Finance and investing terms in plain English

A detailed annual report public companies file with the SEC.

Also called: annual filing, SEC annual report

An amended version of a previously filed 10-K annual report.

Also called: amended 10-K

A quarterly financial filing public companies submit to the SEC.

Also called: quarterly filing, SEC quarterly report

An amended version of a previously filed 10-Q quarterly report.

Also called: amended 10-Q

A filing used when an investor takes a large stake and may want to influence the company.

Also called: Schedule 13D, 13D

A shorter ownership filing used by certain large investors who are considered passive.

Also called: Schedule 13G, 13G

A current report public companies file to disclose major events that investors should know about.

Also called: current report, SEC current report

Money the company owes suppliers for goods or services already received.

Also called: payables, AP

Money customers owe the company for sales already made.

Also called: receivables, AR

The lowest price a seller is currently willing to accept for an investment.

Also called: ask, offer price

How an investor divides money across different types of investments.

Also called: allocation

Resources a company owns or controls that may provide future benefit.

Also called: company assets

A snapshot of what a company owns, owes, and what is left for owners at a specific date.

Also called: statement of financial position

A period when prices are generally falling and investor confidence is often weaker.

Also called: falling market

A standard used to compare the performance of an investment, portfolio, or fund.

Also called: performance benchmark

The highest price a buyer is currently willing to pay for an investment.

Also called: bid

The difference between the current bid price and ask price.

Also called: spread

The accounting value of a company’s net assets based on the balance sheet.

Also called: net asset value of company, equity book value

A firm or person that helps investors buy and sell securities.

Also called: brokerage firm

An account that allows you to buy and sell investments.

Also called: investment account, broker account

A period when prices are generally rising and investor confidence is often improving.

Also called: rising market

Money spent to buy, improve, or maintain long-term assets.

Also called: capex, capital spending

Profit made when an investment is sold for more than its purchase price.

Also called: investment gain

A loss that happens when an investment is sold for less than its purchase price.

Also called: investment loss

A report showing how cash moved into and out of a company over a period of time.

Also called: statement of cash flows

A trading pause designed to slow extreme market moves.

Also called: trading halt rule

A fee charged for handling a trade or transaction.

Also called: trading commission

An annualized growth rate that smooths growth over multiple years.

Also called: CAGR

Growth generated when returns begin earning returns of their own over time.

Also called: compound growth

A market decline that is meaningful but smaller than a typical bear market.

Also called: market correction, pullback

The original value used to calculate gain or loss for tax purposes.

Also called: tax basis

The direct cost of producing or buying the goods a company sells.

Also called: COGS, cost of sales

Assets expected to be used, sold, or turned into cash within about one year.

Also called: short-term assets

Obligations expected to be paid within about one year.

Also called: short-term liabilities

A liquidity ratio comparing current assets to current liabilities.

Also called: liquidity ratio

A filing used to report major events between regular annual and quarterly filings.

Also called: current event filing

The institution that holds assets for an investor or account.

Also called: asset custodian

A ratio comparing company debt to shareholders’ equity.

Also called: D/E ratio, debt equity

The proxy statement that explains shareholder voting matters before an annual meeting.

Also called: proxy statement

Money received before the company has fully delivered the related product or service.

Also called: unearned revenue

The removal of a company’s shares from an exchange.

Also called: exchange delisting

Accounting charges that spread the cost of certain long-term assets over time.

Also called: D&A

Earnings per share calculated using a larger share count that includes potential dilution.

Also called: diluted earnings per share

The rate used to convert future cash flows into present value.

Also called: required return

A valuation method that estimates today’s value based on expected future cash flows.

Also called: DCF, DCF model

Spreading investments across different holdings to reduce the impact of any one position.

Also called: diversified portfolio

A payment a company may make to shareholders, usually from profits or retained earnings.

Also called: cash dividend

Investing the same amount at regular intervals instead of all at once.

Also called: DCA, periodic investing

A well-known U.S. stock index that tracks 30 large public companies.

Also called: DJIA, Dow

A conference call where company leaders discuss financial results and answer questions.

Also called: results call

The amount of profit attributed to each share of stock.

Also called: EPS

A public release that summarizes a company’s recent financial results.

Also called: earnings release, results release

Earnings expressed as a percentage of price, often viewed as the inverse of the P/E ratio.

Also called: inverse P/E

Earnings before interest and taxes.

Also called: earnings before interest and taxes

Earnings before interest, taxes, depreciation, and amortization.

Also called: earnings before interest taxes depreciation and amortization

A broader measure of company value that includes debt and adjusts for cash.

Also called: EV

A fund that trades on an exchange like a stock and usually holds a basket of investments.

Also called: exchange traded fund, exchange-traded fund

A ratio comparing enterprise value to EBITDA.

Also called: enterprise value to EBITDA

A ratio comparing enterprise value to revenue.

Also called: enterprise value to revenue

A marketplace where investments such as stocks are bought and sold.

Also called: stock exchange, market exchange

The annual cost charged by a fund, shown as a percentage of assets.

Also called: fund fee, annual fund cost

The main reports that show a company’s financial condition and performance.

Also called: financial reports, company financials

The shares of a public company that are actually available for trading by the public.

Also called: public float

An insider ownership filing submitted when someone first becomes an insider.

Also called: initial insider filing

An insider filing that reports many changes in insider ownership.

Also called: insider transaction filing

An annual insider filing used to report certain transactions that were not reported earlier on Form 4.

Also called: annual insider filing

A registration statement often used when a company plans to go public.

Also called: S-1, registration statement

A P/E ratio based on expected future earnings rather than past earnings.

Also called: forward price to earnings

Cash left after the company pays for operating needs and capital spending.

Also called: FCF

Free cash flow shown relative to market value or enterprise value.

Also called: FCF yield

An accounting asset created when a company buys another company for more than the fair value of its net identifiable assets.

Also called: acquisition goodwill

Gross profit shown as a percentage of revenue.

Also called: gross profit margin

Revenue minus the direct cost of the goods or services sold.

Also called: gross income

The pace at which a company’s revenue, earnings, or cash flow increases or decreases over time.

Also called: growth

A write-down that occurs when an asset is worth less than its recorded accounting value.

Also called: asset impairment, write-down

A report showing revenue, expenses, and profit over a period of time.

Also called: profit and loss statement, P&L

A list of securities grouped together to measure how a section of the market is performing.

Also called: market index

A fund designed to track the performance of an index.

Also called: passive fund

The process of a private company becoming publicly traded by selling shares to the public.

Also called: IPO

Trading based on important nonpublic information, or sometimes more broadly, insider share transactions reported to the SEC.

Also called: insider transactions

Nonphysical assets such as patents, trademarks, software, or customer relationships.

Also called: intangibles

A measure of how easily a company can cover interest expense with earnings.

Also called: interest coverage

An estimate of what an asset may actually be worth based on fundamentals rather than current market price.

Also called: underlying value

Goods a company has on hand to sell or use in production.

Also called: stock on hand

Amounts a company owes to others.

Also called: obligations, debts and obligations

How easily an investment can be bought or sold without causing a large price change.

Also called: market liquidity

The rules a company must meet to keep trading on an exchange.

Also called: exchange requirements

Borrowed money that is not due within the next year.

Also called: long term debt

Investing a large amount of money at one time instead of in smaller scheduled pieces.

Also called: one-time investing

A buffer between estimated value and the price paid.

Also called: valuation buffer

The total market value of a public company based on its share price and shares outstanding.

Also called: market cap

An event important enough that a reasonable investor would likely care about it.

Also called: material development

Important company information that has not yet been made public.

Also called: MNPI

The standard for deciding whether information is important enough to matter to investors.

Also called: material importance

A ratio used to compare price or value to a business metric such as earnings, sales, or cash flow.

Also called: valuation multiple

A pooled investment fund that collects money from many investors and invests it based on a stated strategy.

Also called: pooled fund

A stock index that includes many companies listed on the Nasdaq exchange.

Also called: Nasdaq

The per-share value of a fund based on its assets minus liabilities.

Also called: NAV

The profit left after subtracting all expenses, interest, and taxes.

Also called: net profit, bottom line

Net income expressed as a percentage of revenue.

Also called: net profit margin

Revenue after subtracting returns, allowances, and certain discounts.

Also called: sales net of returns

Longer-term assets not expected to be converted into cash within about one year.

Also called: long-term assets

The New York Stock Exchange, one of the largest stock exchanges in the world.

Also called: New York Stock Exchange

Cash generated or used by the company’s normal business operations.

Also called: cash flow from operations, CFO

The regular costs of running the business beyond direct production costs.

Also called: opex

Profit from core business operations before interest and taxes.

Also called: operating profit

Operating income expressed as a percentage of revenue.

Also called: operating profit margin

A description for an asset priced above what an analyst believes its fundamentals justify.

Also called: priced too high

A ratio comparing a stock’s price to its earnings per share.

Also called: price to earnings, price-to-earnings ratio

The full collection of investments owned by a person or account.

Also called: investment portfolio

A ratio comparing market value to accounting book value.

Also called: P/B ratio, price to book

A ratio comparing market value to free cash flow.

Also called: P/FCF, price to FCF

A ratio comparing market value to revenue.

Also called: P/S ratio, price to revenue

The original amount of money invested or lent before gains, losses, or interest.

Also called: original investment

A disclosure document that explains an investment offering and its risks.

Also called: offering prospectus

A shareholder vote cast on company matters, often without attending the meeting in person.

Also called: shareholder vote

A company whose shares trade on a public market and that must meet public reporting requirements.

Also called: listed company

A stricter liquidity ratio that excludes some less liquid current assets like inventory.

Also called: acid-test ratio, acid test ratio

A current market snapshot showing pricing information for an investment.

Also called: market quote

Adjusting a portfolio back toward its target mix of investments.

Also called: portfolio rebalancing

A formal filing used to register securities before they are offered to the public.

Also called: registered offering filing

Money spent to create, improve, or test products, services, or technology.

Also called: R&D, research spending

A correction to previously issued financial statements.

Also called: financial restatement

Cumulative profits kept in the business rather than paid out to owners.

Also called: accumulated earnings

The gain or loss produced by an investment over a period of time.

Also called: investment return

A measure of how much profit a company generates relative to its assets.

Also called: ROA

A measure of how much profit a company generates relative to shareholders’ equity.

Also called: ROE

A measure of profit generated relative to the capital used in the business.

Also called: ROIC

The money a company earns from its main business activities before expenses are subtracted.

Also called: sales, top line

The section of a filing where a company describes important risks to the business and investors.

Also called: filing risk section

How much uncertainty or loss an investor is emotionally and practically able to handle.

Also called: tolerance for risk

A rule that describes conditions for reselling certain restricted or controlled securities.

Also called: SEC Rule 144

A stock index that tracks smaller U.S. public companies.

Also called: Russell 2000 Index

A stock market index that tracks 500 of the largest publicly traded U.S. companies.

Also called: Standard & Poor's 500, SP500, S and P 500

The U.S. government agency that oversees securities markets and enforces related laws.

Also called: Securities and Exchange Commission

Selling, general, and administrative costs tied to running the business.

Also called: selling general and administrative

A reduction in each existing shareholder’s ownership percentage because more shares are issued.

Also called: dilution

The value left for owners after liabilities are subtracted from assets.

Also called: stockholders’ equity, book equity

The total number of a company’s shares that currently exist and are held by investors.

Also called: outstanding shares

A broad term for the place where shares of public companies are bought and sold.

Also called: equity market, share market

Book value after intangible assets and often goodwill are removed.

Also called: TBV

An investment account where gains, losses, and income may create tax consequences.

Also called: non-retirement account

A public offer to buy shares directly from shareholders, often at a stated price.

Also called: share tender

The estimated value of a business beyond the explicit forecast period in a DCF model.

Also called: continuing value

The short code used to identify a publicly traded security.

Also called: ticker, symbol

How long an investor expects to keep money invested before needing it.

Also called: investment horizon

The full return from an investment, including both price change and income.

Also called: overall return

A temporary pause in trading for a stock or market.

Also called: halt

A P/E ratio based on earnings already reported over the recent past.

Also called: trailing price to earnings, TTM P/E

A description for an asset priced below what an analyst believes its fundamentals justify.

Also called: priced too low

The process of judging what a company, stock, or asset may be worth.

Also called: business valuation, stock valuation

How much and how quickly prices move up and down over time.

Also called: price swings, market swings

The number of shares or contracts traded during a period of time.

Also called: trading volume

Current assets minus current liabilities.

Also called: net working capital

A measure of income produced by an investment, usually shown as a percentage.

Also called: investment yield