General Glossary

Digital Look provides 4 different glossaries, a general glossary covering the general terms we are asked about, a fundamentals glossary covering the fundamentals terms you will find on the site, a technical glossary explaining some of the more technical terms you are likely to encounter and a trades glossary covering the various trade types.


Alternative Investment Market (AIM) – A junior market compared with the main London Stock Exchange with less onerous listing requirements so it tends to attract smaller companies that have been trading for a short period of time.

Acquisitions – Acquiring control of a corporation, called a target, by stock purchase or exchange, either hostile or friendly.

AGM - A mandatory yearly meeting of shareholders that allows stakeholders to stay informed and involved with company decisions and workings.

Balance Sheet – A financial statement which provides a quantitative summary of a company’s financial position at a given point in time. This takes into account assets, liabilities and net worth with the first part of the balance sheet showing all the productive assets a company owns, and the second part showing all the financial methods.

Bid Price – The price at which a market maker will buy a security.

Broker Recommendation – A stockbroker’s opinion of the investment quality of a company’s shares at the time that it’s reviewed in comparison to other stocks in the sector.

Bulletin Board – A place on a website where private investors can post comments and questions.

Called up Share Capital – Nominal value of shares of the company that are issued and fully paid.

Capital Employed – Capital employed is the value of the assets that contribute to a company's ability to generate revenue. Fixed assets plus current assets minus current liabilities.

Cash Flow – A measure of a company's financial health. Equals cash receipts minus cash payments over a given period of time.

Cash Flow Statement – Gives a summary of a company’s cash flow over a given period of time.

Closing Price - The price of the last transaction for a given security at the end of a given trading session. also called close.

Corporation Tax – A tax paid by limited companies on their profits.

Creditors – People to whom the company owes something, usually cash or a claim to services.

Debtors – People who owe the company something, usually cash or a claim to services.

Director Dealings – When directors buy or sell shares in their company.

Disposals – Sale of a business or business line to another entity.

Dividends – A taxable payment declared by a company's board of directors and given to its shareholders out of the company's current or retained earnings, usually quarterly.

Dividend Cover – A company’s ability to pay ordinary dividends to shareholders out of profits earned and is calculated by dividing the adjusted Earnings Per Share (EPS) by the total dividend per share.

Dividend Growth (Average) - this shows how well a company is paying it Dividends by comparing the amount they have paid out to the shareholders over a chosen period.

Dividend Payment Date – The date on which the most recent dividend will be paid to shareholders.

Dividend Per Share Growth – The percentage change from the previous year in the dividend paid on each share.

Dividend Yield - A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. The Dividend Yield is calculated as:

(Total Dividend/ Share Price) x 100

Dividend Yield is displayed as a percentage.

Earnings Per Share – A company’s profitability expressed on a per share basis and calculated by dividing the company’s annual earnings after tax by the number of shares in issue.

EGM – If something happens within the company that requires the shareholders to meet before the next scheduled AGM, then an extraordinary general meeting is held.

EPS Growth - EPS Growth shows the relative growth of a company’s earnings over the last year. A negative value indicates the company’s earnings fell in the last year. It is calculated as:

[(Current year EPS – Last year EPS)/Last year EPS]*100.

EPS Growth is displayed as a percentage.

Exchange traded Fund (ETF) – ETFs are a kind of collective investment fund competing with investment trusts and unit trusts for investor’s money. ETFs are a lot like conventional tracker funds, pooling the cash of a large number of investors and investing it a basket of shares in companies that make up an index. ETFs are open ended but they do not usually have initial charges and their annual management charges are much lower.

Ex-Dividend Date – was created to allow all pending transactions to be completed before the record date. If an investor does not own the stock before the ex-dividend date, he or she will be ineligible for the dividend payout. Further, for all pending transactions that have not been completed by the ex-dividend date, the exchanges automatically reduce the price of the stock by the amount of the dividend.

Forecast Dividend Change – this is what the analysts believe the Dividend payout will increase/decrease by within a chosen period.

Forecast EPS Change – this is what the analysts believe the EPS will increase/decrease within a chosen period.

Forecast Revenue Change – This is what the analysts believe the Revenue will increase/decrease by within a chosen period.

Gearing – Companies are financed by a combination of debt and shareholders equity. A gearing ratio will tell how much a company has borrowed in relation to the amount of shareholders funds in the business.

General Meetings – A meeting of the shareholders of a company usually held on an annual basis - commonly known as an AGM at which business such as the reception of the directors’ report and accounts, declaration of dividends, election of directors is held.

Gross Gearing – Calculated by dividing gross borrowings by shareholder funds.

High/Low price – The highest and lowest prices for a security over a certain period – most usually quoted for the day (intraday high/low) and for the year (52 week high/low).

Index – An index is a statistical indicator representing the value of the securities that constitute it. Indices are often used to measure a market or industry’s performance. An index may be grouped by market cap (e.g. FTSE 100), business type (e.g. the technology companies in the FTSE Techmark index), sector (e.g. Telecoms) or some other parameter.

Intangible Assets – A company’s long-term assets that are usually non-physical in nature, but represent a right or expected future benefit. Examples are goodwill, brands and trademarks.

Interest – Monies charged by a bank or other financial organisation for borrowing money. This can also refer to the return earned on an investment, including money on deposit at a bank.

Interim Dividend - A dividend which is declared and distributed before the company's annual earnings have been calculated. These dividends are usually distributed six-monthly or quarterly.

Interim Results (“Interims”) - The results reported by a company for the first six months of its financial year. Generally, interim results are made public within three months of the end of the interim period.

Introduction - When a company comes to the market without making any money on admission.

IPO – Initial Public Offering, the term used for any company joining the stock market. It is a way for companies to raise cash and increase and diversify the current shareholder base.

Investment Trusts – a collective fund in the form of a listed company holding a portfolio of securities on behalf of its own shareholders. An investment trust and its shares are tradable in the same way as other companies and shares.

ISIN - International Securities Identification Number. A unique international code which identifies a securities issue. Each country has a national numbering agency which assigns ISIN numbers for securities in that country.

Market Capitalisation – The market value of a company, calculated by multiplying the current share price by the number of shares in issue.

Mid Price – The price in-between Bid and Offer price.

Minority Interest – Represent the share of the assets of the business in subsidiaries that are not wholly owned.

Net Assets – The total figure for all assets less all liabilities.

Net Asset Value – The value of the shareholders interest in a company, calculated by subtracting liabilities from assets.

Net Asset Value (Funds) – The price of each share of a mutual fund. It is calculated by subtracting the fund's liabilities from its total assets, and dividing that figure by the number of shares outstanding. The NAV is the amount of money that an investor would receive for each share if the mutual fund sold all of its assets, paid off all of its outstanding debts, and distributed the proceeds to shareholders.

Net Gearing - is the Total Debt net of cash & equivalents as a percentage of the Total of Shareholders' funds and Debt funds. This ratio is calculated as:

[ (Total Liabilities– Cash at Bank & in Hand)/Shareholder Funds ] *100

Net Gearing is displayed as a percentage.

New Issue – Also known as IPO or Initial Public Offering, the term used for any company joining the stock market. It is a way for companies to raise cash and increase and diversify the current shareholder base.

Next Year Dividend Yield - Estimated figure for the annual dividend per share that the company will pay out next year. This is a consensus figure calculated from a range of analysts that produce investment research on the stock.

Next Year EPS Estimate - Estimated figure for next year’s Earnings Per Share figure. This is a consensus figure calculated from a range of analysts that produce investment research on the stock.

Next Year Forecast P/E Ratio - Estimated figure for next years Price to Earnings ratio. This is a consensus figure calculated based on the EPS figure expected from a range of analysts that produce investment research on this stock.

OFEX – A British share trading and information service that enables investors to buy and sell shares in companies whose shares are not traded on the London Stock Exchange.

Offer Price – The price at which a market maker will sell a security.

Official List – The UK Listing Authority’s list of all listed securities.

Operating Margin – This is the trading margin for each period reported, showing trading profit as a percentage of sales, or total trading revenues.

The calculation is as follows:

Trading profit/total sales x 100 = margin (%)

Operating Profit/Loss – A company’s profit after deducting operating costs from gross profits.

P/E Ratio - Also known as the Price to Earnings ratio is the most common measure of how expensive a stock is. The P/E ratio is equal to a stock's market capitalization divided by its after-tax earnings over a 12-month period, usually the trailing period but occasionally the current or forward period. The value is the same whether the calculation is done for the whole company or on a per-share basis. For example, the P/E ratio of company A with a share price of £10 and earnings per share of £2 is 5. The higher the P/E ratio, the more the market is willing to pay for each dollar of annual earnings.

Digital Look uses the adjusted EPS figure for this calculation.

PEG Ratio - is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's expected future growth. A stock's price/earnings ratio divided by its year-over-year earnings growth rate. In general, the lower the PEG, the better the value, because the investor would be paying less for each unit of earnings growth.

The PEG is calculated as P/E Ratio/EPS Growth and is expressed as a number.

Placing - A form of issue of securities in the UK, typically with a predetermined number of non-retail investors.

Portfolio – A collection of investments all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices.

Preference Shares - Fixed dividend shares that rank above ordinary shares if a company is wound up. Preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders.

Preliminary Results – Listed companies have to announce the annual financial results for the company, also know as prelims or finals. They are considered preliminary until they are reviewed, adjusted and approved by audit. They also have to announce interim results and some companies also announce quarterly figures.

Pre-Tax Profit – A company’s operating profit before tax is deducted.

Pre-Tax Profit per share – A company’s profit after expenses but before tax divided by the number of shares in issue.

Profit and Loss account - The profit and loss account provides a record of a firm's trading activities and whether it has made a profit or lost money over a particular period of time. It differs from the balance sheet that records the financial position of the business at a particular snapshot moment in time.

Profit Growth (Average) – this shows how well a company is growing by comparing the net profits to the past net profits over a chosen period.

Profit Warning – When a listed company expects profits to fall below analysts’ forecasts by more then 10%, the directors are required to issue a profits warning through the London Stock Exchange.

Public Offer –The making available of a new securities issue to the public through an underwriting also called offering. The public can ask for a prospectus and apply to buy shares prior to the companies admission.

Reserves – In asset-based lending the difference between the value of the collateral and the amount lent. Also, funds set aside for emergencies or other future needs. Reserves can arise from the retention of profits or from events such as the issue of shares at a premium or the revaluation of assets.

Regulatory News Service – Also known as RNS, a means by which UK listed companies make announcements to the London Stock Exchange.

Revenue Growth (Average) – this shows how well a company is growing by comparing the Revenue from the historical Revenue over the chosen period.

RiskGrade – Helps investors measure and compare the risk of financial investments to other companies at the same point in time. Visit http://www.msci.com to learn more about RiskGrades.

ROCE – (Return on capital employed). This is a measure of the return from invested and borrowed capital. The return is the pre-tax profit earned before charging borrowing costs.

Sales Per Share – A ratio that shows the total revenue earned per share over a 12-month period. This ratio can be compared to the company’s share price to understand the value that the markets are putting on a unit of the company’s sales.

Sectors – A distinct subset of a market, society, industry, or economy, whose components share similar characteristics. Stocks are often grouped into different sectors depending upon the company's business.

SEDOL - The Stock Exchange Daily Official List number, a code used by the London Stock Exchange to identify stocks, especially those that aren't actively traded in the U.S. and don't have a CUSIP number.

Shares – A unit of ownership that is a proportional amount of a company. The standard class of shares are usually referred to as “Ordinary Shares” but a company may have more than one class of share, including Preference Shares.

Share Premium Account – Surplus of proceeds from share issue over the nominal value of shares issued.

Shareholder Funds – The sum of all company assets less all liabilities.

Shares in Issue - This is the number of shares currently issued for that company.

Spread – The difference between the Bid Price and the Offer Price of an investment.

Stock Exchange – is an organization of brokers and investment bankers which has the purpose of providing the facilities for trade of company stock and other financial instruments - usually a central location and recordkeeping. The trading of stock on stock exchanges is called the stock market.

Stocks – The combined value of raw materials, work in progress or under construction and finished goods held.

Note that this is also the American term for ‘shares’.

Tangible Assets – Physical assets owned by a company or individual that can be seen or touched such as buildings, goods for sale or machinery.

Time and Sales - The official record of trades executed on a stock exchange during the day.

Ticker - The three or four letter trading symbol assigned to the share (and some types of fund – investment trusts and ETF’s) by the exchange on which it trades. Investors often refer to shares by their ticker symbols because of their brevity and because they often remain the same even if a company’s name changes.

Total Assets – The sum of all company assets; both fixed and current.

Trading Statement – A statement made by a company regarding current business activities and sales experience.

Turnover – Also known as sales, the amount derived from the provision of goods and services falling within a company’s normal activities after the deduction of trade discounts, VAT, etc.

Volume – The number of shares traded over a given time period, usually one day.

VWAP (Volume weighted average price) - A measure of the price at which the majority of a given day's trading in a given security took place. This is calculated by dividing the value of trades executed by the volume of shares traded over a given period.














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