Market capitalization, also called market cap, is the overall price of the company as measured by the price of all outstanding shares. It's calculated by multiplying the share price by the number of shares outstanding.
The financial statements include the Income Statement, Balance Sheet, Statement of Shareholders' Equity, Statement of Cash Flows, and Footnotes. These are presented to shareholders, the public, and the SEC in a company's quarterly and annual reports.
Cash flow statement
A company's cash flow statement provides an overview of all cash-related activities for a given period of time. It includes operating activities such as depreciation and changes in liabilities, investing activities such as capital expenditures, and activities such as paying dividends or buying or selling stock.
Earnings per share
Earnings per share is the company's total earnings or net income divided by its shares outstanding. This is reported either for one quarter or for an entire year (four quarters). It is usually abbreviated as "EPS."
The income statement tracks a company's revenues, gross profits, operating income or loss, and net income for the period of time being reported.
Operating margin is defined as Operating Profit divided by Revenue (or Sales).
Operating margin is expressed as a percent of revenue and is the amount of profit you have for each $1 in sales after deducting all expenses other than interest and taxes.
Free cash flow
Free cash flow is the cash a company produces from its operations less the cost of expanding its asset base. It is essentially the money that the company could return to shareholders if the company was to grow no further.
Dividend yield is simply the annual dividend divided by the current share price, expressed as a percentage. For instance, if the annual dividend is $0.40 and the current share price is $18.00, then the yield is:$0.40 / $18.00 = 0.0222 = 2.22%
The balance sheet is one of four financial statements. It shows the financial position of a company as of the date issued. It lists a company's assets (e.g. cash, inventory, etc.) and its liabilities (e.g. debt, accounts payable, etc.) and shareholders' equity. Unlike the other financial statements, it is accurate only at one moment in time, not a period of time.
Gross Margin or gross profit margin is gross profit divided by revenue (or sales), expressed as a percentage.
A stock split simply involves a company altering the number of its shares outstanding and proportionally adjusting the share price to compensate.
A stock split in no way affects the intrinsic value or past performance of your investment.
Net income is a company's earnings or profit as reported on the income statement. Revenue minus all expenses gives you net income. The famous "bottom line."
Net Margin = Net Income/Revenue
Net margin is expressed as a percent of revenue and is the amount of profile you have for each $1 in sales after deducting all expenses.
The P/E ratio is defined as the market price per share of a stock divided by the stock's earnings per share.
The P/E is a quick way to look at the valuation of a stock. One way to view it is as how many years it would take for you to recover your investment principle from the earnings a company generates, assuming no change in those earnings. For example, if you were to buy a company for $5 million that had annual net income of $1 million -- a P/E of 5 -- it would take you 5 years to break even on that investment.
The PEG ratio of a stock is the price to earnings ratio (P/E) divided by the expected future growth rate. The PEG may be used to find growth stocks that are inexpensively valued
How to use PEG ratio
A PEG of less than 1 is generally considered desirable. For instance, if a stock's P/E is 20, and its projected growth rate is 25%, its PEG is 0.80. This is better than a stock with a P/E of 25 and a projected growth rate of 20, which would result in a PEG of 1.25.
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