Investing Glossary
Quick reference for common investing and stock market terms. Click on linked terms for in-depth guides.
B
- Beta
- Measure of a stock's volatility relative to the market. Beta > 1 means more volatile than the market.
C
- Current Ratio
- Current assets divided by current liabilities. Above 1.0 suggests the company can pay short-term obligations.
D
- Dividend Yield
- Annual dividend per share divided by stock price, expressed as a percentage. Shows the cash return from dividends.
- DCF (Discounted Cash Flow)
- Valuation method that estimates intrinsic value by projecting future cash flows and discounting them to present value.
- Debt-to-Equity Ratio
- Total debt divided by shareholders' equity. Higher ratios indicate more financial leverage and risk.
E
- EPS (Earnings Per Share)
- Company's net income divided by shares outstanding. Higher EPS generally indicates greater profitability.
- Enterprise Value (EV)
- Market cap plus debt minus cash. Represents the total cost to acquire a company.
- EBITDA
- Earnings before interest, taxes, depreciation, and amortization. A proxy for operating cash flow.
- Ex-Dividend Date
- The cutoff date to own a stock and receive the next dividend payment.
F
- Free Cash Flow (FCF)
- Cash generated after capital expenditures. Represents money available for dividends, buybacks, or debt reduction.
I
- Intrinsic Value
- The estimated true worth of a company based on its fundamentals, typically calculated using discounted cash flow or other valuation methods.
M
- Market Cap (Market Capitalization)
- Total market value of a company, calculated as share price × shares outstanding. Used to categorize companies as small, mid, or large cap.
- Margin of Safety
- The difference between intrinsic value and market price. A larger margin provides a buffer against estimation errors.
O
- Operating Margin
- Operating income divided by revenue. Shows what percentage of sales becomes operating profit.
P
- P/E Ratio (Price-to-Earnings)
- Stock price divided by earnings per share. Shows how much investors pay for each dollar of earnings.
- P/B Ratio (Price-to-Book)
- Stock price divided by book value per share. Useful for valuing asset-heavy companies like banks.
- PEG Ratio
- P/E ratio divided by earnings growth rate. Helps evaluate if a growth stock is fairly valued.
- Payout Ratio
- Percentage of earnings paid as dividends. Lower ratios suggest more sustainable dividends.
R
- ROE (Return on Equity)
- Net income divided by shareholders' equity. Measures how efficiently a company generates profit from shareholder investments.
W
- WACC (Weighted Average Cost of Capital)
- The average rate a company pays to finance its assets, combining cost of equity and cost of debt.
Intrinsic Investor is for educational purposes only. Not financial advice.