|Earnings per Share|
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Definition of Earnings per Share
Earnings per Share
A measure of the earnings generated by a company on a per
EPS, as it is called, is a company's profit divided by its number of outstanding
earnings per share expressed as if all outstanding convertible securities
How much profit a company made on each share of common stock this year.
This important ratio equals the net
This measure of earnings per share
See basic earnings per share and diluted earnings per share.
A company that pays out all earnings per share to stockholders as dividends. Or, a company or
The ratio of earnings per share after allowing for tax and interest payments on fixed interest
Assume XYZ Co. sells for $25.50 per share and has earned $2.55 per share this year; $25. 50 = 10
Shows the "multiple" of earnings at which a stock sells. Determined by dividing current
Program by which a corporation buys back its own shares in the open market. It is usually
This key ratio equals the current market price
A measure of how much investors are willing to pay for each dollar
Ratio of stock price to earnings per share.
a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity.
earnings of a firm as reported on its income statement.
Securities certificates issued in the U.S. by a transfer agent acting on behalf of the foreign
Annual fund operating expenses
For investment companies, the management fee and "other expenses,"
Annual percentage rate (APR)
The periodic rate times the number of periods in a year. For example, a 5%
Annual percentage yield (APY)
The effective, or true, annual rate of return. The APY is the rate actually
Annualized holding period return
The annual rate of return that when compounded t times, would have
Number of shares authorized for issuance by a firm's corporate charter.
Average collection period, or days' receivables
The ratio of accounts receivables to sales, or the total
BARRA's performance analysis (PERFAN)
A method developed by BARRA, a consulting firm in
Book value per share
The ratio of stockholder equity to the average number of common shares. Book value
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash flow per common share
Cash flow from operations minus preferred stock dividends, divided by the
Short-term unsecured promissory notes issued by a corporation. The maturity of
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s performance Presentation Standards Implementation
The length of the time period (for example, a quarter in the case of quarterly
The length of time for which the customer is granted credit.
Commercial paper sold directly by the issuer to investors.
The period during which a customer can deduct the discount from the net amount of the bill
Discounted payback period rule
An investment decision rule in which the cash flows are discounted at an
Dividends per share
Amount of cash paid to shareholders expressed as dollars per share.
Dividends per share
Dividends paid for the past 12 months divided by the number of common shares
Net income for the company during the period.
Earnings before interest and taxes (EBIT)
A financial measure defined as revenues less cost of goods sold
Earnings retention ratio
Positive or negative differences from the consensus forecast of earnings by institutions
The real flow of cash that a firm could pay out forever in the absence of any change in
Short-term notes with maturities up to 360 days that are issued by companies in
The time interval over which a money manager's performance is evaluated.
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
FHA prepayment experience
The percentage of loans in a pool of mortgages outstanding at the origination
Funds From Operations (FFO)
Used by real estate and other investment trusts to define the cash flow from
A constant stream of cash flows without end that is expected to rise indefinitely.
Length of time that an individual holds a security.
Holding period return
The rate of return over a given period.
Income statement (statement of operations)
A statement showing the revenues, expenses, and income (the
Issued share capital
Total amount of shares that are in issue. Related: outstanding shares.
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
Management/closely held shares
percentage of shares held by persons closely related to a company, as
A portfolio strategy in which a portfolio is created that will be capable of
Net operating losses
Losses that a firm can take advantage of to reduce taxes.
Net operating margin
The ratio of net operating income to net sales.
The period of time between the end of the discount period and the date payment is due.
In the Euromarket, a period over which Eurodollars are sold is said to be neutral if it does not
Purchase or sale of government securities by the monetary authorities to increase or
Open-market purchase operation
A systematic program of repurchasing shares of stock in market
Operating cash flow
earnings before depreciation minus taxes. It measures the cash generated from
The average time intervening between the acquisition of materials or services and the final
Degree to which exchange rate changes, in combination with price changes, will alter a
Operating profit margin
The ratio of operating margin to net sales.
Short-term, cancelable lease. A type of lease in which the period of contract is less than the
Fixed operating costs, so-called because they accentuate variations in profits.
The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is
Operationally efficient market
Also called an internally efficient market, one in which investors can obtain
Outstanding share capital
Issued share capital less the par value of shares that are held in the company's treasury.
shares that are currently owned by investors.
When a security is expected to appreciate at a rate faster than the overall market.
Money market instruments, commercial paper and other.
Paper gain (loss)
Unrealized capital gain (loss) on securities held in portfolio, based on a comparison of
Perfect capital market
A market in which there are never any arbitrage opportunities.
An idealized market environment in which every market participant is too small to affect
A financial result in which the profit and loss from the underlying asset and the hedge position
Perfect market view (of capital structure)
Analysis of a firm's capital structure decision, which shows the
Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital
Perfectly competitive financial markets
Markets in which no trader has the power to change the price of
Perfected first lien
A first lien that is duly recorded with the cognizant governmental body so that the lender
Performance attribution analysis
The decomposition of a money manager's performance results to explain
The evaluation of a manager's performance which involves, first, determining
The calculation of the return realized by a money manager over some time interval.
shares of stock given to managers on the basis of performance as measured by earnings
Warrants that have no expiration date.
A constant stream of identical cash flows without end, such as a British consol.
personal benefits, including direct benefits, such as the use of a firm car or expense account for
Personal tax view (of capital structure)
The argument that the difference in personal tax rates between
An interest in an asset held by a trustee for the benefit of another person.
Preferred equity redemption stock (PERC)
Preferred stock that converts automatically into equity at a
Preferred shares give investors a fixed dividend from the company's earnings. And more
Related: Relative strength
Rights of individuals and companies to own and utilize property as they see fit and to receive
Accounting earnings that are retained by the firm for reinvestment in its operations;
The property that portfolio choice can be separated into two independent tasks: 1)
Set of contracts perspective
View of corporation as a set of contracting relationships, among individuals
This is a company's total assets minus total liabilities. A company's net worth is the
A section of an annual report where one can find jargon-free discussions by
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