116 financial terms and metrics with plain-English definitions and formulas — from price and volume basics to income-statement, balance-sheet, valuation, and technical measures. Part of the free Well Street investing concepts library.
The final price at which a security trades during a regular trading session. This is the most commonly referenced price and serves as the baseline for most calculations and charts.
The price at which a security first trades upon the opening of the exchange on a given trading day. It can differ from the previous close due to after-hours trading or overnight news.
The highest price reached by a security during a single trading session. Used to gauge intraday volatility and as a reference for technical resistance levels.
The lowest price reached by a security during a single trading session. Used to measure intraday volatility and as a technical support reference.
The total number of shares traded during a given period. High volume indicates strong interest and liquidity, while low volume can signal uncertainty or lack of conviction.
The closing price adjusted for corporate actions such as dividends, stock splits, and rights offerings. This provides a more accurate reflection of a stock's true return over time.
The absolute dollar change in price from the previous trading session's close. A positive value means the stock gained, negative means it declined. Formula: Close − Previous Close
The percentage change in price relative to the previous close. This normalizes price movement, making it possible to compare stocks at different price levels. Formula: (Close − Previous Close) / Previous Close × 100
Volume-Weighted Average Price. The average price of a security weighted by the volume traded at each price level. Institutional traders often use VWAP as a benchmark for trade execution quality. Formula: Σ(Price × Volume) / Σ(Volume)
The average number of shares traded per day, typically calculated over 20 or 50 trading days. It establishes a baseline for normal trading activity.
The total amount of money generated from the sale of goods or services related to the company's primary operations. Also called the top line, it represents the starting point of profitability analysis.
The direct costs attributable to the production of goods or services sold by the company, including raw materials, direct labor, and manufacturing overhead.
The profit earned after subtracting the direct costs of producing goods or services. It reveals how efficiently a company converts revenue into profit before operating expenses. Formula: Revenue − Cost of Revenue
The percentage of revenue retained after direct production costs. A higher ratio indicates better pricing power or production efficiency. Formula: Gross Profit / Revenue × 100
Costs incurred during normal business operations excluding cost of goods sold. Includes research and development, sales and marketing, and general administrative expenses.
The profit derived from core business operations after deducting operating expenses from gross profit. Also known as EBIT when interest and taxes are excluded. Formula: Gross Profit − Operating Expenses
The percentage of revenue that translates into operating profit. A key indicator of operational efficiency and management effectiveness. Formula: Operating Income / Revenue × 100
Earnings Before Interest, Taxes, Depreciation, and Amortization. A widely used proxy for cash-flow generating ability that removes the effect of financing decisions, tax jurisdictions, and accounting choices. Formula: Net Income + Interest + Taxes + Depreciation + Amortization
EBITDA expressed as a percentage of revenue. A higher ratio indicates stronger earnings power before non-cash and financing charges. Formula: EBITDA / Revenue × 100
The bottom line — total profit after all expenses, taxes, interest, and other costs have been deducted from revenue. This is the figure used to calculate earnings per share. Formula: Revenue − All Expenses − Taxes
Net income expressed as a percentage of revenue. Also called the net profit margin, it shows how much of each dollar of revenue becomes actual profit. Formula: Net Income / Revenue × 100
The portion of a company's net income allocated to each outstanding share of common stock. It is the most widely watched metric for comparing profitability across companies. Formula: Net Income / Weighted Average Shares Outstanding
Earnings per share calculated assuming all convertible securities (options, warrants, convertible bonds) are exercised. It represents a worst-case scenario for per-share earnings. Formula: Net Income / (Shares Outstanding + Dilutive Securities)
The average number of shares outstanding during a reporting period, weighted by the time each count was in effect. Used as the denominator in EPS calculations.
Money spent on research and development activities to create new products, services, or technologies. High R&D spending can indicate innovation-driven growth strategies.
Selling, General, and Administrative expenses. These include sales commissions, advertising, office rent, salaries, and other overhead not directly tied to production.
Revenue earned from interest-bearing investments such as bonds, savings accounts, or loans the company has made to others.
The cost incurred for borrowed funds. It represents interest payable on bonds, loans, and other forms of debt. It directly reduces pre-tax income.
The total amount of taxes owed to government authorities based on taxable income. The effective tax rate can vary significantly by jurisdiction and available deductions.
Non-cash expenses that allocate the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. Added back in cash flow calculations since no actual cash leaves the company.
Everything a company owns that has economic value. Includes cash, investments, receivables, inventory, property, equipment, and intangible assets like patents. Formula: Total Current Assets + Total Non-Current Assets
Assets expected to be converted to cash or consumed within one year. Includes cash, short-term investments, accounts receivable, and inventory.
Long-term assets not expected to be converted to cash within one year. Includes property, equipment, long-term investments, goodwill, and intangible assets.
The most liquid assets on the balance sheet, including physical currency, bank deposits, and short-term investments that can be readily converted to cash (maturity of 3 months or less).
Investments expected to be converted to cash within one year. These include treasury bills, certificates of deposit, and marketable securities.
Money owed to the company by its customers for goods or services delivered but not yet paid for, minus an allowance for doubtful accounts. Formula: Gross Receivables − Allowance for Doubtful Accounts
Raw materials, work-in-progress, and finished goods that are ready or will be ready for sale. A critical metric for manufacturing and retail companies.
Tangible long-term assets used in operations, including land, buildings, machinery, and vehicles. Reported net of accumulated depreciation.
An intangible asset that arises when a company acquires another business for more than the fair value of its identifiable net assets. It represents brand value, customer relationships, and synergies.
Non-physical assets that have economic value, including patents, trademarks, copyrights, proprietary technology, and customer lists.
All financial obligations a company owes to outside parties. Includes accounts payable, loans, bonds, deferred revenue, and pension obligations. Formula: Total Current Liabilities + Total Non-Current Liabilities
Obligations due within one year, including accounts payable, short-term debt, accrued expenses, and current portion of long-term debt.
Money the company owes to its suppliers for goods and services received but not yet paid for. A component of working capital management.
Debt obligations due within one year. Includes short-term bank loans, commercial paper, and the current portion of long-term debt.
Debt obligations with maturities greater than one year. Includes corporate bonds, term loans, and mortgage debt used to fund long-term investments.
The sum of all interest-bearing obligations, both short-term and long-term. A key metric for assessing financial leverage and creditworthiness. Formula: Short-Term Debt + Long-Term Debt
Total debt minus cash and cash equivalents. A negative net debt means the company holds more cash than it owes, indicating strong financial health. Formula: Total Debt − Cash & Cash Equivalents
The residual interest in the assets after deducting liabilities. Represents what shareholders would theoretically receive if the company liquidated all assets and paid off all debts. Formula: Total Assets − Total Liabilities
Cumulative net income that has been retained by the company rather than distributed as dividends. Represents profits reinvested back into the business over its entire history.
Cash generated from the company's core business operations. This is often considered the purest measure of a company's ability to generate cash because it excludes investing and financing activities.
Money spent on acquiring or upgrading physical assets such as buildings, machinery, and equipment. These investments are necessary to maintain and grow the business.
Cash available after a company has paid for its operations and capital expenditures. This is the money available for dividends, share buybacks, debt repayment, or acquisitions. Formula: Operating Cash Flow − Capital Expenditure
Total cash distributed to shareholders as dividends during the period. Shown as a negative number in financing activities because cash is leaving the company.
Non-cash expense representing equity instruments (stock options, restricted stock) granted to employees as compensation. Added back in cash flow from operations since no actual cash was spent.
The total change in a company's cash position during the period, combining operating, investing, and financing activities. Formula: Operating CF + Investing CF + Financing CF
The difference between the tax expense reported on the income statement and the actual tax paid. Arises from timing differences between accounting rules and tax regulations.
The total market value of a company's outstanding shares. It categorizes companies as micro-cap, small-cap, mid-cap, large-cap, or mega-cap. Formula: Share Price × Total Shares Outstanding
The theoretical total cost to acquire a company, accounting for both equity and debt. It provides a more comprehensive valuation than market cap alone because it includes the company's capital structure. Formula: Market Cap + Total Debt − Cash & Equivalents
Price-to-Earnings ratio. Measures how much investors are willing to pay for each dollar of earnings. A high P/E may indicate expected growth, while a low P/E may signal undervaluation or declining prospects. Formula: Share Price / Earnings Per Share
Compares a stock's market value to its book value. A ratio below 1 may suggest the stock is undervalued relative to its net assets, while a high ratio may indicate intangible value. Formula: Share Price / Book Value Per Share
Compares a company's market capitalization to its total revenue. Useful for valuing growth companies that may not yet be profitable. Formula: Market Cap / Total Revenue
Measures how the market values a company's cash-generating ability relative to its price. Lower values may indicate undervaluation relative to actual cash generation. Formula: Market Cap / Free Cash Flow
Enterprise Value divided by EBITDA. One of the most widely used valuation multiples because it neutralizes differences in capital structure, taxes, and accounting policies. Formula: Enterprise Value / EBITDA
Enterprise Value divided by total revenue. Used to value companies that may not be profitable yet, particularly common in technology and high-growth sectors. Formula: Enterprise Value / Revenue
Price/Earnings-to-Growth ratio. Adjusts the P/E ratio by the expected earnings growth rate. A PEG of 1 suggests fair valuation relative to growth; below 1 may indicate undervaluation. Formula: P/E Ratio / Annual EPS Growth Rate
Discounted Cash Flow value. The present value of all expected future free cash flows, discounted at the company's weighted average cost of capital. Represents intrinsic value based on expected cash generation. Formula: Σ(FCFₜ / (1 + WACC)ᵗ) + Terminal Value / (1 + WACC)ⁿ
The net asset value of a company on a per-share basis. It represents what each share would theoretically be worth if the company liquidated all assets at book value. Formula: (Total Assets − Total Liabilities) / Shares Outstanding
The inverse of the P/E ratio, expressed as a percentage. It allows comparison between stock returns and bond yields, helping investors assess relative attractiveness. Formula: EPS / Share Price × 100
Measures how effectively management uses shareholders' equity to generate profit. A high ROE indicates efficient use of investor capital. Formula: Net Income / Average Shareholders' Equity × 100
Indicates how efficiently a company uses its total assets to generate earnings. Useful for comparing companies within the same industry. Formula: Net Income / Total Assets × 100
Measures the return generated on all capital invested in the business, including both equity and debt. A ROIC above the cost of capital indicates value creation. Formula: NOPAT / (Total Debt + Equity − Cash) × 100
The percentage of revenue remaining after direct production costs. A key indicator of pricing power and production efficiency. Formula: Gross Profit / Revenue × 100
The percentage of revenue remaining after all operating expenses. Reflects management's ability to control costs while growing revenue. Formula: Operating Income / Revenue × 100
The percentage of revenue that becomes net income after all expenses, taxes, and interest. The ultimate measure of bottom-line profitability. Formula: Net Income / Revenue × 100
EBITDA as a percentage of revenue. Provides a cleaner view of operational profitability by excluding non-cash charges and financing costs. Formula: EBITDA / Revenue × 100
Measures a company's ability to pay short-term obligations with current assets. A ratio above 1 indicates more current assets than current liabilities. Formula: Total Current Assets / Total Current Liabilities
A stricter measure of liquidity that excludes inventory from current assets. Also called the acid-test ratio, it measures the ability to meet short-term obligations with the most liquid assets. Formula: (Current Assets − Inventory) / Current Liabilities
The most conservative liquidity ratio, measuring only cash and cash equivalents against current liabilities. Shows the ability to immediately cover short-term debts. Formula: Cash & Equivalents / Current Liabilities
Compares a company's total debt to shareholders' equity. A higher ratio indicates more aggressive financing through debt, which increases both risk and potential returns. Formula: Total Debt / Total Shareholders' Equity
The proportion of a company's assets financed by debt. A higher ratio indicates greater financial leverage and potentially higher risk. Formula: Total Debt / Total Assets
Measures how easily a company can pay interest on its debt. A higher ratio indicates a greater margin of safety. Below 1.5 is generally considered risky. Formula: EBIT / Interest Expense
Indicates how many years of EBITDA it would take to pay off all net debt. Widely used by credit analysts and rating agencies. Below 2 is generally healthy; above 4 raises concerns. Formula: Net Debt / EBITDA
Measures how efficiently a company uses its assets to generate revenue. A higher ratio indicates more efficient use of assets. Formula: Revenue / Average Total Assets
Shows how many times inventory is sold and replaced over a period. Higher turnover indicates efficient inventory management and strong demand. Formula: Cost of Goods Sold / Average Inventory
Measures how efficiently a company collects money owed by customers. A higher ratio indicates faster collection of receivables. Formula: Revenue / Average Accounts Receivable
Shows how quickly a company pays its suppliers. A lower ratio may indicate the company is taking advantage of favorable payment terms. Formula: Cost of Goods Sold / Average Accounts Payable
The average number of days it takes a company to collect payment after a sale. Lower DSO means faster cash collection. Formula: 365 / Receivables Turnover
The average number of days it takes a company to pay its suppliers. Higher DPO preserves cash longer but may strain supplier relationships. Formula: 365 / Payables Turnover
The average number of days a company holds inventory before selling it. Lower values indicate faster-moving inventory. Formula: 365 / Inventory Turnover
The annual dividend payment expressed as a percentage of the stock price. A key metric for income-focused investors seeking regular cash returns. Formula: Annual Dividend Per Share / Share Price × 100
The total dividend paid per share of stock for a given period. Companies may pay dividends quarterly, semi-annually, or annually.
The percentage of net income distributed as dividends. A high ratio may indicate limited reinvestment; a low ratio suggests the company retains most earnings for growth. Formula: Dividends Per Share / Earnings Per Share × 100
The annualized percentage rate at which dividends have grown. Consistent dividend growth is often a sign of financial health and management confidence. Formula: (Current DPS − Previous DPS) / Previous DPS × 100
The year-over-year percentage change in revenue. Positive growth indicates expanding business activity and market demand. Formula: (Current Revenue − Prior Revenue) / Prior Revenue × 100
The year-over-year percentage change in earnings per share. EPS growth that exceeds revenue growth may indicate improving profitability. Formula: (Current EPS − Prior EPS) / |Prior EPS| × 100
The year-over-year percentage change in net income. Sustainable net income growth is a strong indicator of long-term value creation. Formula: (Current Net Income − Prior Net Income) / |Prior Net Income| × 100
The year-over-year percentage change in free cash flow. Growing free cash flow provides more flexibility for dividends, buybacks, and investment. Formula: (Current FCF − Prior FCF) / |Prior FCF| × 100
The year-over-year percentage change in operating income. Tracks the growth of core business profitability, excluding non-operating items. Formula: (Current Oper. Income − Prior Oper. Income) / |Prior| × 100
The average closing price over the last 50 trading days. Often used as a short-to-medium-term trend indicator. A stock trading above its 50-day SMA is generally considered to be in an uptrend. Formula: Sum of last 50 closing prices / 50
The average closing price over the last 200 trading days. The most widely watched long-term trend indicator. The golden cross (50 SMA crosses above 200 SMA) is a bullish signal. Formula: Sum of last 200 closing prices / 200
A momentum oscillator measuring speed and magnitude of recent price changes on a scale of 0-100. Readings above 70 suggest overbought conditions; below 30 suggest oversold. Formula: 100 − (100 / (1 + Average Gain / Average Loss))
Moving Average Convergence Divergence. Shows the relationship between two exponential moving averages. Used to identify trend direction, momentum, and potential reversals. Formula: 12-period EMA − 26-period EMA
A momentum indicator measuring overbought and oversold levels on a scale of -100 to 0. Readings above -20 indicate overbought; below -80 indicate oversold. Formula: (Highest High − Close) / (Highest High − Lowest Low) × -100
A composite score assessing a company's environmental, social, and governance practices. Higher scores indicate better sustainability practices and potentially lower long-term risk.
Measures a company's impact on the natural environment, including carbon emissions, waste management, energy efficiency, and natural resource conservation.
Evaluates how a company manages relationships with employees, suppliers, customers, and communities. Covers labor practices, diversity, health and safety, and human rights.
Assesses the quality of a company's leadership, board diversity, executive compensation, audit practices, and shareholder rights protections.
The price level that a professional analyst forecasts a stock will reach within a specified timeframe, typically 12 months. Based on fundamental analysis and financial modeling.
A professional analyst's opinion on a stock, typically ranging from Strong Buy to Strong Sell. Consensus ratings aggregate opinions from multiple analysts.
The consensus analyst forecast for upcoming earnings per share. Used to set expectations — beating estimates often drives stock prices up, while missing them can cause declines.
The consensus analyst forecast for upcoming revenue. Helps investors gauge expected business growth and compare actual results against market expectations.
The count of professional analysts providing estimates for a stock. Higher coverage generally indicates greater institutional interest and more reliable consensus forecasts.
Measures a stock's volatility relative to the overall market. A beta of 1 means the stock moves in line with the market; above 1 means more volatile; below 1 means less volatile. Formula: Covariance(Stock, Market) / Variance(Market)
The number of shares available for public trading, excluding restricted shares held by insiders and institutions under lockup. Low float stocks tend to be more volatile. Formula: Shares Outstanding − Restricted Shares
The total number of permanent full-time employees. Can be used to calculate revenue per employee or gauge operational scale and efficiency.
The date when the company first offered its shares to the public through an Initial Public Offering. Indicates how long the company has been publicly traded.
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