Stocktoria
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.
- 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 (diluted)
- Diluted earnings per share — net profit divided by all shares (including options/convertibles). The per-share profit.
- 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.
- 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).
- 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 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.
- Total assets
- Everything the company owns.
- Total liabilities
- Everything the company owes.
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