Company analysis terms
The vocabulary of judging a business: what its statements show, what the ratios mean, and where each one misleads. The largest group on the site, because this is where most of the real work of investing happens.
Annual report
The full yearly account a listed company must publish about itself.
Auditor report
An independent accountant opinion on whether the accounts are fair.
Balance sheet
A snapshot of what a company owns and what it owes on one date.
Book value
What the company would be worth on paper if it sold everything and paid its debts.
CAGR
The smoothed average yearly growth rate over a period.
Cash flow statement
A record of cash actually entering and leaving the business.
Contingent liability
A possible future cost that has not happened yet.
Debt
Money a company has borrowed and has to pay back.
Debt to equity
How much a company has borrowed compared with what its owners have put in.
EPS
The profit a company made for each share.
Free cash flow
Cash left over after a company pays to run and maintain itself.
Market capitalisation
The total value of a company in the stock market.
Operating margin
What share of each rupee of sales survives as operating profit.
PE ratio
Whether a share price looks expensive or cheap compared to the company’s profit.
Price to book
The share price compared with the company book value per share.
Profit
What a company keeps after paying all its costs.
Promoter
The founder or controlling owner group of an Indian company.
Promoter pledge
Promoter shares used as security for a loan.
Related party transaction
Business done between a company and people connected to it.
Revenue
The total money a company earns from selling its products or services.
ROCE
How much profit a company makes on all the capital it uses, borrowed and owned.
ROE
How much profit a company makes on the money its owners have put in.
Valuation
What price the market is asking for a business right now.
Working capital
The money tied up in running day to day operations.