Asset leverage:   The total assets of a firm in relation to the equity of a firm in relation to the equity of the firm. This ratio gives an indication of the size of liabilities used to finance the assets.

CAPEX:   CAPital Expenditure. The resources committed by a firm to acquire or upgrade physical assets used in operations, such as buildings or equipment.

COGS:   Cost of Goods Sold. An expense that is incurred during a financial period that reflects the cost of the goods or services that generate revenue for a firm.

COPAT:   Cash Operating Profit After Taxes. Refers to the amount of cash generated from operations after all operations-related costs have been paid and all potential taxes deducted.

DCF:   Discounted Cash Flow. A method of evaluating an investment by estimating future cash flows and discounting them to the present by choosing a suitable discount rate.

EBITDA:   Earnings before Interest, Taxes, Depreciation and Amortization. An approximate measure of a firm’s operating cash flow based on data from the firm’s income statement. EBITDA is calculated by subtracting operating costs from revenue, thus looking at earnings before the deduction of interest expenses, taxes, depreciation, and amortization.

EPS:   Earnings per Share. Total earnings for a period (usually a year), divided by the average number of shares outstanding during that period, thus giving the portion of a firm’s profit allocated to each outstanding share of common stock.

EV:   Enterprise Value. Refers to the total value of a firm to all its investors, both equity investors and leaders. EV is calculated by adding the market capitalization to debt and preferred shares and subtracting cash & cash equivalents.

Fair Value:   The price of a firm’s share that should prevail according the fundamentals is interpreted through financial analysis. This does not mean that the value is necessarily achievable in the market place, since other factors such as sentiment, fund flows and technical support and resistance levels come into play when determining the price of any asset that is traded on a public market.

Market Cap:   The market capitalization of a firm, obtained by multiplying the price of its share by the total number of shares outstanding.

Net Cash Flow:   Cash receipts minus cash payments over a given period of time. Usually refers to operating cash flow after CAPEX and working capital payments have been made.

P/E:   Price-to-Earnings Ratio. The most common measure of valuation for stocks. It relates a stock’s price to its share of the firm’s earnings in a particular year. It is obtained by dividing the market capitalization by earnings over a given 12-month period.

P/B:   Price-to-Book Value. This ratio relates a stock’s price to its accounting value as represented on the firm’s balance sheet.

PEG:   P/E relative to the average expected earnings growth in coming years. This ratio attempts to tie in a firm’s valuation (as represented by the P/E ratio) to its future growth of earnings.

ROE:   Return on Equity. A measure of a firm’s earnings in any given financial period (usually a year) relative to total equity as represented on the balance sheet. It is used as a general indication of efficiency.

SG&A:   Selling, General and Administrative expenses. Refers to the portion of a firm’s incurred costs that are more general in nature (as opposed to directly relating to the goods sold or services rendered) but are still considered operations-related.

Working Capital:   Calculated as current assets minus current liabilities, working capital measure how much liquid assets a firm requires in order to continue to operate.

Dividend Yield:   The percentage return that a cash dividend payment represents relative to the price of the share. It is calculated by dividing the amount of dividends paid per share by the stock’s price. Mature, well-established companies tend to have higher dividend yields, while young, growth-oriented companies tend to have lower ones.