401(k) Match
The annual dollar value of employer matching contributions to a 401(k) plan.
Accelerated Depreciation
A depreciation method that recognizes higher expense in the early years of an asset's life and lower expense in later years.
Accelerated Share Repurchase
A structured buyback transaction in which a company immediately repurchases a large block of shares from an investment bank.
Accounting Equation
The fundamental rule that total assets equal total liabilities plus total equity on every balance sheet.
Accounts Payable
Money a company owes to its suppliers and vendors for goods or services received but not yet paid for.
Accounts Receivable
Money owed to a company by customers who have purchased goods or services on credit but have not yet paid.
Accrual Accounting
Recording revenue and expenses when earned or incurred, regardless of when cash is received or paid.
Accrued Interest
The portion of the next coupon payment that has accumulated since the last coupon date, paid by the buyer to the seller at settlement.
Accrued Liabilities
Expenses a company has incurred but not yet paid, recorded as current obligations on the balance sheet.
Accrued Revenue
Revenue earned but not yet received or recorded as cash.
Accumulated Deficit
A negative retained earnings balance indicating that cumulative net losses have exceeded cumulative profits since a company's founding.
Accumulated Depreciation
The total depreciation expense recognized on an asset since it was placed in service, shown as a contra asset on the balance sheet.
Acquisition
The purchase of one company by another, with the buyer gaining control.
Active vs. Passive
Active investing attempts to beat market benchmarks through security selection; passive investing tracks an index at lower cost.
Activist Investor
An investor who acquires a significant stake in a company and uses that position to push for strategic or management changes.
Additional Paid-In Capital
The amount investors paid for shares above their par value, recorded in the equity section of the balance sheet.
ADR
A US-traded certificate representing shares in a foreign company, allowing Americans to invest in foreign stocks on US exchanges.
After-Tax Return
The net investment return remaining after paying applicable income or capital gains taxes.
Allowance for Doubtful Accounts
A contra-asset estimating the portion of receivables that will not be collected.
Alpha
The excess return of an investment relative to a benchmark, after adjusting for the level of market risk taken.
Altman Z-Score
A multi-factor bankruptcy prediction model combining five financial ratios into a single score.
Analyst Rating
A Wall Street analyst's recommendation on a stock — typically Buy, Hold, or Sell — based on their research.
Anchoring Bias
The tendency to rely too heavily on the first piece of information encountered when making financial decisions.
AGM
A mandatory yearly meeting where shareholders vote on board elections, executive pay, and company resolutions.
Annual Report
A comprehensive yearly publication summarizing a public company's financial performance and strategy for shareholders.
Fixed Annuity Payout
Annual payment from a fixed annuity given a starting balance, interest rate, and payout period.
Life Annuity Payout
Estimated annual income from a life annuity, assuming payments last until the expected end of life.
APY to APR
Converts an Annual Percentage Yield (APY) to the nominal Annual Percentage Rate (APR), or an APR to APY, for any compounding frequency.
Asset Allocation
How a portfolio is divided among different asset classes.
Asset Sale
A transaction in which a company sells specific assets or divisions rather than the entire entity.
Asset Turnover
Measures how much revenue a company generates for every dollar of assets it holds.
Asset
Any resource with economic value owned or controlled by an individual or business.
Audit Committee
A board subcommittee overseeing financial reporting, internal controls, and external audits.
Financial Audit
An independent examination of a company's financial statements to verify their accuracy and compliance with accounting standards.
Auditor Opinion
The formal conclusion issued by an independent auditor on whether a company's financial statements are presented fairly in accordance with GAAP.
Bad Debt Expense
The cost recognized when accounts receivable are deemed uncollectible, matched to the period revenue was earned.
Balance Sheet
A financial statement showing a company's assets, liabilities, and shareholders' equity at a specific point in time.
Barriers to Entry
Economic, regulatory, or structural obstacles that make it difficult or costly for new competitors to enter an established market.
Basis Point
One one-hundredth of a percentage point (0.01%), used as the standard unit of measure for interest rates, bond yields, and spreads.
Bear Market
A sustained decline of 20% or more in stock prices accompanied by widespread pessimism.
Benchmark
A standard index used to measure a portfolio's performance.
Beneficial Ownership
The natural person who ultimately owns or controls a legal entity or asset, even when nominal ownership is held through shell companies, trusts, or nominees.
Beta
Measures a stock's sensitivity to market movements — how much it tends to rise or fall relative to the overall market.
Bond Equivalent Yield
Converts a semi-annual yield to an effective annual yield using compound interest.
Bid-Ask Spread
The difference between the highest price a buyer will pay and the lowest price a seller will accept for a security.
Big Mac FX
The PPP-implied exchange rate derived from comparing Big Mac prices across countries.
BS Call
The theoretical fair value of a European call option derived from the Black-Scholes model.
BS Put
The theoretical fair value of a European put option derived from the Black-Scholes model.
Black Swan
An extremely rare, high-impact event that is nearly impossible to predict using historical data and standard risk models.
Blue-Chip Stock
Shares of a large, well-established, financially sound company with a long record of reliable performance and often dividend payments.
Board Composition
The mix of skills, independence, and backgrounds among a company's board directors.
Board Independence
The proportion of directors with no material ties to a company, enabling unbiased oversight.
Board of Directors
The elected body of individuals responsible for overseeing a corporation's management and representing shareholders.
Bond Covenant
Contractual conditions in a bond indenture that restrict issuer behavior to protect bondholders from increased risk after issuance.
Bond Price
The present value of a bond's future coupon payments and par repayment, discounted at the required yield.
Bond Rating
A letter-grade assessment of a bond issuer's creditworthiness.
BVPS
The per-share value of a company's net assets — total equity minus preferred equity, divided by shares outstanding.
Book Value
The net asset value of a company as reported on its balance sheet: total assets minus total liabilities.
Bottom-Up Analysis
An investment research approach that focuses on individual company fundamentals regardless of broader macroeconomic conditions or sector trends.
Break-Even Analysis
A financial tool that identifies the sales volume at which total revenues equal total costs, yielding zero profit or loss.
Broker
A licensed intermediary who executes securities transactions on behalf of clients in exchange for a fee or commission.
BRRRR Return
Measures what percentage of original cash invested is recovered through a cash-out refinance after the Buy, Rehab, Rent, Refinance, Repeat cycle.
Bull Market
A sustained period of rising stock prices and widespread investor optimism.
Burn Rate
The rate at which a company spends its cash reserves, typically expressed as a monthly figure, used to assess financial sustainability.
Business Cycle
The recurring pattern of expansion, peak, contraction, and trough in economic activity.
Business Model
The framework describing how a company creates, delivers, and captures value — its revenue streams, cost structure, and customer strategy.
Buy and Hold
A passive long-term investing strategy of purchasing securities and holding them through market cycles rather than trading actively.
CAGR
The steady annual growth rate that takes an investment from its starting value to its ending value over a given period.
Calmar Ratio
Compares a fund's annualised growth rate to its worst drawdown — a risk-adjusted return metric for drawdown-sensitive investors.
Cap Rate
The ratio of a property's net operating income to its market value, expressing the expected return on an all-cash real estate investment.
Capital Allocation
The process by which a company's management decides how to deploy its available financial resources among competing investments and returns.
CapEx
Funds used by a company to acquire, maintain, or improve physical assets such as property, equipment, or technology.
Capital Gains Tax
US tax on profit from selling a capital asset, with lower rates for assets held over one year.
Capital Lease
A lease that transfers substantially all ownership risks to the lessee, requiring the asset and liability to be recorded on the balance sheet.
Capital Structure
The mix of debt and equity a company uses to finance its assets and operations.
Capitalize vs. Expense
The accounting decision to record a cost as a long-term asset (capitalize) or charge it immediately to the income statement (expense).
CAPM
Estimates a stock's required return based on its beta and the expected market risk premium.
Capture Ratios
Measure how much of a benchmark's gains a fund captures in rising markets, and how much of its losses it incurs in falling markets.
20/4/10 Car Rule
The maximum car price you can afford: 20% down, 4-year loan, monthly payment under 10% of gross income.
Carry Trade Return
Total return from borrowing in a low-rate currency and investing in a high-rate currency.
Carve-Out
A partial IPO in which a parent company sells a minority stake in a subsidiary to public investors while retaining majority ownership.
Cash Basis Accounting
An accounting method that records revenues when cash is received and expenses when cash is paid, regardless of when they are earned or incurred.
Cash Conversion Cycle
The number of days it takes to convert inventory investments into cash from sales.
Cash Dividend
A direct payment of cash from a company's earnings to shareholders, typically distributed on a regular quarterly schedule.
Cash Flow Statement
A financial statement tracking cash inflows and outflows from operating, investing, and financing activities.
Cash Merger
An acquisition in which shareholders of the target company receive a fixed cash payment per share as consideration.
Cash-on-Cash Return
The ratio of annual pre-tax cash flow to total cash invested, measuring the leveraged yield on a real estate investment.
Cash Ratio
The strictest liquidity measure — cash and equivalents divided by current liabilities.
Central Bank
A national institution that manages the money supply, sets interest rates, and oversees financial stability.
CEO Duality
When one individual serves as both Chief Executive Officer and board chairman simultaneously.
Change of Control
The acquisition of a majority ownership stake in a company by a new controlling party, triggering contractual and legal provisions.
CEO
The highest-ranking executive responsible for a company's overall strategy and operations.
CFO
The senior executive overseeing a company's financial strategy, reporting, and investor relations.
COO
The executive responsible for a company's day-to-day operations and strategy execution.
Classified Board
A board structure where directors serve staggered multi-year terms, preventing full board replacement in one vote.
Clawback
A contractual right to recover previously paid executive compensation after misconduct or restatements.
Coast FIRE
The portfolio balance today that will grow to your FIRE number by retirement without any further contributions.
Common-Size Statement
A financial statement that expresses each line item as a percentage of a base figure, enabling comparison across companies and time periods.
Common Stock
The primary class of company ownership shares, granting holders voting rights and a residual claim on assets and earnings after all other obligations are paid.
Comparability Principle
The accounting requirement to use consistent methods so financial statements can be meaningfully compared across periods and companies.
Compensation Committee
A board subcommittee of independent directors that sets and oversees executive compensation.
Competitive Moat
A durable competitive advantage that protects a company's market share and profitability from competitors over the long term.
Compound Interest
Earning interest on both principal and previously earned interest.
Comprehensive Income
The total change in a company's equity during a period from all sources except transactions with shareholders, combining net income and other comprehensive income.
Concentration Risk
The risk of amplified losses from overexposure to a single asset, issuer, sector, geography, or counterparty.
Confirmation Bias
The tendency to seek out and favor information that confirms existing beliefs while ignoring contradictory evidence.
Conservatism Principle
An accounting guideline that directs companies to record losses and liabilities as soon as they are probable, but to delay recognizing gains until they are realized.
Consistency Principle
An accounting rule requiring companies to use the same accounting methods and policies from period to period unless a justified change is made and disclosed.
Consolidated Statements
Combined financial reports of a parent company and its subsidiaries, presenting them as a single entity.
Consolidation
The process of combining financial statements of a parent company and its subsidiaries into a single set of financial statements.
Consumer Confidence
A measure of how optimistic households feel about the economy and their personal financial situations.
Contingent Liability
A potential obligation arising from a past event whose outcome depends on a future uncertain event, such as a pending lawsuit.
Contrarian Investing
An investment strategy that deliberately goes against prevailing market sentiment by buying out-of-favor assets and selling popular ones.
Contribution Margin
Revenue minus variable costs, representing the amount each unit sold contributes toward covering fixed costs and generating profit.
Convertible Bond
A bond that can be converted into a set number of the issuer's shares.
Convexity
The second-order measure of a bond's price sensitivity to yield changes, capturing the curvature that modified duration misses.
Corporate Bond
A debt security issued by a corporation to raise capital from investors.
Corporate Culture
The shared values, behaviors, and norms that define how an organization operates and makes decisions.
Corporate Purpose
The stated reason a company exists, extending beyond profit to encompass broader stakeholder value.
Corporate Restructuring
A broad set of strategic actions that reorganize a company's operations, finances, or ownership to improve long-term value.
Correlation
Measures how consistently two return series move together, from −1 (perfect inverse) to +1 (perfect positive).
Cost of Capital
The minimum return a company must earn on its investments to satisfy all capital providers — both debt holders and equity investors.
Cost of Debt
The effective interest rate a company pays on its borrowed funds, after adjusting for tax savings.
Cost of Equity
The return required by equity investors to compensate for the risk of owning a company's stock.
COGS
The direct costs attributable to producing the goods or services a company sells during a period.
Cost of Revenue
The total direct costs incurred to deliver a product or service, used primarily by service and technology companies.
Cost-Push Inflation
Inflation caused by rising production costs that force prices higher while reducing economic output.
CVP Analysis
A planning tool that examines the relationship between costs, sales volume, and profit to determine break-even points and profit targets.
Coupon Payment
The periodic interest payment a bondholder receives, equal to the face value multiplied by the coupon rate divided by the payment frequency.
Creative Destruction
The process by which new innovations continuously replace existing industries, driving long-run economic progress.
Credit Rating
An assessment of a borrower's creditworthiness and likelihood of default, issued by rating agencies such as Moody's, S&P, and Fitch.
Credit Risk
The probability that a borrower or counterparty will fail to meet its financial obligations.
Credit Spread
The additional yield a corporate bond pays over a comparable-maturity Treasury bond, compensating investors for credit risk.
Credit Utilization
Total credit card balances as a percentage of total credit limits — the second-largest FICO score factor.
Cross-Border Merger
A merger combining two companies from different countries, subject to multiple regulatory, tax, and currency considerations.
Currency Exposure
The sensitivity of a portfolio's returns to changes in foreign exchange rates.
Current Assets
Resources expected to be converted to cash or consumed within one year, listed at the top of the balance sheet.
Current Liabilities
Financial obligations due within one year, shown on the balance sheet below current assets.
CPLTD
The amount of a company's long-term debt that must be repaid within the next 12 months, reported as a current liability on the balance sheet.
Current Ratio
Measures a company's ability to cover short-term liabilities with short-term assets.
Cyclical Stock
A stock whose performance is closely tied to the economic cycle, rising during expansions and falling during recessions.
DPO
The average number of days a company takes to pay its suppliers after receiving goods or services.
DSO
The average number of days a company takes to collect payment after recording a sale.
DCA Return
Calculates the total return of a DCA strategy by averaging purchase prices across multiple periods.
Debt Covenant
A contractual condition in a loan agreement requiring the borrower to maintain specific financial ratios or behaviors.
Debt-for-Equity Swap
A transaction in which creditors exchange outstanding debt claims for equity shares in the debtor company.
Debt-to-Assets
The proportion of a company's assets financed by debt.
D/E Ratio
Compares a company's total debt to its shareholders' equity.
Declassified Board
A board structure where all directors stand for shareholder election every year.
Default Risk
The probability that a borrower will fail to make scheduled debt payments, exposing creditors to loss.
Defensive Stock
A stock that tends to maintain relatively stable earnings and dividends regardless of the state of the overall economy.
Deferred Compensation
A portion of an employee's earnings set aside to be paid at a future date, typically at retirement, providing a tax deferral benefit.
Deferred Revenue
Cash received from customers before a company has delivered the corresponding goods or services.
Deferred Tax Asset
A balance sheet asset representing future tax savings from temporary timing differences.
Deferred Tax Liability
A balance sheet obligation representing taxes owed in the future because book income exceeds taxable income today.
Deferred Tax
The future tax consequence of temporary differences between a company's book income and its taxable income.
DeFi APY
Converts a DeFi protocol's quoted APR into the effective Annual Percentage Yield, accounting for how often returns are compounded.
Deflation
A sustained decrease in the general price level of goods and services.
Delisting
The removal of a company's shares from a stock exchange, either voluntarily or for failing listing requirements.
Demerger
A corporate split in which a company divides into two or more independent companies, distributing shares to existing shareholders.
Depreciation Methods
The systematic approaches used to allocate the cost of a long-term asset over its useful life.
Depreciation
The cost of a long-lived asset spread over the years it is used. Amortisation is the same for intangible assets.
Diluted Shares
The total number of shares outstanding including all potentially dilutive securities, used to calculate diluted EPS.
DIME Method
A life insurance needs formula covering Debt, Income, Mortgage, and Education.
DIO
The average number of days a company holds inventory before selling it.
Direct Listing
A method of going public in which a company lists existing shares on a stock exchange without issuing new shares or hiring underwriters.
Director Duties
The fiduciary obligations of board members, including duty of care and duty of loyalty.
Disability Need
Monthly income benefit required to replace a percentage of earnings if you become disabled.
Discontinued Operations
A business segment or component that has been sold, abandoned, or classified as held for sale, reported separately from continuing operations in financial statements.
Discounted Payback
The time to recover the initial investment using present-value-adjusted cash flows.
Disposition Effect
The behavioral tendency to sell winning investments too early and hold losing ones too long.
Diversification
Spreading investments across assets to reduce risk.
Dividend Growth Investing
An investment strategy that targets companies with a history of consistently growing their dividend payments over time.
Dividend Policy
A company's approach to determining how much of its earnings to distribute to shareholders as dividends versus retaining for growth.
Dividend Stock
A share of a company that pays regular cash distributions to shareholders, typically from earnings, providing income alongside potential price appreciation.
Dividend Yield
Annual dividends per share expressed as a percentage of the stock price.
Dividend
A payment from a company to its shareholders out of its profits or distributable equity, usually in cash and per share.
Dollar-Cost Averaging
Investing a fixed dollar amount at regular intervals regardless of price.
Double-Declining Balance
An accelerated depreciation method that applies twice the straight-line rate to the asset's remaining book value.
DPO
The average number of days a company takes to pay its suppliers.
Drawdown
The peak-to-trough percentage decline in the value of an investment or portfolio over a specific period.
DRIP
A program that automatically reinvests cash dividends into additional shares of the same stock, often without commissions and sometimes at a discount.
DSCR
The ratio of a property's net operating income to its annual mortgage payments, used by lenders to determine whether a property qualifies for financing.
DSO
The average number of days it takes a company to collect payment after a sale.
DTI Ratio
Monthly debt payments as a percentage of gross monthly income, used to qualify for mortgages.
Dual-Class Shares
A share structure with two classes carrying different voting rights, often used by founders to retain control.
DuPont 3-Step
Decomposes Return on Equity into three drivers: net profit margin, asset turnover, and financial leverage.
EBT
A company's profit after all operating and interest expenses, but before income tax is deducted.
Earnings Guidance
A company’s own outlook for its coming results, such as expected revenue growth or operating margin for the financial year.
Earnings Management
The use of accounting discretion to influence reported financial results, either within or outside GAAP rules.
Earnings Quality
A measure of how accurately and sustainably a company's reported net income reflects its true economic performance.
Earnings Surprise
The difference between a company's actual reported earnings and analysts' consensus earnings estimate.
EBITDA Margin
Operating profitability as a percentage of revenue, before interest, taxes, depreciation, and amortization.
EBITDA
Operating profit before depreciation and amortisation: a rough measure of the cash a business earns from operations before financing, taxes and new investment.
Economies of Scale
Cost advantages a firm gains as it increases production, reducing average cost per unit at larger output volumes.
Economies of Scope
Cost savings that arise when a firm produces multiple products jointly more cheaply than separately.
Effective Annual Rate
The actual annual return on a loan or investment after accounting for intra-year compounding.
Effective Duration
A numerical duration measure that uses actual price changes from parallel yield shifts, suitable for bonds with embedded options.
Effective Tax Rate
Income tax expense as a percentage of profit before tax: the rate a company actually reports, as opposed to the statutory rate set by law.
Efficient Market Hypothesis
The theory that asset prices fully reflect all available information, making consistent outperformance very difficult to achieve.
Emergency Fund
Liquid savings equal to 3–6 months of living expenses held to cover unexpected events.
Enterprise Value
The total value of a business — equity plus debt minus cash.
EPS
The portion of a company's profit allocated to each outstanding share.
Equal-Weight Index
A stock market index that assigns the same percentage weight to every constituent regardless of market capitalization.
Equity Method
An accounting approach used when an investor has significant influence over an investee, recognizing a proportional share of the investee's net income.
Equity Offering
The issuance and sale of shares in a company to investors, used to raise capital or provide liquidity for existing shareholders.
Equity Risk Premium
The excess return that investing in stocks is expected to provide over the risk-free rate, compensating investors for the higher risk of equities.
Equity Risk
The risk of financial loss from a decline in the market value of stocks held in a portfolio.
Equity
The residual ownership interest in an asset after all liabilities have been deducted.
ESG Reporting
Disclosure of a company's environmental, social, and governance performance to investors and stakeholders.
ESG
A framework for evaluating companies on environmental impact, social responsibility, and corporate governance practices.
ETF
A pooled investment vehicle that holds a basket of securities and trades on a stock exchange throughout the day like a single share.
EV/EBIT
Enterprise Value divided by operating profit (EBIT) — a capital-structure-neutral earnings multiple.
EV/EBITDA
Compares a company's total value to its earnings before interest, taxes, depreciation, and amortisation.
EV/Revenue
Enterprise Value divided by annual revenue — a capital-structure-neutral alternative to the P/S ratio.
Ex-Dividend Date
The cutoff date after which new buyers are not entitled to the next declared dividend.
Exchange Offer
A corporate transaction in which an issuer proposes to swap one class of outstanding securities for a different class or new series.
Exchange Rate
The price at which one country's currency can be exchanged for another's.
Executive Compensation
The total pay package for senior corporate executives, including salary, bonuses, stock options, and other benefits.
Expense Ratio
The annual fee charged by a fund as a percentage of assets.
Expense Recognition
The accounting principle governing when expenses are recorded in financial statements.
Extraordinary Items
Unusual and infrequent gains or losses that were formerly reported separately on the income statement under GAAP.
Factor Investing
A strategy that targets specific return drivers such as value, size, momentum, or quality.
Fair Value Accounting
An accounting framework that measures assets and liabilities at their current market value rather than original cost.
Fair Value Hierarchy
A three-level classification system ranking the reliability of inputs used to measure the fair value of assets and liabilities.
Family-Controlled Company
A business where a founding family retains sufficient voting power to influence major corporate decisions.
FASB
The Financial Accounting Standards Board, the private-sector body responsible for establishing US Generally Accepted Accounting Principles (GAAP).
FCF Yield
Free cash flow expressed as a percentage of market capitalisation.
Federal Income Tax
Estimated US federal income tax owed for 2025 using progressive tax brackets and standard deduction.
Fiduciary Duty
A legal obligation to act in the best interests of another party, as directors owe to shareholders.
FIFO vs LIFO
Inventory costing methods that determine which unit costs flow to cost of goods sold: FIFO assumes oldest units sell first, LIFO assumes newest units sell first.
50% Rule
A rule of thumb estimating that approximately 50% of a rental property's gross rent is consumed by operating expenses — excluding mortgage payments.
Financial Leverage
The use of borrowed capital to amplify investment returns, magnifying both gains and losses.
Financial Modeling
The process of building a mathematical representation of a company's financial performance to support analysis and decision-making.
Financial Statements
The four core reports — income statement, balance sheet, cash flow statement, and statement of changes in equity — that summarize a company's financial performance and position.
FIRE Number
The total portfolio size needed to retire early and live off investment returns indefinitely.
Fiscal Quarter
One of four three-month reporting periods that divide a company's fiscal year.
Fiscal Year
A 12-month accounting period used by a company for financial reporting purposes, which may differ from the calendar year.
Fixed Assets
Long-term tangible assets used in business operations, such as buildings and equipment, that are not expected to be converted to cash within one year.
Float
The number of shares of a company's stock that are freely available for public trading, excluding shares held by insiders, executives, and restricted shareholders.
Financial Footnotes
Disclosures attached to financial statements that explain accounting policies, estimates, commitments, and other details not visible in the main figures.
Free Cash Flow
Cash remaining after a company pays for its operating expenses and capital expenditures — available for dividends, buybacks, or debt repayment.
Full Disclosure Principle
An accounting rule requiring companies to disclose all information that could materially affect users' understanding of financial statements.
Fundamental Analysis
A method of valuing a security by examining the underlying company's financial health, competitive position, and economic environment to estimate intrinsic value.
Future Value
The value of a current asset at a specified future date, assuming a given rate of return.
Futures Price
The theoretical no-arbitrage price of a futures contract based on the cost of carry.
FV of Annuity
How much a series of equal periodic deposits will grow to at a given interest rate.
FX Cross Rate
A currency exchange rate derived indirectly via a common third currency (usually USD).
GAAP
Generally Accepted Accounting Principles — the standardized set of rules for financial reporting used by U.S. public companies.
GDP Growth
The percentage change in a country's gross domestic product over a given period.
GDP
The total monetary value of all goods and services produced within a country's borders in a given period.
Going Concern
The assumption that a company will continue operating for the foreseeable future, at least the next 12 months.
Going Private
The process of converting a publicly traded company into a private company, removing its shares from a stock exchange.
Golden Parachute
A lucrative severance package guaranteed to executives upon job loss following a corporate takeover.
Goodwill Impairment
A non-cash charge recognizing that acquired goodwill is worth less than its book value.
Goodwill
An intangible asset recorded when a company acquires another for more than the fair value of its net identifiable assets.
Graham Number
Benjamin Graham's formula for the maximum price a defensive investor should pay for a stock, based on EPS and book value.
Green Bond
A fixed-income security issued to raise capital specifically for projects with environmental or climate benefits.
Gross Margin
The percentage of revenue remaining after deducting the cost of goods sold.
Gross Profit
Revenue minus the cost of goods sold; the profit a company makes before operating expenses, interest, and taxes.
Gross Rent Multiplier
The ratio of a property's purchase price to its annual gross rental income, used as a quick screening tool before deeper due diligence.
Growing Perpetuity
The present value of a cash flow that grows at a constant rate forever.
GARP
An equity strategy targeting companies with above-average earnings growth at valuations that have not fully priced in that growth.
Growth Investing
An investment strategy focused on companies expected to grow revenues or earnings significantly faster than the overall market.
Growth Stock
A share of a company expected to grow revenue and earnings significantly faster than the market average, typically trading at elevated valuations.
Health OOP Max
Total out-of-pocket medical cost after deductible and coinsurance, capped at the plan's OOP maximum.
Hedge Accounting
An accounting method that allows gains and losses on a hedging instrument to be recognized in the same period as the risk being hedged, reducing earnings volatility.
Herd Mentality
The tendency for investors to follow the crowd rather than conduct independent analysis, amplifying market trends and bubbles.
Historical Cost
The original purchase price of an asset, used as its recorded value on the balance sheet regardless of subsequent market value changes.
Holding Company
A parent corporation that owns controlling interests in subsidiaries without operating directly.
HPR
The total return earned on an investment from purchase to sale, including all income and capital appreciation.
Home Bias
The tendency for investors to allocate a disproportionately large share of their portfolio to domestic assets, underweighting international opportunities.
Horizontal Analysis
A financial statement analysis technique that compares each line item across multiple periods to identify trends and growth rates.
Hostile Takeover
An acquisition attempt that proceeds without the approval or against the wishes of the target company's board of directors.
HSA Limit
IRS annual contribution limit for Health Savings Accounts, including the 55+ catch-up amount.
Human Life Value
The present value of a person's future earning potential, used to estimate life insurance needs.
IFRS
A globally adopted set of accounting standards developed by the IASB, used in over 140 countries outside the United States.
Impairment
A reduction in the carrying value of an asset on the balance sheet when its recoverable amount falls below its book value.
Impermanent Loss
The percentage value lost by a liquidity provider compared to simply holding the tokens, due to price divergence between the two pooled assets.
Implied Vol (IV)
The volatility level implied by an option's market price, derived by reverse-solving the Black-Scholes formula.
Income Investing
An investment strategy focused on generating regular cash income from dividends, interest, and distributions rather than capital appreciation.
Income Statement
The financial statement that shows a company’s revenue, costs and profit for a period, from the top line to net income.
Income Tax Expense
The total tax charge recognized on a company's income statement, including both taxes currently due and deferred tax effects.
Independent Director
A board member with no material ties to the company, providing objective governance oversight.
Index Fund
A fund designed to track the performance of a market index by holding the same securities in the same proportions.
Inflation-Adjusted Value
The real purchasing-power equivalent of a future dollar amount in today's dollars.
Inflation
The general increase in the price level of goods and services in an economy over time, reducing purchasing power.
Information Ratio
Measures how consistently a fund generates active return above its benchmark per unit of active risk (tracking error).
Insider Trading
The buying or selling of a company's securities by someone with access to material non-public information about the company, which is illegal in most circumstances.
Insider
A person with access to material non-public information about a company, including directors, officers, and large shareholders.
Investor Activism
When large shareholders use their ownership stakes to push for governance or strategic changes.
Institutional Investor
A large organization — such as a pension fund, mutual fund, or insurance company — that invests large sums in financial markets.
Institutional Ownership
The percentage of a company's outstanding shares held by institutional investors such as mutual funds, pension funds, and hedge funds.
Intangible Assets
Non-physical assets with economic value, such as patents, trademarks, brand names, customer lists, and software.
Intercompany Transaction
A financial transaction between entities within the same parent company or corporate group.
Interest Coverage
How many times a company's operating profit covers its interest expense.
Interest Expense
The cost incurred by a company for borrowed funds, recorded on the income statement before taxes.
Interest Rate Parity
The no-arbitrage forward exchange rate implied by the interest rate differential between two countries.
Interest Rate
The percentage charged by a lender for the use of money, or paid by a financial institution on deposits.
Interim Financials
Financial reports covering a period shorter than a full fiscal year, most commonly quarterly (Q1, Q2, Q3) reports.
Internal Controls
Processes and procedures a company implements to ensure the accuracy of financial reporting, prevent fraud, and comply with laws.
Intrinsic Value
The immediate exercise value of an option — how much it is in the money.
Inventory Turnover
How many times a company sells and replaces its inventory during a period.
Inventory Write-Down
A reduction in the carrying value of inventory when its market value or net realizable value falls below its recorded cost.
Inventory
The goods a company holds for sale or the raw materials and work-in-progress used to produce those goods.
Investment Grade
A bond rating of BBB−/Baa3 or above, indicating low default risk.
Investment Horizon
The length of time an investor plans to hold assets before needing to liquidate them to meet a financial goal.
IPO
The first time a private company sells shares to the general public on a stock exchange.
IRR
The discount rate at which a project's net present value equals zero.
ISIN
A 12-character alphanumeric code that uniquely identifies securities in international markets, standardizing cross-border trading.
Jensen's Alpha
The excess return a portfolio earns above what CAPM predicts given its level of systematic risk.
Joint Venture
A business arrangement where two or more parties create a separate entity to pursue a shared objective.
Junk Bond
A high-yield bond rated below investment grade, carrying higher default risk.
Kelly Criterion
Calculates the optimal fraction of capital to allocate per trade or bet to maximize long-run portfolio growth.
Large-Cap
A publicly traded company with a market capitalization generally above $10 billion, representing the largest and most established firms.
Lease Accounting
The GAAP framework for recording lease agreements on financial statements, governed by ASC 842 for US companies.
Lease Liability
The present value of future lease payments that a lessee is obligated to make, recognized on the balance sheet.
LBO
The acquisition of a company using significant borrowed funds.
Liability
A financial obligation or debt owed by an individual or business to another party.
Limit Order
An order to buy or sell a security at a specified price or better, giving the trader control over execution price but no guarantee of execution.
Liquidity Risk
The risk of being unable to sell an asset quickly at a fair price, or of being unable to meet financial obligations as they come due.
Listed Company
A public company whose shares are traded on an organized stock exchange, meeting that exchange's listing requirements.
Lock-Up Period
A contractual restriction preventing insiders from selling shares after an IPO, typically lasting 90 to 180 days.
Long-Term Debt
Borrowed funds that are due beyond one year, recorded as a non-current liability on the balance sheet.
Loss Aversion
The behavioral tendency to feel the pain of losses roughly twice as intensely as the pleasure of equivalent gains.
Lower of Cost or Market
An inventory rule requiring write-down when market value falls below original cost.
LTC Cost
Projects the future cost of long-term care by applying an inflation rate to today's cost.
Macaulay Duration
The weighted-average time (in years) to receive all of a bond's cash flows, used as a measure of interest rate sensitivity.
Majority Shareholder
An individual or entity owning more than 50% of a company's voting shares, granting effective control.
Majority Voting
A director election standard requiring more than 50% of votes cast for a candidate to be elected.
MBO
An acquisition in which a company's management team purchases the business.
MD&A
The section of an annual report where management explains financial results, risks, and outlook in their own words.
Marginal Cost
The increase in total production cost from producing one additional unit of output.
Mark-to-Market
The practice of revaluing an asset or liability to its current market price at the end of each reporting period.
Market Cap
The total market value of all a company's outstanding shares.
Cap-Weighted Index
An index where each component's weight is proportional to its market capitalization.
Correction
A short-term decline of 10–20% in a stock index or asset price from a recent peak.
Market Crash
A sudden, severe decline in stock prices across a broad section of the market, typically 20% or more in a short period.
Market Efficiency
The degree to which asset prices fully and immediately reflect all available information.
Market Index
A composite measure that tracks the performance of a selected group of stocks representing a market or sector.
Market Liquidity
The ease with which an asset can be bought or sold quickly at a fair price without significantly affecting its market price.
Market Manipulation
Intentional distortion of a security's price or volume through deceptive practices such as spoofing or pump-and-dump schemes.
Market Order
An order to buy or sell a security immediately at the best available current price, prioritizing execution speed over price certainty.
Market Power
The ability of a firm to profitably set prices above competitive levels without losing all of its customers.
Market Risk
The risk of losses due to broad movements in financial markets, including equity prices, interest rates, currency rates, and commodity prices.
Market Sentiment
The overall attitude and emotional disposition of market participants toward a particular security or financial market at a given point in time.
Matching Principle
An accounting rule requiring expenses to be recognized in the same period as the revenue they helped generate.
MNPI
Significant, undisclosed company information that would affect the stock price if made public.
Material Weakness
A deficiency in a company's internal controls over financial reporting significant enough that there is a reasonable possibility of a material misstatement going undetected.
Materiality
The threshold above which an omission or misstatement in financial statements could influence the decisions of a reasonable investor.
Max Drawdown
The largest peak-to-trough decline in a portfolio's value — the worst-case loss any investor could have experienced.
Medicare IRMAA
Additional Medicare Part B premium paid by higher-income enrollees based on MAGI.
Merger Agreement
The definitive legal contract between an acquirer and a target company specifying the full terms and conditions of a proposed merger.
Merger Arbitrage
An investment strategy that profits from the price spread between a target stock's trading price and the announced acquisition price.
Merger of Equals
A combination of two similarly sized companies structured as a partnership of peers with shared governance and leadership.
Merger
The combination of two companies into a single new entity.
Mid-Cap
A company with a market capitalization typically between $2 billion and $10 billion, offering a blend of growth potential and relative stability.
MiFID II
The EU's Markets in Financial Instruments Directive II, governing investment services, transparency, and investor protection across European markets.
Minority Interest
The share of a subsidiary’s equity and profit that belongs to shareholders other than the parent company. IFRS calls it non-controlling interests.
MIRR
An improved version of IRR that uses separate rates for financing costs and reinvestment returns.
Misery Index
The sum of the unemployment rate and the inflation rate — a simple gauge of economic hardship.
Modified Duration
Estimates the percentage price change of a bond for a 1% change in yield.
Momentum Investing
A strategy that buys recent outperformers and sells recent underperformers.
Monetary Policy
Central bank actions to control money supply and interest rates to achieve economic goals.
Monopoly
A market structure where a single seller controls the entire supply, enabling above-competitive pricing.
Moving Average
A continuously updated average of a security's price over a set lookback period, used to smooth short-term noise and identify trends.
Multi-Step Income Statement
An income statement format that separates operating and non-operating results into distinct subtotals for gross profit, operating income, and net income.
Mutual Fund
A pooled investment vehicle that collects money from many investors to purchase a diversified portfolio of securities.
NASDAQ
The world's second-largest stock exchange by market capitalization, known for listing technology and growth companies.
NAV
The per-share value of a mutual fund or ETF, calculated as total assets minus total liabilities divided by shares outstanding.
Net Assets
Total assets minus total liabilities, equivalent to shareholders' equity on the balance sheet.
Net Income
Profit for the period after all costs, financial items, income taxes and discontinued operations: the bottom line of the income statement.
NIM
A bank profitability metric measuring the difference between interest income earned and interest paid, relative to assets.
Net Margin
The percentage of revenue that remains as profit after all expenses and taxes.
Net Operating Loss
A tax designation arising when a company's allowable deductions exceed its taxable gross income, creating a loss that can offset future taxable income.
Net Realizable Value
The estimated selling price of an asset minus costs to complete and sell it.
Net Worth
Total assets minus total liabilities — the most fundamental measure of personal financial health.
Network Effects
The phenomenon whereby a product or service becomes more valuable to each user as more people use it.
NOI
Annual gross income from a property minus all operating expenses, excluding mortgage payments, taxes on income, depreciation, and capital expenditures.
Nominating Committee
A board subcommittee that identifies director candidates, oversees board composition, and governs governance practices.
Non-Cash Expenses
Accounting charges that reduce net income but do not require an actual cash outflow in the period recognized.
Non-Current Assets
Long-term resources expected to provide economic value beyond one year, including property, equipment, and intangibles.
Non-Executive Director
A board member who provides independent oversight without holding any management role in the company.
Non-GAAP Measures
Figures not defined in the accounting standards, such as adjusted operating profit or comparable EBITDA. In the EU they are called alternative performance measures (APMs).
Non-Operating Income
Revenue and gains arising from activities outside a company's core business operations.
Notes Payable
A formal written promise to repay a specific amount of money by a set date, recorded as a liability on the balance sheet.
NPV
The sum of all discounted future cash flows from a project minus the initial investment.
Off-Balance-Sheet
Financing arrangements that allow a company to keep assets or liabilities off its main balance sheet, reducing apparent leverage.
Oligopoly
A market structure dominated by a small number of large firms, each of which must account for the actions of its rivals when making decisions.
1% Rule
A quick-filter rule that says monthly rent should be at least 1% of the purchase price for a rental property to generate positive cash flow.
Open Market Repurchase
A share buyback program in which a company purchases its own stock on the open market at prevailing prices over time.
Operating Cash Flow
Cash generated by a company's core business operations, before accounting for investing or financing activities.
Operating Cycle
The average time it takes a company to convert raw materials into cash from sales, flowing through inventory, production, and receivables.
Operating Expenses
The costs of running the business, from materials and salaries to rents and depreciation, deducted from revenue to arrive at operating profit.
Operating Income
Profit from the business itself, after all operating costs but before financial items and income taxes. Also called operating profit or EBIT.
Operating Lease
A short-term rental agreement where the lessee uses an asset without assuming ownership risks.
Operating Leverage
A measure of how sensitive a company's operating income is to changes in revenue, driven by fixed vs. variable cost structure.
Operating Margin
The percentage of revenue remaining after all operating costs — before interest and taxes.
Operating Segment
A reportable component of a company whose financial results are reviewed separately by management.
Opportunity Cost
The value of the best alternative foregone when a choice is made.
Delta (Call)
The rate of change in a call option's price for a $1 move in the underlying stock.
Delta (Put)
The rate of change in a put option's price for a $1 move in the underlying stock.
Gamma
The rate of change in an option's delta for a $1 move in the underlying stock.
Rho (Call)
The change in a call option's price for a 1% increase in the risk-free interest rate.
Rho (Put)
The change in a put option's price for a 1% increase in the risk-free interest rate.
Theta (Call)
The daily time decay of a call option's price, holding all other factors constant.
Theta (Put)
The daily time decay of a put option's price, holding all other factors constant.
Time Value
The portion of an option's price beyond its intrinsic value, reflecting the remaining time to expiry.
Vega
The change in an option's price for a 1% increase in implied volatility.
OCI
Gains and losses excluded from net income that flow directly to equity, such as currency translation adjustments.
Overconfidence Bias
The tendency for investors to overestimate their knowledge, skills, and ability to predict market outcomes.
Par Value
The nominal face value assigned to a share of stock or a bond as stated in the corporate charter or bond indenture.
Passive Investing
An investment strategy that seeks to match market returns by holding diversified index funds rather than selecting individual securities.
Payback Period
The time it takes for a project to recover its initial investment from undiscounted cash flows.
Payout Ratio
The share of a company’s earnings paid out as dividends: dividend per share divided by earnings per share.
P/E Ratio
Measures how much investors pay per dollar of earnings.
PEG Ratio
Adjusts the P/E ratio by a company's expected earnings growth rate.
Pension Accounting
The accounting standards and methods governing how companies recognize and disclose defined benefit pension obligations and plan assets.
Percentage-of-Completion
A revenue recognition method that records income proportionally as a long-term contract progresses toward completion.
Performance Obligation
A promise in a contract to transfer a distinct good or service to a customer.
Piotroski F-Score
A 9-point scoring system that grades a company's financial health across profitability, leverage, and efficiency.
Poison Pill
A shareholder rights plan that allows existing shareholders to buy new shares at a discount, diluting a hostile acquirer's stake.
Portfolio
A collection of financial assets held by an investor.
Preferred Stock
A class of equity with priority over common stock for dividend payments and asset distribution in liquidation, typically without voting rights.
Prepaid Expenses
Payments made in advance for goods or services to be received in a future period, recorded as current assets on the balance sheet.
Present Value
The current worth of a future sum of money, discounted at a required rate of return.
Duration Price Approximation
Approximates the dollar price change of a bond from a given yield shift using modified duration.
Price Elasticity
A measure of how sensitive demand or supply is to a change in price.
Price Target
An analyst's forecast of a stock's expected price over the next 12 months, based on a fundamental valuation model.
P/B Ratio
A valuation ratio comparing a company's market price per share to its book value per share.
P/CF Ratio
Compares a stock's price to its operating cash flow per share, reducing the impact of accounting adjustments.
P/FCF Ratio
Compares a company's market capitalization to its free cash flow — the cash left after capital expenditures.
P/S Ratio
Measures how much investors pay for each dollar of a company's annual revenue.
Primary Market
The market where new securities are issued and sold for the first time, enabling issuers to raise capital directly from investors.
Prior Period Adjustment
A correction to a previously issued financial statement for a material accounting error.
Private Equity
Investment capital deployed in companies that are not publicly traded, typically through buyouts, growth investments, or venture capital.
Pro Forma
Financial statements or projections that exclude certain items or incorporate hypothetical assumptions to present a different view of performance.
Profitability Index
The ratio of the present value of future cash inflows to the initial investment cost.
PP&E
Long-term tangible assets used in business operations, recorded on the balance sheet at cost less accumulated depreciation.
Prospectus
A formal document filed with the SEC that provides details about an investment offering to potential investors.
Proxy Contest
A campaign by dissident shareholders to solicit proxies and win shareholder votes against company management.
Proxy Vote
A shareholder vote cast by an authorized representative on behalf of the shareholder, typically on corporate matters at an annual meeting.
Purchase Accounting
Acquisition accounting that records acquired assets and liabilities at fair value, recognizing goodwill for any excess price.
Purchase Price Allocation
The process of assigning an acquisition price to the identifiable assets and liabilities of an acquired company at fair value, with any excess recorded as goodwill.
PPP
An implied exchange rate based on the ratio of price levels between two countries.
Put-Call Parity
The no-arbitrage relationship between European call and put prices on the same underlying.
PV of Annuity
The current worth of a series of equal periodic payments, discounted at a required return.
PV of Perpetuity
The current worth of a stream of equal payments that continues indefinitely.
Qualified Opinion
An audit opinion indicating that financial statements are fairly presented except for a specific, limited exception noted by the auditor.
Qualitative Analysis
An investment evaluation approach focused on non-numerical factors such as management quality, competitive positioning, brand strength, and business model durability.
Quantitative Analysis
An investment evaluation approach that uses mathematical models, statistics, and large data sets to identify pricing patterns and manage risk.
Quantitative Easing
A central bank policy of purchasing assets to inject money into the economy.
Quick Assets
The most liquid current assets—cash, marketable securities, and net receivables—used to measure a company's ability to meet short-term obligations.
Quick Ratio
A stricter liquidity test that excludes inventory from current assets.
R-Squared
The proportion of a fund's return variation explained by its benchmark, from 0 (no relationship) to 1 (perfect fit).
R&D Expense
The costs a company incurs to develop new products, technologies, or services, expensed as incurred under GAAP.
Real Interest Rate
The nominal interest rate adjusted for inflation using the Fisher equation.
Real Return
An investment's return after subtracting the inflation rate.
Real Yield
The inflation-adjusted return on a bond, calculated using the exact Fisher equation.
Realization Principle
The accounting rule that revenue should be recognized only when earned and collection is reasonably assured.
Realized vs. Unrealized Gains
The distinction between gains from assets already sold (realized, taxable) and gains on assets still held (unrealized, not yet taxable).
Rebalancing
The process of restoring a portfolio to its target asset allocation by selling outperforming assets and buying underperforming ones.
Recapitalization
A restructuring of a company's capital mix by altering the balance of debt and equity on its balance sheet.
Receivables Turnover
How many times a company collects its average accounts receivable during a year.
Recency Bias
The cognitive bias of giving excessive weight to recent events when making investment decisions, ignoring longer historical context.
Recession
A significant decline in economic activity lasting more than a few months, typically defined as two consecutive quarters of negative GDP growth.
Reconciliation
The process of comparing two sets of records or figures to ensure they are consistent and identify any discrepancies.
Record Date
The date on which a company identifies shareholders eligible to receive a dividend.
Refi Break-Even
The number of months until monthly savings from refinancing recover the closing costs.
Related-Party Transactions
Business dealings between entities with a pre-existing relationship, requiring disclosure due to potential conflicts of interest.
RSI
A momentum oscillator scaled from 0 to 100 that measures the speed and magnitude of recent price changes to identify overbought or oversold conditions.
Remuneration Committee
A board subcommittee that sets executive pay, equivalent to the compensation committee in UK and international governance.
Rent vs Buy
The number of years until buying a home produces greater net wealth than renting and investing the difference.
Restatement
The revision of previously published financial statements to correct errors, fraud, or misapplication of accounting standards.
Restricted Cash
Cash and cash equivalents that are not freely available for general use because they are reserved for a specific purpose.
RSUs
A form of equity compensation where an employer promises to grant company shares to an employee upon meeting vesting conditions.
Retail Investor
An individual non-professional investor who buys and sells securities for their own personal account.
Retained Earnings
The cumulative net income a company has kept rather than distributed to shareholders as dividends.
Retention Ratio
The proportion of net income reinvested back into the business rather than paid as dividends.
ROI
A measure of the profit earned on an investment relative to its cost.
Revenue Recognition
The accounting principle that determines when and how revenue is recorded, governed by the five-step model under ASC 606.
Run Rate
An extrapolation of recent revenue data to estimate a company's full-year revenue as if current trends continued.
Revenue
The income a company earns from selling its goods and services in a period, before any costs are deducted. Also called sales, net sales or turnover.
Reverse Merger
A transaction in which a private company goes public by merging into an existing publicly traded shell company.
Reverse Split
A corporate action that consolidates shares, reducing their count while proportionally increasing the price per share.
Reverse Takeover
A transaction in which a private company gains effective control of a publicly listed entity, achieving a public listing in the process.
ROU Asset
An asset representing a lessee's right to use leased property over the lease term, recognized on the balance sheet under ASC 842 and IFRS 16.
Rights Issue
An offer allowing existing shareholders to buy new shares at a discount before they are offered publicly.
Risk-Adjusted Return
A measure of investment return that accounts for the amount of risk taken to achieve it, enabling fair comparison across investments.
Risk-Free Rate
The theoretical return on an investment with zero risk, typically approximated by short-term government bond yields.
Risk Tolerance
The degree of investment risk an investor is willing and able to accept.
Risk
The possibility that an investment's actual return will differ from its expected return.
ROA
Measures how efficiently a company uses its total assets to generate net income.
ROE
Measures how much profit a company generates per dollar of shareholders' equity.
ROIC
Measures how efficiently a company generates profit from all capital invested by shareholders and debt-holders.
Rule of 72
A shortcut to estimate how many years it takes to double an investment at a given annual return.
Runway
The amount of time a company can continue operating before exhausting its cash reserves, given its current burn rate.
Safe Withdrawal Rate
The annual percentage of a retirement portfolio you can withdraw without depleting it over 30 years.
Salvage Value
The estimated residual value of an asset at the end of its useful life, used as the basis for depreciation calculations.
Savings Rate
Monthly savings as a percentage of take-home pay — the single most powerful driver of wealth accumulation.
Say on Pay
A non-binding shareholder vote on a company's executive compensation package, required by the Dodd-Frank Act.
Scenario Analysis
A risk management technique that evaluates how a portfolio performs under a range of hypothetical future market conditions.
Scrip Dividend
A dividend program that gives shareholders the choice to receive new shares instead of their cash dividend entitlement.
Secondary Market
The financial marketplace where previously issued securities are bought and sold between investors, as opposed to being purchased directly from the issuing company.
Secondary Offering
The sale of new or existing shares by a public company after its IPO.
Sector Investing
An investment approach concentrating exposure in specific industries or economic sectors rather than holding a diversified market portfolio.
Sector Rotation
An investment strategy of shifting capital between market sectors based on where they are in the economic cycle to capture relative outperformance.
Segment Reporting
Reporting revenue and profit separately for the parts of a business that management follows, such as business areas or regions.
Sensitivity Analysis
A technique that measures how changes in a single input variable affect the value of an investment or model output.
SG&A
The combined costs of selling products and running the back-office, including salaries, marketing, rent, and executive compensation.
Share Buyback
A company's repurchase of its own outstanding shares, reducing shares in circulation and often increasing earnings per share.
Shareholder Activism
Using equity ownership to pressure companies for governance, strategic, or operational changes.
Shareholder Agreement
A private contract among shareholders defining their rights, obligations, transfer restrictions, and exit procedures.
Sharpe Ratio
Measures excess return per unit of total volatility — the most widely used risk-adjusted performance metric.
Short Interest
The total number of shares sold short and not yet repurchased to close the position.
Short Selling
Borrowing shares to sell at the current price, then repurchasing them later at a lower price to profit from the decline.
Short Squeeze
A rapid price surge in a heavily shorted stock that forces short sellers to buy back shares to cover their positions, amplifying the price move.
Short-Term Debt
Borrowings due within one year, classified as current liabilities and used to fund short-term working capital needs.
Small-Cap
A publicly traded company with a market capitalization typically below $2 billion, characterized by higher growth potential and greater volatility.
Sortino Ratio
Like the Sharpe ratio but penalises only downside volatility — better for asymmetric return distributions.
SPAC
A shell company that raises capital through an IPO with the sole purpose of merging with or acquiring a private company to take it public.
Special Committee
An ad hoc board subcommittee of independent directors formed to evaluate conflict-of-interest transactions.
Special Dividend
A one-time, non-recurring cash distribution to shareholders separate from and in addition to any regular dividend.
Spin-Off
A new independent company created by separating a division from a parent company.
Squeeze-Out
A mechanism allowing a majority shareholder above a statutory threshold to compulsorily acquire remaining minority shares.
Stagflation
The coexistence of high inflation, high unemployment, and slow economic growth.
Staggered Board
A board structure where directors serve staggered multi-year terms, requiring several years to replace the full board.
Stakeholder Theory
A governance framework holding that companies owe obligations to employees, customers, and communities, not just shareholders.
Standard Deviation
Measures the dispersion of returns around the average — the most common gauge of investment volatility.
Retained Earnings Statement
A financial statement that reconciles the opening and closing retained earnings balance by showing net income earned and dividends declared.
Stewardship Code
A set of principles defining how institutional investors should engage with companies to promote good governance.
Stock-Based Compensation
Employee compensation paid in the form of equity awards such as stock options and restricted stock units, recorded as an expense under GAAP.
Stock Dilution
The reduction in existing shareholders' ownership percentage and earnings per share that occurs when a company issues additional shares.
Stock Dividend
A distribution of additional shares to existing shareholders instead of a cash payment, proportional to current holdings.
Stock Exchange
An organized marketplace where securities such as stocks and bonds are bought and sold between investors.
Stock-for-Stock Merger
An acquisition in which target shareholders receive shares of the acquiring company at a fixed exchange ratio instead of cash.
Stock Market
A network of exchanges where buyers and sellers trade shares of publicly listed companies.
Stock Options
The right granted to employees to purchase company stock at a predetermined price (strike price) within a set period.
Stock Split
Dividing each existing share into several new ones. The number of shares goes up and the price per share goes down, while the company’s value stays the same.
Stock
A share of ownership in a publicly traded corporation.
Stockholders' Equity
The residual interest in a company's assets after deducting all liabilities; what shareholders theoretically own.
Stop-Loss Order
An order that automatically sells a security when its price falls to a specified level, designed to limit an investor's loss on a position.
Straight-Line Depreciation
A depreciation method that allocates the cost of an asset evenly over its useful life in equal annual amounts.
Strategic Acquisition
A company purchase driven primarily by long-term competitive advantages rather than short-term financial return.
Student Loan Payoff
Monthly payment needed to fully repay a student loan over a given term, plus total interest cost.
Subordinated Debt
Debt that ranks below senior creditors in bankruptcy proceedings, compensating investors with higher yields for the greater loss risk.
Subsequent Events
Significant events occurring after the balance sheet date but before financial statements are issued.
Substance Over Form
The accounting principle requiring transactions to be recorded based on their economic reality rather than legal structure.
Supermajority
A charter or bylaw provision requiring more than a simple majority — often 66.7% or 75% — for certain decisions.
Supply Shock
A sudden unexpected event that significantly disrupts the supply of a key commodity or input.
Sustainable Growth Rate
The maximum growth rate a company can achieve without raising additional external capital.
Systematic Risk
Market-wide risk that cannot be eliminated through diversification.
Takeover Bid
A formal public offer by an acquirer to purchase shares of a target company at a specified price, often at a premium.
Takeover Premium
The percentage above a target company's pre-announcement share price paid by an acquirer to gain control.
Tangible Assets
Physical, touchable assets with a definite monetary value, such as property, equipment, inventory, and cash.
Tariff
A tax imposed by a government on imported or exported goods.
Tax-Equivalent Yield
The pre-tax yield a taxable bond must offer to match the after-tax return of a tax-exempt municipal bond.
Tax Provision
The estimated income tax expense recorded on a company's income statement for the reporting period.
Tax Shield
The reduction in taxable income — and therefore taxes paid — resulting from allowable deductions such as interest expense or depreciation.
Technical Analysis
A method of evaluating securities by analyzing historical price and volume data to forecast future price movements and identify trading opportunities.
Temporary Difference
A difference between an asset or liability's book value for financial reporting and its tax basis that will reverse over time.
Tender Offer Defense
Strategies used by a target company's board to resist or improve terms of an unwanted hostile acquisition bid.
Tender Offer
A public offer to purchase some or all of shareholders' shares at a specified price, usually above the current market price.
Term Life Need
Estimates required life insurance coverage based on income, debts, existing coverage, and liquid assets.
Terminal Value
The estimated value of a business beyond the explicit forecast period in a discounted cash flow model.
TWR
A performance measure that neutralizes the distorting effect of investor cash flows, enabling fair comparison of portfolio managers.
TIE Ratio
A solvency ratio measuring how many times a company can cover its interest expense with operating earnings.
Token Dilution
Measures the percentage increase in a token's total supply when new tokens are minted, quantifying how existing holders' ownership is reduced.
Top-Down Analysis
An investment research approach that begins with broad macroeconomic conditions, then narrows to sectors, and finally selects individual securities.
Total Return
The overall gain or loss from an investment including both price appreciation and income such as dividends or interest.
Tracking Error
The standard deviation of the difference between a portfolio's returns and its benchmark.
Trade War
A conflict in which countries impose escalating tariffs or trade barriers on each other.
Trading Halt
A temporary suspension of trading in one or more securities, ordered by an exchange or regulator to allow the market to absorb material information.
Trading Volume
The total number of shares or contracts traded for a security during a given period, typically one trading day.
Trad vs Roth IRA
Comparison of after-tax retirement balances between a Traditional (pre-tax) and Roth (after-tax) IRA.
Treasury Stock
Shares a company has repurchased from the open market and holds rather than retiring or reissuing.
Treynor Ratio
Measures excess return per unit of systematic (market) risk — useful for comparing diversified portfolios.
True Car Cost
The total 5-year cost of vehicle ownership including depreciation, financing, fuel, insurance, and maintenance.
2% Rule
A strict real estate screening rule stating monthly rent should be at least 2% of the purchase price, targeting high cash-flow investment properties.
Underwriting
The process by which an institution evaluates and assumes financial risk on behalf of a client, used in securities issuance, insurance, and lending.
Unearned Revenue
Cash received from customers before the related goods or services have been delivered.
Unit Economics
The direct revenues and costs associated with a single unit of a business, used to assess per-transaction profitability and scalability.
Unit-of-Production Depreciation
A depreciation method that allocates an asset's cost based on its actual output or usage rather than elapsed time.
Unqualified Opinion
An auditor's clean opinion that financial statements present fairly in conformity with GAAP.
Unrealized Gain/Loss
The paper profit or loss on an investment that has not yet been sold, reflecting the difference between current market value and original cost.
Unsystematic Risk
Company- or industry-specific risk that can be reduced through diversification.
Useful Life
The estimated period over which a depreciable asset is expected to provide economic benefits, used to calculate periodic depreciation expense.
Vacancy Rate
The percentage of available rental time during which a property or unit is unoccupied and generating no rental income.
Value at Risk
The maximum dollar loss not expected to be exceeded over a given period at a specified confidence level.
Value Investing
An investment strategy that involves buying securities trading below their estimated intrinsic value.
Value Stock
A stock trading below its estimated intrinsic value based on fundamental metrics such as earnings, book value, or cash flow.
Variable Cost
A cost that changes in direct proportion to production volume or sales activity, such as raw materials and direct labor.
Variable Costing
A cost accounting method that treats only variable manufacturing costs as product costs.
Variance
The average squared deviation of returns from their mean — the square of standard deviation.
Vertical Analysis
A financial statement analysis technique that expresses each line item as a percentage of a base figure within the same period.
VIX
The CBOE Volatility Index, a real-time measure of expected S&P 500 volatility over the next 30 days derived from option prices, often called the fear gauge.
Volatility
A statistical measure of how sharply and rapidly the price of an asset changes over time.
Voluntary Delisting
A company's decision to withdraw its shares from a stock exchange at management's initiative rather than due to exchange sanctions.
Voting Rights
The power each share carries to participate in corporate decisions, ranging from one-vote-per-share to non-voting classes.
WACC
The average after-tax cost of all capital sources a company uses, weighted by each source's proportion of total capital.
Warrant
A company-issued derivative giving the holder the right to buy shares at a fixed price before a set expiration date.
White Knight
A friendly acquirer that rescues a target company from a hostile takeover by offering better terms or a preferred deal structure.
Working Capital
Current assets minus current liabilities, measuring a company's ability to meet short-term obligations.
Write-Down
A partial reduction in the carrying value of an asset to reflect impairment or decline in fair value below book value.
Write-Off
The complete removal of an asset from the balance sheet when it is determined to have no remaining recoverable value.
Yield Curve Slope
The spread between the 10-year and 2-year Treasury yields — a key recession indicator.
Yield Curve
A graph plotting bond yields across different maturities, used to gauge economic and interest rate expectations.
Yield to Call
The annualised return an investor earns if a callable bond is called by the issuer on the first call date.
Yield to Maturity
The total annualised return an investor earns by holding a bond to maturity, accounting for price, coupons, and par repayment.