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Definition of Collar
An upper and lower limit on the interest rate on a floating-rate note.
Interest-rate option that guarantees that the rate on a floating-rate
The simultaneous purchase of an equity floor and sale of an equity cap.
Amounts contributed to the company by the owners (contributed capital) plus the residual earnings of the business (retained earnings).
Funds raised from shareholders.
Ownership. Common stock represents equity in a corporation.
Refers to one of the two basic sources of capital for a business, the
Represents ownership interest in a firm. Also the residual dollar value of a futures trading account,
The difference between the total of all recorded assets and liabilities on the balance
The net worth of a business, consisting of capital stock, capital (or paid-in) surplus (or retained earnings), and, occasionally, certain net worth reserves. Common equity is that part of the total net worth belonging to the common shareholders. Total equity includes preferred shareholders. The terms common stock, net worth, and common equity are frequently used interchangeably.
The net worth of a company. This represents the ownership interest of the shareholders (common and preferred) of a company. For this reason, shares or stocks are often known as equities.
The discount rate that reflects only the business risks of a project and abstracts from the
The ratio of total assets to stockholder equity.
A management style that de-emphasizes the significance of economic
Value of outstanding common shares at par, plus accumulated retained
An account that reduces an equity account. An example is Treasury stock.
Same as the cost of common stock. Sometimes viewed as the
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A comparison of debt to equity in a company's capital structure.
A widely used financial statement ratio to assess the
A common term for convertible bonds because of their equity component and the
Dual syndicate equity offering
An international equity placement where the offering is split into two
Life insurance or annuity product in which the cash value and benefit level fluctuate according to the performance of an equity portfolio.
Refers to the investors percentage ownership of a company that can be re-acquired by the company, usually at a pre-determined amount.
An agreement in which one party, for an upfront premium, agrees to compensate the other at
Also called a residual claim, a claim to a share of earnings after debt obligation have been
Equity contribution agreement
An agreement to contribute equity to a project under certain specified
An agreement in which one party agrees to pay the other at specific time periods if a specific
Through equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock.
Used to refer to warrants because they are usually issued attached to privately placed bonds.
Related: Variable life
Accounting method for an equity security in cases where the investor has sufficient
Total assets divided by total common stockholders' equity; the amount of total assets per
Securities that give the holder the right to buy or sell a specified number of shares of stock, at
An ownership interest in an enterprise, including preferred and common stock.
A swap in which the cash flows that are exchanged are based on the total return on some stock
Those holding shares of the firm's equity.
Securities sold in the Euromarket. That is, securities initially sold to investors
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
GEMs (growing-equity mortgages)
Mortgages in which annual increases in monthly payments are used to
The balance of a margin account. Related: buying on margin, initial margin requirement.
Stock in a firm that relies on financial leverage. Holders of leveraged equity face the
Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.
Refers to the capital invested in a business by its shareowners
The total of all capital contributions and retained earnings on a business’s
Preferred equity redemption stock (PERC)
Preferred stock that converts automatically into equity at a
Funds, other than paid-up capital and retained earnings, employed in a business and which will remain in a business as permanent capital.
RATE OF RETURN ON STOCKHOLDERS’ EQUITY
The percentage return or profit that management made on each dollar stockholders invested in a company. Here’s how you figure it:
RATIO OF DEBT TO STOCKHOLDERS’ EQUITY
A ratio that shows which group—creditors or stockholders—has the biggest stake in or the most control of a company:
Return on Common Equity Ratio
A measure of the percentage return earned on the value of the
Return on equity (ROE)
Indicator of profitability. Determined by dividing net income for the past 12
return on equity (ROE)
This key ratio, expressed as a percent, equals net
Represents the total assets of a corporation less liabilities.
This is a company's total assets minus total liabilities. A company's net worth is the
The total amount of contributed capital and retained earnings; synonymous with stockholders' equity.
The residual interest or owners' claims on the assets of a corporation
Balance sheet item that includes the book value of ownership in the corporation. It
The residual claims that stockholders have against a firm's assets, calculated by
The total amount of contributed capital and retained earnings; synonymous with shareholders’ equity.
stockholders' equity, statement of changes in
Although often considered
STOCKHOLDERS’ (OR OWNERS’) EQUITY
The value of the owners’ interests in a company.
Stratified equity indexing
A method of constructing a replicating portfolio in which the stocks in the index
Top-down equity management style
A management style that begins with an assessment of the overall
Total debt to equity ratio
A capitalization ratio comparing current liabilities plus long-term debt to
The formula Assets = Liabilities + equity.
An equation that reflects the two-sided nature of a
Income that has been earned but not yet received. For instance, if you have a non-registered Guaranteed Investment Certificate (GIC), Mutual Fund or Segregated equity Fund, growth accrues annually or semi-annually and is taxable annually even though the gain is only paid at maturity of your investment.
Accumulated Other Comprehensive Income
Cumulative gains or losses reported in shareholders'
Adjusted present value (APV)
The net present value analysis of an asset if financed solely by equity
Methods of financing in which lenders and equity investors look principally to the
Extent to which a company's net assets cover a particular debt obligation, class of preferred stock, or equity position.
The tendency of stocks preferred by the dividend discount model to share certain equity
A debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period.
Also called the statement of financial condition, it is a summary of the assets, liabilities, and
A “snapshot” statement that freezes a company on a particular day, like the last day of the year, and shows the balances in its asset, liability, and stockholders’ equity accounts. It’s governed by the formula:
One of the basic financial statements; it lists the assets, liabilities, and equity accounts of the company. The Balance Sheet is prepared using the balances at the end of a specific day.
A term often used instead of the more formal and correct
A report that summarizes all assets, liabilities, and equity for a company
A financial report showing the status of a company's assets, liabilities, and owners' equity on a given date.
Balance sheet identity
Total Assets = Total Liabilities + Total Stockholders' equity
A method of pricing options or other equity derivatives in
The value of an asset as carried on the balance sheet of a
book value and book value per share
Generally speaking, these terms
BOOK VALUE OF COMMON STOCK
The theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals:
Book value per share
The ratio of stockholder equity to the average number of common shares. Book value
A very broad term rooted in economic theory and referring to
The total of debt and equity, i.e. the total funds in the business.
Refers to investments by a business in long-term
The makeup of the liabilities and stockholders' equity side of the balance sheet, especially
The mix of the various types of debt and equity capital maintained by a firm. The more debt capital a firm has in its capital structure, the more highly leveraged the firm is considered to be.
capital structure, or capitalization
Terms that refer to the combination of
Amounts of directly contributed equity capital in excess of the par value.
The debt and/or equity mix that fund a firm's assets.
The total amount of debt and equity issued by a company.
Also called financial leverage ratios, these ratios compare debt to total capitalization
A table showing the capitalization of a firm, which typically includes the amount of
Cash Flow Provided or Used from Financing Activities
Cash receipts and payments involving
CASH FLOWS FROM OPERATIONS
A section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business.
A public equity issue that is sold to all interested investors.
Are equity instruments that take no security against assets, have no fixed terms of repayment and pay no fixed dividends.
These are securities that represent equity ownership in a company. Common shares let an
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