Glossary of investing terms

Every metric, ratio and filing behind a Stocktoria score, in plain English. Terms with a deeper guide are linked — the rest are defined right here.

Altman Z″: A balance-sheet score of bankruptcy risk. Above 2.6 is the safe zone; below 1.1 signals distress.
Beneish M-score: A statistical model that flags possible earnings manipulation from eight accounting ratios (receivables, margins, asset quality, growth, accruals...). Above about -1.78 suggests a higher chance of aggressive accounting; it is a screen, not proof.
Beta: How much the stock moves versus the overall market. 1 = moves with the market, above 1 = more volatile, below 1 = steadier.
Cash & equivalents: Cash and very-liquid holdings the company can use immediately.
Current ratio: Short-term assets divided by short-term bills — ability to cover near-term obligations. Above 1 is healthier.
Debt / equity: Long-term debt divided by equity — how much the company relies on borrowing. Lower is generally safer.
Dividend payout: The share of profit paid out as dividends. A lower payout usually means the dividend is safer.
Dividend yield: Yearly dividends as a percent of the company's market value — the cash return from dividends.
EPS: Earnings per share — net profit divided by the number of shares. The slice of profit attributable to each share.
EPS (diluted): Diluted earnings per share — net profit divided by all shares (including options/convertibles). The per-share profit.
EV / EBITDA: Enterprise value divided by EBITDA (operating profit before depreciation). A takeover-style valuation multiple — lower is cheaper.
Earnings yield: EBIT divided by enterprise value — how much operating profit you get per dollar of total company value. Higher is cheaper; it's the inverse of EV/EBIT and the value half of Greenblatt's Magic Formula.
Enterprise value: The whole-company price tag: market cap plus net debt. What it would cost to buy the business outright, including its debt.
FCF margin: Free cash flow as a percent of revenue — how cash-generative the business is.
Free cash flow: Operating cash flow minus money spent on equipment and property — the cash left over to pay dividends or reduce debt.
Graham number: Benjamin Graham's rough maximum fair value for a stock: the square root of 22.5 x EPS x book value per share. A market price below it hints at possible undervaluation (works best for stable, profitable companies).
Gross margin: Gross profit as a percent of revenue — how much is left after direct costs. Higher is better.
Gross profit: Revenue minus the direct cost of making the product or service.
Income tax: Corporate income tax for the year.
Interest expense: The cost of the company's debt — interest paid on borrowings.
Inventory: The value of goods held for sale or used in production.
Market cap: The company's total stock-market value — share price times the number of shares.
Net income: The bottom-line profit left after all costs, interest and taxes.
Net margin: Net profit as a percent of revenue — how much of each sales dollar becomes profit.
Operating cash flow: Actual cash generated by the day-to-day business — harder to fake than reported profit.
Operating income: Profit from the core business, before interest and taxes (also called EBIT).
Operating margin: Operating income as a percent of revenue — profitability of the core business.
P / B: Price-to-book: market value divided by the company's net worth (equity).
P / E: Price-to-earnings: market value divided by yearly profit. Roughly how many years of profit you pay for. Lower can mean cheaper.
P / FCF: Price-to-free-cash-flow: market value divided by the cash the business generates after investment.
P / S: Price-to-sales: market value divided by yearly revenue. Useful when profit is small or negative.
Piotroski F: A 0–9 score of financial health from nine pass/fail checks on profitability, debt and efficiency. Higher is stronger (8–9 is excellent).
Quality Score: Stocktoria's 0-100 composite of a company's financial health (Piotroski F), solvency (Altman Z), profitability (net margin) and revenue growth — one number for overall quality, graded A+ to D. Higher is better. A general read, not a substitute for the individual scores.
R&D expense: Money spent on research and developing new products.
Return on assets: Profit relative to the assets used to produce it — how efficiently the company uses what it owns.
Return on capital: Operating profit (EBIT) as a percent of capital employed (total assets minus current liabilities) — how efficiently the business turns capital into profit. Higher is better.
Return on equity: Profit relative to the owners' equity — the return generated on shareholders' money.
Revenue: Total sales — the money the company brought in from its products and services.
Revenue growth: How much sales grew compared with the prior year.
SG&A expense: Selling, general & administrative costs — overhead like marketing, salaries and offices.
Shareholders' equity: Assets minus liabilities — the owners' stake in the company (its book value).
Total assets: Everything the company owns.
Total liabilities: Everything the company owes.

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