Here are the top 10 business words that you may need to know if you are planning for wealth creation via stock market.
Share or Stock: As the name suggests, share means a percentage of ownership in a company or a financial asset or a unit of ownership of the issuing company. Investors who hold shares of any company are also known as shareholders.
IPO: Initial Public Offering (IPO) is the process by which a company is listed on the stock exchange. Any company that wishes to get listed brings its IPO first to the public. That means, it can go public by selling its stocks to the general public. The company which offers its shares is called an ‘issuer’. A company brings its IPO with the help of investment banks.
Market Capitalization: Market capitalization, or market cap, is the market value of a publicly-traded company’s outstanding shares. A simple calculation of company market capitalization is share price multiplied by the number of shares outstanding. Since outstanding stock is bought and sold publicly, capitalization might be used as an indicator of popular opinion of a company’s net worth and may be a determining factor in some forms of stock valuation.
Balance sheet: A balance sheet is a financial record/statement that reports a company’s assets, liabilities and shareholders’ equity. A balance sheet of a company is a core financial statement that analysis income statements and statements of cash flows; core financial statements used to evaluate a business.
Arrears: Arrear is a financial and legal term that refers to the status of payments in relation to their due dates. The word simply can be described as an obligation or liability that has not received payment by its maturity. Therefore, the term arrears apply to an overdue payment.
Capex: Capital expenditures (CapEx) are funds employed by a corporation to accumulate, upgrade, and maintain physical assets like property, plants, buildings, technology, or equipment. CapEx is usually wont to undertake new projects or investments by a corporation.
Quarterly Result: For business evaluation of a company, a year is divided into four quarters starting April of every year. A quarter may be a three-month period on a company’s financial calendar that acts as a basis for periodic financial reports and therefore the paying of dividends
Assets: Assets are company strength that is reported on a company’s balance sheet. Assets are bought or created to increase a firm’s value or benefit the firm’s operations.
Liability: A liability is some things an individual or company owes, usually a sum of cash. Liabilities are settled over time through the transfer of economic benefits including money, goods, or services. Recorded on the proper side of the record, liabilities include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.
Liquidity: Financial liquidity refers to how easily assets are often converted into cash. Assets like stocks and bonds are very liquid since they will be converted to cash within days. However, large assets like property, plant, and equipment aren’t as easily converted to cash. For example, your bank account is liquid, but if you owned land and needed to sell it, it’s going to take weeks or months to liquidate it, making it less liquid.