Finance Glossary

Plain-English definitions of the metrics and ratios used across valuation, profitability, growth, dividends, and risk.

P/E RatioCompares a company's share price with its earnings per share.PEG RatioAdjusts the price-to-earnings ratio for expected earnings growth.EV/EBITDACompares enterprise value with earnings before interest, taxes, depreciation, and amortization.Price-to-BookCompares market price with book value per share.Price to Free Cash FlowCompares a company's market value with the free cash flow it generates.Book ValueMeasures a company's accounting equity as total assets minus total liabilities.FCF YieldShows free cash flow as a percentage of a company's market value.Forward P/ECompares share price with expected earnings per share instead of reported earnings.Market CapMeasures the total market value of a company's outstanding shares.Price-to-SalesCompares a company's market value with its revenue.EPSShows net income attributable to each outstanding share of common stock.ROICMeasures after-tax operating profit relative to invested capital.ROEMeasures net income generated for each dollar of shareholder equity.Gross MarginShows the share of revenue left after cost of goods sold.Operating MarginShows operating income as a percentage of revenue.Revenue GrowthMeasures how much sales increase or decrease over a period.EPS GrowthMeasures how earnings per share change over a period.

CAGRShows the constant annual growth rate needed to move from a beginning value to an ending value.

TAMEstimates the total revenue opportunity available for a product or market.

Dividend YieldShows annual dividends per share as a percentage of share price.Payout RatioMeasures the share of earnings paid to shareholders as dividends.

Ex-Dividend DateMarks the first trading date when new buyers are not entitled to the next dividend.

BetaMeasures a security's volatility relative to the overall market.Free Cash FlowMeasures cash from operations left after capital expenditures.Debt-to-EquityCompares total debt with shareholder equity to assess leverage.Current RatioCompares current assets with current liabilities to gauge short-term liquidity.

Interest CoverageMeasures how many times earnings can cover interest expense.

52-Week HighMarks the highest price a stock traded at over the prior 52 weeks.10-KExplains a company's annual SEC filing with audited financial statements and risk disclosures.13FShows quarterly institutional equity holdings reported to the SEC.Blue Chip StocksDescribes large, established companies with durable market positions.DCFEstimates intrinsic value by discounting expected future cash flows.DividendRepresents cash or stock payments distributed to shareholders.Dividend AristocratsDescribes companies with long records of consecutive dividend increases.EBITDAMeasures earnings before interest, taxes, depreciation, and amortization.Economic MoatDescribes durable competitive advantages that protect returns over time.Enterprise ValueMeasures a company's total value including equity, debt, and cash adjustments.Intrinsic ValueEstimates what a business is worth based on fundamentals rather than market price.Net MarginShows net income as a percentage of revenue.Penny StocksDescribes low-priced stocks that often carry higher liquidity and disclosure risk.Quick RatioCompares liquid current assets with current liabilities.ROAMeasures net income generated for each dollar of assets.Sharpe RatioCompares excess return with volatility to evaluate risk-adjusted performance.Short InterestMeasures shares sold short relative to a company's share base or trading activity.WACCEstimates a company's blended cost of equity and debt capital.