language Flashcards
Business lang
Market capitalization,
Defined as the value of all outstanding shares of a corporation, has an inverse relationship to both risk and return.
price to earnings ratio
Price of the stock / EPS :
$40 / EPS $2 = 20 Over the past 5 years Apples EPA: 20.97
EPS
Earnings per share, is company’s profit - dividend / divided by the outstanding shares.
($1 billion - $200 million) / 400 million shares = $2 per share
Understand the PE ratio well
A high P/E could mean that a stock’s price is high relative to earnings and possibly overvalued. Conversely, a low P/E might indicate that the current stock price is low relative to earnings.
High P/E
The value of the stock is overpriced
Low P/E
May indicate that the stock is undervalued
Equity
Shareholder Equity = Total Assets − Total Liabilities
Assets are are
Cash, accounts receivables , inventory and buildings
Liabilities are
Your obligations to pay cash, transfer assets or provide services.
Funding assets can be achieved
Owner investment or owner equity & increase liabilities.
stock holding other companies
Short and long-term marketable securities are at its stock holding other companies
Book to market ratio?
Equal & net asset / by market value 128 B / 628 B Apple 21% in 2016
Accrual accounting ?
Accrual accounting revenue is noted when it is earned not received expenses are noted as they are incurred not paid
Gross margin
Gross margin the difference between what a product cost us and what we sell it for
Operating income
Gross margin less regular and recurring expenses
