the stock exchange.
Pretax profit
Profit (see below) before tax.
Profit
The surplus of revenue generated over expenses incurred for a particular accounting period.
Prospectus
A document, published prior to the issue of shares to the public, which explains all aspects of a company's business, detailing financial and other information about the company and the shares being offered for sale.
Return on assets
Ratio which measures the profit a company generates from its total assets.
Rights issue
Offer of shares to existing shareholders to raise money.
Share capital
Ordinary shares in issue.
Share option
See Option.
Short term debt
The portion of debt that is payable within one year. Included in current liabilities on the balance sheet.
Tangible fixed assets
Tangible fixed assets represents property, plant and equipment, after the deduction of depreciation.
Yield
The rate of return gained on an investment. It also refers to the dividend payable on a share (and is expressed as a percentage of the market price).