Do you find the post useful? Please share Share0 Tweet0 I answered this question on Quora: What is P/E Ex Cash? To calculate the p/e (ex cash), subtract Cash from the market value before dividing by earnings. So, P/E (ex cash) = (Market Value – Cash and cash equivalents)/Net Income There is a very good… [Read More]
Basic Investment Terms and Definitions
Welcome to the comprehensive list of investment terms and their definitions, designed for investors at all levels.
In this article we will go over the basic stock market terms. Stock market trading goes back about 200 years. In the US, the colonial government used to sell bonds in order to finance the war. The government promised to pay the buyers of bonds at a later date. It was during this time that private banks started issuing stocks of companies to raise money. This was also a time when the rich had tremendous opportunities to scale up their wealth.
In 1792, twenty four big merchants joined hands to create the New York Stock Exchange (NYSE). The daily meeting in Wall Street for trading bonds and stocks was also initiated during this time. In the early half of the 19th century, the US witnessed rapid economic growth. The companies understood that investors were eager to have partial ownership so they offered stocks. By the turn of the 20th century, stocks worth millions of dollars were traded and the stock markets began to grow globally. Today the stock exchanges such as NYSE, London Stock Exchange, and the Tokyo Stock Exchange have a major impact on global economy and commerce.
History has shown that the issuing of stocks helped companies to expand exponentially. The economy where the stock market is on the rise can be considered an upcoming economy. Rising share prices tend to be associated with the increased business investments. Share prices also actively influence the wealth of households and their consumption. Exchanges act as the clearinghouse for every transaction which means that they collect and deliver the shares, guaranteeing payment to the sellers. Over time, the increased usage of the stocks and stock exchanges created a unique vocabulary. Today, to understand the workings of the financial markets, it is important that we have a good knowledge of these basic stock market terms.
- NYSE: A history of the New York Stock Exchange.
- SEC: The official website of the US Securities and Exchange Commission.
- NASDAQ: The largest electronic-based stock exchange in the United States.
- CBOE: The largest options exchange in the world.
Basic Stock Market Terms
Here’s a glossary of stock market terms, suitable for beginners just learning how to pick stocks. Additionally, consider practicing your investing skills with our list of stock market game for kids. Younger students can take a look at the money games for kids
Days Sales Outstanding
Debt to Equity Ratio
Over the Counter Market (OTC)
Did this get you interested in learning more about investing in the stocks? Read our extensive guide on how to invest in stocks for practical investment concepts to help you buy your first stock
View articles in other categories: Dividend Stocks, Large Cap Stocks, Mid Cap Stocks, small cap stocks, Macro-economic, Value Investing Tips, Investing Questions, Business, Personal Finance, Investment Guide
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As investors, we all know that the earnings of a company are of paramount importance to the growth of the business as well as creation and growth of shareholder wealth. Question then arises on how the earnings should be measured. In US, the Generally Accepted Accounting Procedures (GAAP), specifies the way a company can recognize its revenue and expense. Like most investors, you are undoubtedly familiar with the terms “earnings”, “net income”, and, “earnings per share”.
Then there is EBIT.
Do you find the post useful? Please share Share0 Tweet0 Enterprise value can be thought of as a private market valuation for the company. When a buyer purchases a company in the private market, he has to pay for the company equity (including common stock, preferred shares, minority interest, etc – learn about common stock… [Read More]
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Do you find the post useful? Please share Share0 Tweet0 Enterprise Value/EBIT or EV/EBIT is a similar measure as P/E ratio (P E ratio definition). Instead of the Market Value, we use the Enterprise Value and instead of the Earnings in the denominator, we use EBIT. EV/EBIT = Enterprise Value (EV) / Earnings Before Interest… [Read More]
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