Financial Glossary
32 terms across 6 categories — search, filter, and expand for formulas and examples.
Assets
Everything the company owns — cash, equipment, inventory, intellectual property.
Liabilities
Everything the company owes — bank debt, bonds, accounts payable, deferred revenue.
Equity (Book Value)
Assets minus Liabilities — the accounting value of shareholders' stake in the business.
Debt-to-Equity (D/E) Ratio
Total debt divided by shareholders' equity, measuring how much leverage a company uses.
Current Ratio
Current assets divided by current liabilities — a measure of short-term liquidity.
Revenue
Total money received from selling products or services before any costs are deducted.
Gross Profit
Revenue minus the direct cost of goods sold (COGS). It's what's left before operating expenses.
EBITDA
Earnings Before Interest, Taxes, Depreciation & Amortisation. An approximation of operating cash generation.
Net Income
The bottom-line profit after all revenues, costs, interest, and taxes have been accounted for.
EPS (Earnings Per Share)
Net income divided by the number of shares outstanding. Tells you profit on a per-share basis.
Operating Cash Flow
Cash generated purely from the core business operations, before investing or financing activities.
Free Cash Flow (FCF)
Operating cash flow minus capital expenditure. The real cash left over for shareholders.
Capex (Capital Expenditure)
Money spent on physical assets like factories, machinery, servers, and buildings.
Burn Rate
How quickly a company is spending its cash reserves, typically quoted per month for pre-profitable companies.
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Tells you how much investors pay per dollar of profit.
P/B Ratio (Price-to-Book)
Market capitalisation divided by book value (net assets). Shows how much premium investors pay over accounting value.
EV/EBITDA
Enterprise Value divided by EBITDA. A capital-structure-neutral valuation multiple.
PEG Ratio
P/E ratio divided by the expected earnings growth rate. Adjusts for growth when comparing stocks.
Dividend Yield
Annual dividend per share divided by the current stock price, expressed as a percentage.
Beta
A measure of how much a stock's price moves relative to the overall market (Beta = 1 means it moves in lockstep).
Alpha
The excess return your portfolio generates above a benchmark (like the S&P 500) after adjusting for risk.
Volatility (σ)
The standard deviation of a security's returns, measuring how much prices fluctuate around their average.
Sharpe Ratio
Return minus the risk-free rate, divided by volatility. Measures return earned per unit of risk taken.
Max Drawdown
The largest peak-to-trough decline in portfolio value over a given period.
Correlation
A statistical measure of how two assets move together, ranging from −1 (perfectly opposite) to +1 (perfectly in sync).
Market Order
An instruction to buy or sell a security immediately at the best available current price.
Limit Order
An order to buy or sell only at a specific price or better. It won't fill unless the market reaches your price.
Stop-Loss
An automatic sell order triggered when a security's price falls to a pre-set threshold.
Long
Buying and holding a security with the expectation that its price will rise.
Short (Short Selling)
Borrowing shares and selling them, hoping to buy them back cheaper later and pocket the difference.
Futures
A standardised contract to buy or sell an asset at a predetermined price on a specified future date.
Options (Call / Put)
A contract granting the right — but not the obligation — to buy (call) or sell (put) an asset at a set price (strike) before expiry.