Early instalment of UK corporation tax. It forms a minimum tax on companies that earn most of their profit overseas.
Annual General Meeting. The meeting for shareholders at which routine matters, such as the election of directors, approval of reports and accounts, are put to the vote of shareholders.
American Depositary Receipt (ADR)
Certificate issued by US banks to facilitate trading for US shareholders in the shares of non-US companies.
Fixed assets include land, machines and buildings; current assets consist of cash, money owed, stock, investments and work in progress; intangible assets are goodwill, trademarks, patents, etc; liquid assets are funds kept in cash or in a form that can be quickly and easily turned into cash.
Profit made on the sale of shares, commodities, property or land; in the UK, capital gains tax may be payable on the profit.
Measure of the actual cash generated by a business rather than the accounting profit. In the UK typically pre-tax profit plus depreciation, amortisation and other non-cash charges. In the US, net income with depreciation charges added back.
Closed-end investment funds
Investment funds with a fixed share capital. As opposed to open-ended funds which expand or contract according to investor demand.
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.
A market average of stockbrokers' and bank analysts' forecasts of the future financial performance of a company.
Bond that can be converted into shares of the issuing company.
The rate of interest payable on a fixed-interest security, traditionally a detachable coupon.
Cum dividend (cum cap, cum all (see also Ex:))
Purchase of a share cum dividend means that the buyer of a share is entitled to the next dividend payment; cum rights means that the purchaser is entitled to shares from a forthcoming rights issue; cum cap means that the purchaser is entitled to a scrip issue; cum all means that the purchaser is entitled to all of these. Opposite of ex:
Assets of a company which can be realised in cash, sold or consumed within one year. Typically the sum of cash, cash equivalents, receivables, inventories, prepaid expenses and other current assets.
Liabilities of a company that the company expects to satisfy within one year. Typically accounts payable, short term debt, notes payable, taxes payable, dividends payable and other current liabilities.
A ratio which describes the leverage or gearing of the company and is calculated as total debt divided by common shareholders' equity expressed as a percentage.
The reduction in the balance sheet value of a company asset to reflect its loss of value through age and wear and tear.
The number of times a company could pay its most recent net dividend out of its net profit (profits after tax).
The proportion of a company's profit that it pays to its shareholders, usually declared as a dividend per share (DPS). In the UK the dividend is normally paid in two parts: an interim dividend payment and a final dividend once the final results are known.
Profit available to ordinary shareholders, after all operating expenses, interest charges, taxes and preference dividends have been deducted. Excludes extraordinary items.
Earnings per share (eps)
Earnings divided by the number of ordinary shares outstanding. Diluted earnings per share adjusts the number of shares to reflect the potential number of shares outstanding after the exercise of options or convertible debt.
Extraordinary General Meeting. A meeting of shareholders which may be called to approve special events such as a take-over, or major acquisition.
Employee Stock Ownership Plan (ESOP)
A trust established by a company for the allocation of shares to employees. Usually a tax efficient way to provide this motivational benefit.
The voting capital in the company, represented by the ordinary shares.
Ex dividend, ex rights, ex cap, ex all
Purchase of a share Ex dividend (xd) means that the buyer of a share is not entitled to the next dividend payment; ex rights means that the purchaser is not entitled to shares from a forthcoming rights issue; ex cap means that the purchaser is not entitled to a scrip issue; ex all means not entitled to any of these. Opposite of cum.
Borrowing money to buy out a company, using the company's assets as collateral for the borrowing. The loans are typically repaid from the company's cash flow or by selling off assets.
The debts of a company and other financial obligations; the opposite of assets.
London International Financial Futures and Options Exchange.
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. Also a measure of the volume of shares being traded, which may affect the ability of buyers or sellers to build/unwind large holdings without a substantial impact on the price.
Long term debt
All interest-bearing financial obligations which mature in more than a year.
Ratio or multiple calculated by dividing the price per share (p) by the earnings per share (e). A simple measure for comparing the relative valuations of different companies.
Raising money by issuing new shares and 'placing' them, generally in substantial amounts, with major investors.
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. Preference shares are share capital but not equity share capital.
The first release of a company's results for the financial year to the stock exchange.
All income (or loss) before tax.
The surplus of revenue generated over expenses incurred for a particular accounting period. Operating profit refers to the profit generated before interest and tax have been taken into account.
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 securities being offered for sale.
A book-keeping transaction that does not affect the value of the shareholders interest or raise any money for the company; it is a means for a company to transfer money from reserves into permanent capital. Can also be known as a capitalisation issue or bonus issue.
A financial instrument issued by a company and traded on a stock exchange.
Securities and Exchange Commission (SEC)
The statutory body that regulates the US securities industry.
Securities and Futures Authority (SFA)
The regulatory body for the securities and futures markets in the UK. Formed in 1991 through a merger of the Securities Association and the Association of Futures Brokers and Dealers.
Common shares outstanding.
The term to describe the position of investors that have sold shares they do not possess, in the hope of buying them later at a lower price.
Short term debt
The portion of debt that is payable within one year. Falls under current liabilities on the company balance sheet.
Usually the difference between the Bid and Offer prices.
The term used to describe the division of shares into a larger number of shares with lower unit value. There is no change to the proportional holding of shares.