Investor glossary
Investor glossary
Plain-language definitions of the terms you run into when reading about companies and markets, each with a real example and a few common follow-up questions.
D
- DividendA dividend is a cash payment a company makes to shareholders out of its profits, usually every quarter. Here is how the decision gets made, with a real example.
- Dividend YieldDividend yield is the annual dividend expressed as a percentage of the current share price. Here is the formula, the yield trap, and a real example.
E
- EBITDAEBITDA is operating profit with interest, taxes, depreciation and amortization added back. Here is the formula and a real, filed example.
- EPSEPS is a company's net profit divided by its share count. Here is how it is calculated, the basic-versus-diluted distinction, and a real example.
- Ex-Dividend DateThe ex-dividend date is the first day a stock trades without the right to its next declared dividend. Buy on or after it and the seller keeps the payment.
F
I
M
R
- Reverse Stock SplitA reverse stock split combines multiple shares into one, raising the price per share without changing what a holding is worth. Formula and a real example.
- ROEROE is a company's net profit divided by shareholders' equity. Here is the formula, why heavy buybacks can push it above 100%, and a real example.
- ROICROIC measures after-tax operating profit against the debt and equity that fund a business. Here is the formula and a worked example with real numbers.
S
- Share DilutionDilution is a fall in each shareholder's ownership percentage when a company issues new shares. Here is how it happens and a real example with numbers.
- Stock BuybackA stock buyback is a company spending cash to repurchase its own shares, shrinking the share count. Here is how it works, with a real, dated example.
- Stock SplitA stock split multiplies a company's share count and divides its share price by the same ratio, without changing the company's total value. Here is how it works.