Sam, we suggest checking the Securities and Exchange Commission’s database, found at www.sec.gov/edgarhp.htm.
Terms of Investments
Should some of the investment and finance terms in this piece seem somewhat confusing, we’ve provided the following explanations:
- An index is a statistical composite used to chart the stock market, much like the S&P 500, a composite based on the performance of the country’s largest companies.
- Price-to-earnings ratio (P/E), or multiple as it is sometimes called, serves as a way of showing how expensive stocks are. To calculate a P/E or multiple, divide the company’s stock price by its earnings per share.
- Earnings growth is the percentage that a company’s profits or earnings per share increase annually.
- A stock’s yield is calculated by dividing a company’s dividend by its current share price.
- A dividend is the amount of profits a company regularly distributes to shareholders quarterly.
- Return on equity is the amount of money a company earns on a sum shareholders have invested in it. It is calculated by dividing how much a corporation’s common stock is worth by the amount of net income or profit made during a period.
- Market capitalization shows just how much a company’s outstanding stock is worth. To calculate a market cap, as professionals sometimes call it, multiply a company’s stock price by the number of shares it has outstanding.
- Leverage show how much in debt a corporation is. One way to measure leverage is by calculating a company’s debt-to-capital ratio. Divide a company’s long-term debt by its total capital.
Capital gains are the amount a stock or other investment appreciates over time. To calculate an investment’s capital gain, subtract the price your purchase you paid from its most recent price.