Glossary L-P
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Liquidity Ratio
This ratio is a measure of how much dollar volume is required to move a stock's price up or down by one percentage point. A high ratio indicates a stock that requires relatively heavy trading to move its price. A low liquidity ratio indicates a stock that moves on relatively light volume. The ratio is calculated by adding the daily percentage changes of a stock's closing price for each trading day of the month. Then the total dollar volume for the month is divided by this total percentage change figure.Back to Top
Long-Term Debt
Liabilities that are expected to paid after 12 months from the date of the last balance sheet. A company's long-term debt could be in the form of bank debt, mortgage bonds, debenture bonds or other obligations.Back to Top
MACD
The Moving Average Convergence Divergence is an indicator used to detect a trend shift in the price of a security. Typically, the MACD is expressed in a chart as a line plotting the difference between the security’s 12-day and 26-day exponential moving averages, with the 9-day exponential moving average of the MACD plotted over that line. When the MACD is above the 9-day line, also called the signal line, that suggests the current trend has strength and that it may be a good time to buy. When the MACD dips underneath the signal line, it is a signal to sell. When the lines diverge significantly, it suggests the current trend is at an end.Back to Top
Market Value
The total market value of a company or stock. Also called market capitalization, it is calculated by multiplying the number of shares outstanding by the latest closing price of the stock. Generally speaking, small cap stocks have market values below $1 billion, while large-caps have values in excess of $5 billion. Mid-cap fall inbetween.Back to Top
Money Flow Index
The MFI is a measure of the strength of an asset price trend. The money flow for any given day is determined by multiplying an asset’s typical price (the average high, low and closing price) by its volume. The money flow index is determined by dividing the sum of the money flow for days in which the typical price rises over the prior day’s price by that same value plus the sum of the flow for days in which the typical price declines beneath the prior day’s price and multiplying the quotient by 100. The index is measured on a scale from zero to 100.Back to Top
Net Earnings
Also known as the bottom line, this is the profit a company realizes after all costs, expenses and taxes have been paid. It is calculated by subtracting business, depreciation, interest and tax costs from revenues. Also called net income or net profit.Back to Top
Net EPS
Net Earnings-Per-Share (EPS) is the portion of a companies net earnings allocated to each share of stock. It is calculated by dividing net earnings by common shares outstanding adjusted for the assumed conversion of all potentially dilutive securities. Securities having a dilutive effect may include convertible debentures, warrants, options and convertible preferred stock.Back to Top
Net Margin
A company's profitability after all costs, expenses and taxes have been paid. The net margin is calculated by dividing net earnings by revenues and then multiplying by 100. The result is expressed as a percentage. It is used to measure operating efficiency at a company.Back to Top
On-Balance Volume Index
This is the ratio of shares traded to upward price movement. It was developed to help spot stocks that have been moving higher on increasing volume — a sign that there is developing interest in the company on Wall Street. The calculation is a complicated one, but goes like this: The daily volume and price change for the latest four weeks are compared with the same data for the previous four weeks and then related to trading on days when the stocks price rose. The index will be higher for stocks that are moving up on increasing volume, and can be an indication of significant buying activity.Back to Top
Operating Margin
A company's profitability before non-cash charges. The operating margin is calculated by dividing EBITDA (earnings before interest expense, taxes, depreciation and amortization) by revenues and then multiplyiong by 100. It is a measure of operating efficiency at a company."Back to Top
Payout Ratio
The percent of earnings-per-share (EPS) that was paid out as a dividend. It is calculated by dividing the quarterly dividend by the quarterly EPS and multiplying by 100.Back to Top
PEG
The PEG ratio (price-to-earnings-growth) is calculated by dividing a stock's forward P/E by its projected three- to five-year annual EPS growth rate. It is used to find companies that are trading at a discount to their projected growth. A PEG ratio of less than one is considered a sign that a stock is a good value. Generally speaking, the higher the PEG, the pricier the stock.Back to Top
Pre-Tax Margin
The profitability of a company before taxes are paid. The pre-tax margin is calculated by dividing pre-tax earnings by revenues and then multiplying by 100. The result is expressed as a percentage.Back to Top
Previous Close
The last trade price of a stock at the end of yesterday's trading session. This value is updated just before the opening of today's trading session.Back to Top
Price/Book
The ratio of a stock's latest closing price divided by its book value per share. Book value is the total assets of a company minus total liabilities. It is also called shareholders' equity. To get the book-value-per-share figure, shareholders' equity is divided by total shares outstanding.Back to Top
Price/Cash Flow
The ratio of a stock's latest closing price divided by cash flow per share for the past 12 months.Back to Top
Price/Sales
The ratio of a stock's latest closing price divided by revenue per share. (Sales are the same thing as revenues.) Revenue per share is determined by dividing revenue for the past 12 months by the number of shares outstanding. This ratio is particularly useful for companies that have little or no earnings.Back to Top
