10-Q
Quarterly report required by the SEC each quarter. Provides a comprehensive overview of a company's state of business.

52 Week High
This is the highest price that a security has traded at during the last 52 weeks.

52 Week Low
This is the lowest price that a security has traded at during the last 52 weeks.

Balance of Trade
See "Trade Deficit"

Balance Sheet
A snapshot of assets, liabilities and resulting equity. Equity is the net ownership value of the company at a point in time -- typically prepared quarterly and annually. The Balance Sheet shows the company's state of affairs on a given date. This report typically includes a the summary comparison for the past 5-years.

Book Value
Book Value, or Shareholder Equity, is the company's real net worth. Book Value is equal to Assets minus Liabilities. Book Value is the ultimate value of a company in liquidation, however it typically does not reflect the liquidated value. Book Value may vary significantly from other objectively determined values, most notably Market Value. It is a fundamental guide in selecting underpriced stocks.

Assets Assets include existing machinery, land, buildings, inventory, cash in the bank, etc. held by the company. Problem is, many of the values on the books do not reflect actual value. For example, a piece of manufacturing equipment is put on the books at its cost when purchased. Its value is then reduced each year as depreciation is charged to income. Thus, its book value is its cost minus accumulated depreciation.

The purpose of depreciation is allow a company to recover its cost, not replace the asset or reflect its liquidated value. With depreciation, older buildings may be carried on the books for $0. If that building is in a downtown metropolitan area, its value is grossly underestimated. Computer equipment is typically depreciated over 7 years. With the pace of technology, a 3-year old computer system may be worthless on the market. On the books, the computer system looks like it has value, On the open market, it is worthless. You get the idea, Asset values can be very misleading.

Liabilities: Liabilites include debt items, so you should get an accurate picture of this side of the equation.

If you need an accurate picture of the Book Value of a company, hire a good investment banker. This is often done on take-over bids. You can get the book value reported by the company from their Annual Report. It will be on the balance sheet. Companies are required to submit quarterly and annual reports to the Securities Exchange Commission (SEC). You can get these reports through our research pages.

Common Stock Equivalent
Securities which may be convertible into common stock in the future, including warrants, stock options and convertible debentures. Since converting or exercising these options would dilute the Company's Earnings Per Share, they are counted as common stock when determining a corporation's value per share on a fully-diluted basis.

Compound Growth Rate
Annualized rate of growth over a number of years. Securities Analysts check a company's compound growth rate of profits for five years to determine the long-term profitability.

Consumer Goods
Goods bought for personal or household use. Consumer Goods are distinguished from Capital Goods, which are used to produce other goods. The general economic meaning of Consumer Goods includes consumer services. The Consumer Price Index (CPI) is based on food, clothing and other goods, plus utilities, entertainment and other services.

Consumer Price Index (CPI)
It is a measure of change in consumer prices, an indication of price inflation at the consumer level. And is determined by a monthly survey which comes from the U.S. Bureau of Labor Statistics. CPI components include the costs of housing, food, transportation, and electricity. Many employment and pension contracts are tied to changes in consumer prices. It is also referred to as the cost-of-living index.

The CPI was adjusted to 100 in 1983, it was about 160 in early 1998 – consumer goods increased about 60% in 15 years.

CPI (Consumer Price Index)
See "Consumer Price Index (CPI)"

Current Ratio
Current Assets divided by Current Liabilities. The ration indicates a company's ability to pay its current obligations from Current Assets. A Current Ratio less than 1.0 indicates short-term financial weakness. Conversely, a Current Ratio greater than 1.0 indicates short-term financial strength. The higher the ratio, the more liquid the company.

Current Yield
See "Dividend Yield"

Debt/Equity Ratio
Long-term debt divided by shareholders' equity is a fundamental measure of leverage. A highly leveraged company uses future profits to pay off debt -- rather than grow the company.

Dilution
Effect on earnings per share and book value per share if all convertible securities were converted and all stock options and warrants were exercised.

Dividend Payout Ratio
Percentage of earnings paid to common stockholders as dividends. Utilities tend to offer the highest payout ratios, growth companies usually reinvest all earnings and payout ratios are minimal.

Dividend Yield
The dividend (expressed as %) paid on a stock. How to calculate the Dividend Yield? Divide the dividend by the current market value of the stock. If the market value of a stock is $100 and the Dividend is $6, the Dividend Yield is 6%.

Dividends
Earnings are distributed to shareholders as dividends. They are stated in dollar amount per share and paid quarterly. Dividend Reinvestment Programs (DRP) give you the option of reinvesting dividends to purchase additional stock shares. Dividends are taxable income in the year they are paid.

For more information on dividend eligibility, see "Ex-Dividend," "Ex-Dividend Date," and "Record Date"

Earnings Per Share (EPS)
Every publicly traded company calculates its profits at three-month intervals (quarterly) and at year-end. Earnings are stated as earnings per share. Even if the company sold additional stock during the year, you can easily compare growth in profits from year to year.

Economic Growth Rate
Rate of change in the Gross Domestic Product, expressed as an annual percentage. If adjusted for inflation, it is called the Real Economic Growth Rate.

Two consecutive quarterly drops in the Economic Growth Rate indicates a Recesssion. Two consecutive quarterly increases in the Economic Growth Rate indicates an expanding economy.

Economic Indicators
Key statistics that indicate the direction of the economy.

Some Important Indicators: Unemployment Rate, Inflation Rate, Trade Deficit, Balance of Trade, Factory Utilization Rate.

See "Leading Indicators"

Edgar
Electronic Data Gathering and Retrieval is the system used to make corporate financial reports available to investors. Some of the key documents; 10-K (annual report), 10-Q (quarterly reports), and 8-K (significant developments such as the sale of a company unit).

EPS (Earnings Per Share)
See "Earnings Per Share (EPS)"

Exchange Rate
Price at which a country's currency can be converted into another country's currency. For example: the exchange rate between the U.S. Dollar and the British Pound is different from the exchange rate between the U.S. Dollar and the West German Mark. The rates change throughout each trading day.

Ex-Dividend
Ex-dividend literally means "without dividend." Stocks bought during the period between the dividend announcement and its' payment are bought ex-dividend. Buyers during this period do not receive the dividend. The beginning of this period is known as the Ex-Dividend Date.

See "Dividends"

Ex-Dividend Date
The first day of trading when the seller, rather than the buyer, of a stock will be entitled to the most recently announced dividend payment. This date set by the NYSE (and generally followed on other US exchanges) is currently two business days before the Record Date.

See "Dividends"

Financial Statement
Written statement reflecting a company's financial condition. Includes a balance sheet and income statement --- may also include a statement of changes in working capital and net worth.

Fixed Asset
Tangible property that is used in the operation of the business. Some examples: plant, machinery, equipment, furniture and fixtures. You will find them on the Balance Sheet listed at their net depreciated value.

Float
The so-called float is the number of shares of a security that are outstanding and available for trading by the public. The larger the Float, the less likely the stock prices will be volatile.

Fortune 500
Fortune magazine compiles this list annually. It includes the 500 largest industrial (manufacturing) companies, ranked by Sales.

Fully Diluted
Total number of common shares outstanding. Includes all securities that could be converted into common shares, such as warrants, stock options, convertible bonds and preferred stock.

Fundamental Analysis
Forecasting future stock price movement based of fundamental information. The primary information sources are quarterly and annual reports. Fundamentalists' try to figure out if a stock is undervalued or overvalued at the current market price.

These terms are commonly used in world of investing to discuss the fundamental strength of companies:
1. Book Value
2. Debt/Equity Ratio
3. Dividends
4. Earnings Per Share
5. Market Value
6. Price to Earnings Ratio (P/E Ratio)
7. Yield

GDP (Gross Domestic Product)
See "Gross Domestic Product (GDP)"

Gross Domestic Product (GDP)
Total value of goods and services produced in the U.S. economy over a specific period of time, usually quarterly. The GDP is the primary indicator of the status of the economy. It includes consumer and government purchases, private domestic and foreign investments in the U.S., and the total value of exports. This data is released by the government quarterly, as is an inflation-adjusted version.

Income Statement
Also called the Profit & Loss Statement. It is a summary of revenues, costs, and expenses over a period --- typically prepared quarterly and annually. Together with the Balance Sheet at the end of the accounting period, it constitutes a company's Financial Statement. This report typically includes a the summary comparison for the past 5-years.

Index of Leading Indicators
See "Leading Indicators"

Inflation
Describes a rise in prices of goods and services. Moderate inflation and economic growth go hand-in-hand. When spending increases faster than supply, inflation can become overheated.

See "Consumer Price Index (CPI)" --- Tracks prices paid by consumers.
See "Producer Price Index (PPI)" --- Tracks prices paid by producers.

Inflation Rate
Rate of change of prices, typically calculated on an annual basis. Two key U.S. indicators are tracked by the Bureau of Labor Statistics.

See "Inflation"
See "Consumer Price Index (CPI)" --- Tracks prices paid by consumers.
See "Producer Price Index (PPI)" --- Tracks prices paid by producers.

Institution
An organization that invests on behalf of other parties – such as a pension fund, mutual fund or investment trust. Most institutions hold shares for relatively long time periods and invest conservatively.

See "Institutional Investor"

Institutional Investor
Investors who invest through organizations such as a pension fund or mutual fund. The Institution typically trades large volumes of securities on behalf of Institutional Investors. Many analysts look at the percentage of a company's stock that is held by institutions as a measure of market confidence. Much of the trading (50-70%) done on the New York Stock Exchange is done by institutions on behalf of Institutional Investors.

See "Institution"

Leading Indicators
Statistics released monthly that suggest the future direction of the economy. They include statistics such as average workweek, unemployment claims, new orders for consumer goods, and contracts for plant and equipment. The Index of Leading Indicators is published monthly and has successfully forecast business cycle ups and downs in the past.

Market Value
Market Value of a company is equal to the stock price times the number of shares outstanding. The number of shares outstanding for the company is part of the quarterly and annual reports submitted to the Securities Exchange Commission (SEC). You can get the quarterly and annual reports reports through our research pages.

You can tell how big a company is by comparing Market Value.

P/E (Price to Earnings Ratio)
See "Price to Earnings Ratio (P/E)"

PPI (Producer Price Index)
See "Producer Price Index (PPI)"

Price to Earnings Ratio (P/E)
The P/E ratio is an important indicator of value. Divide the current market price of one share by the expected per-share earnings (next year) and you have the P/E ratio. A P/E ratio that exceeds past levels suggests an overvalued stock.

Producer Price Index (PPI)
It is measure of the changes in wholesale costs, an indication of cost inflation at the wholesale level. It is released monthly by the U.S. Bureau of Labor Statistics. Prices are calculated as products move through the manufacturing and distribution stages, before they reach consumers. The index is broken down into components by commodity, industry sector, and stage of processing.

Real Economic Growth Rate
This is the Inflation-adjusted rate of change in the Gross Domestic Product, expressed as an annual percentage.

See "Economic Growth Rate"

Record Date
To be entitled to the next dividend, a shareholder must officially own the stock as of the Record Date. After the Record Date, the stock is said to be Ex-Dividend.

See "Dividends"

Shareholder Equity
See "Book Value"

Trade Deficit
Trade Deficit, used interchangebly with Balance of Trade, is an excess of imports over exports. Trade Surplus is an excess of exports over imports. More accurately, the all- encompassing term is Balance of Trade -- a Surplus or a Deficit. The Balance of Trade is made up of transactions in merchandise and other movable goods. Factors that influence the Balance of Trade:

Strength or Weakness Of A Country's Currency: e.g., if the U.S. dollar is very strong compared to Mexico, the Balance of Trade with Mexico has a bias toward imports. That leads to a Trade Deficit.

Production Advantages: e.g., if Japan has more modern production techniques that the U.S., the Balance of Trade with Japan has a bias toward imports. That leads to a Trade Deficit.

These are simple examples of the dynamics of Trade Deficit. When you consider that the growth of many large is tied to exports and sales to foreign countries, you can readily see that the Balance of Trade gives you some indication of potential profit problems for these companies.