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Financial Terms | |
price/earnings ratio (price to earnings ratio, P/E ratio, PE ratio) |
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Definition of price/earnings ratio (price to earnings ratio, P/E ratio, PE ratio)price/earnings ratio (price to earnings ratio, P/E ratio, PE ratio)This key ratio equals the current market price
Related Terms:Price/earnings ratio (PE ratio)Shows the "multiple" of earnings at which a stock sells. Determined by dividing current Price to Earnings Ratio (P/E, PE Ratio)A measure of how much investors are willing to pay for each dollar "Soft" Capital RationingCapital rationing that under certain circumstances can be violated or even viewed Abusive Earnings ManagementThe use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result. Abusive Earnings ManagementA characterization used by the Securities and Exchange Acceleration ClauseClause causing repayment of a debt, if specified events occur or are not met. Accelerationist HypothesisBelief that an effort to keep unemployment below its natural rate results in an accelerating inflation. ![]() Accounting earningsearnings of a firm as reported on its income statement. Accounting periodThe period of time for which financial statements are produced – see also financial year. accounts receivable turnover ratioA ratio computed by dividing annual Accrued expenses payableExpenses that have to be recorded in order for the financial statements to be accurate. Accrued expenses usually do not involve the receipt of an invoice from the company providing the goods or services. accrued expenses payableThe account that records the short-term, noninterest- Acid-test ratioAlso called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid ACID-TEST RATIOA ratio that shows how well a company could pay its current debts using only its most liquid or “quick” assets. It’s a more pessimistic—but also realistic—measure of safety than the current ratio, because it ignores sluggish, hard-toliquidate current assets like inventory and notes receivable. Here’s the formula: Acid-test RatioSee quick ratio acid test ratio (also called the quick ratio)The sum of cash, accounts receivable, and short-term marketable ![]() Adjusted Cash Flow Provided by Continuing OperationsCash flow provided by operating Adjusted EarningsNet income adjusted to exclude selected nonrecurring and noncash items of reserve, gain, expense, and loss. Aggregate Expenditure CurveAggregate demand for goods and services drawn as a function of the level of national income. Annual fund operating expensesFor 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 rate (APR)Interest rate that is annualized using simple interest. Annual percentage yield (APY)The effective, or true, annual rate of return. The APY is the rate actually Annualized holding period returnThe annual rate of return that when compounded t times, would have Annuity PeriodThe time between each payment under an annuity. Appraisal ratioThe signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard Arm's length priceThe price at which a willing buyer and a willing unrelated seller would freely agree to Articles of incorporationLegal document establishing a corporation and its structure and purpose. Ask priceA dealer's price to sell a security; also called the offer price. Asset activity ratiosratios that measure how effectively the firm is managing its assets. Asset/equity ratioThe ratio of total assets to stockholder equity. Asset-specific RiskThe amount of total risk that can be eliminated by diversification by asset turnover ratioA broad-gauge ratio computed by dividing annual Autonomous ExpenditureElements of spending that do not vary systematically with variables such as GDP that are explained by the theory. See also exogenous expenditure. Average Amortization PeriodThe average useful life of a company's collective amortizable asset base. Average Collection PeriodAverage number of days necessary to receive cash for the sale of Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Average Propensity to Consumeratio of consumption to disposable income. See also marginal propensity to consume. Average Propensity to Saveratio of saving to disposable income. See also marginal propensity to save. Bargain-purchase-price optionGives the lessee the option to purchase the asset at a price below fair market BARRA's performance analysis (PERFAN)A method developed by BARRA, a consulting firm in basic earnings per share (EPS)This important ratio equals the net Basic Earnings Power Ratiopercentage of earnings relative to total assets; indication of how Basis priceprice expressed in terms of yield to maturity or annual rate of return. Benefit Ratio MethodThe proportion of unemployment benefits paid to a company’s Benefit Wage Ratio MethodThe proportion of total taxable wages for laid off Biased expectations theoriesRelated: pure expectations theory. Bid priceThis is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically book value and book value per shareGenerally speaking, these terms Book value per shareThe ratio of stockholder equity to the average number of common shares. Book value Book Value per ShareThe book value of a company divided by the number of shares Buy on openingTo buy at the beginning of a trading session at a price within the opening range. Call priceThe price, specified at issuance, at which the issuer of a bond may retire part of the bond at a Call priceThe price for which a bond can be repaid before maturity under a call provision. Canada Pension Plan (CPP)A plan that provides retirement and long term disability income benefits to residents of Canadian provinces (excluding Quebec). Canadian Deposit Insurance CorporationBetter known as CDIC, this is an organization which insures qualifying deposits and GICs at savings institutions, mainly banks and trust companys, which belong to the CDIC for amounts up to $60,000 and for terms of up to five years. Many types of deposits are not insured, such as mortgage-backed deposits, annuities of duration of more than five years, and mutual funds. Capital expendituresAmount used during a particular period to acquire or improve long-term assets such as capital expendituresRefers to investments by a business in long-term Capital market imperfections viewThe view that issuing debt is generally valuable but that the firm's Capital rationingPlacing one or more limits on the amount of new investment undertaken by a firm, either capital rationinga condition that exists when there is an capital rationingLimit set on the amount of funds available for investment. Capitalization ratiosAlso called financial leverage ratios, these ratios compare debt to total capitalization Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized againstfuture-period revenue. Capitalized ExpendituresExpenditures that are accounted for as assets to be amortized Cash flow coverage ratioThe number of times that financial obligations (for interest, principal payments, cash flow from operating activities, or cash flow from profitThis equals the cash inflow from sales during the period minus the cash Cash flow from operationsA firm's net cash inflow resulting directly from its regular operations Cash flow per common shareCash flow from operations minus preferred stock dividends, divided by the Cash Flow Provided by Operating ActivitiesWith some exceptions, the cash effects of transactions Cash Flow–to–Income Ratio (CFI)Adjusted cash flow provided by continuing operations CASH FLOWS FROM OPERATIONSA 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. Cash ratioThe proportion of a firm's assets held as cash. Cash Ratioratio of cash and cash equivalents to liabilities; in the case of a bank, the ratio of cash to total deposit liabilities. Cheapest to deliver issueThe acceptable Treasury security with the highest implied repo rate; the rate that a Clean priceBond price excluding accrued interest. Commercial paperShort-term unsecured promissory notes issued by a corporation. The maturity of commercial paperShort-term unsecured notes issued by firms. Committee, AIMR Performance Presentation Standards Implementation CommitteeThe Association for Investment Management and Research (AIMR)'s performance Presentation Standards Implementation Common stock ratiosratios that are designed to measure the relative claims of stockholders to earnings Company-specific riskRelated: Unsystematic risk Companyspecific RiskSee asset-specific risk Compensating balanceAn excess balance that is left in a bank to provide indirect compensation for loans CompensationAll forms of pay given to an employee in exchange for services rendered. compensation committeea company committee comprised mainly of members of the board of directors; is responsible compensation strategya foundation for the compensation plan that addresses the role compensation should play in the organization CompetenceSufficient ability or fitness for ones needs. Possessing the necessary abilities to be qualified to CompetitionIntra- or intermarket rivalry between businesses trying to obtain a larger piece of the same Competitive AdvantageThe strategies, skills, knowledge, resources or competencies that differentiate a business from its competitors. Competitive biddingA securities offering process in which securities firms submit competing bids to the Competitive offeringAn offering of securities through competitive bidding. Compounding periodThe length of the time period (for example, a quarter in the case of quarterly compounding periodthe time between each interest computation Concentration accountA single centralized account into which funds collected at regional locations concentration bankingSystem whereby customers make payments to a regional collection center which transfers funds to Concentration servicesMovement of cash from different lockbox locations into a single concentration Configuration auditA review of all engineering documentation used as the basis Configuration controlVerifying that a delivered product matches authorizing Consumer Price Index (CPI)The CPI, as it is called, measures the prices of consumer goods and services and is a Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |