Glossary of Financial Terms

TITLE DESCRIPTION
A-REIT

See: REIT

AISC

All-in sustainable cost: A measure used by gold miners to quantify all costs associated with keeping an operating mine running, from the mine right through to the back office, expressed in US$/oz (or A$/oz etc).

All Ordinaries

A market capitalisation-weighted index of all stocks listed on the ASX which satisfy various liquidity and free-float requirements. Once the Australian stock market benchmark, it has since been replaced in that role by the S&P/ASX200 index.

Alpha

The risk associated with, or stock price movement attributable to, factors specific to that individual stock and not to the market as a whole (beta).

ARPU

Average revenue per unit

ASX

Australian Securities Exchange: The Australian stock market. The exchange is a listed company called ASX Ltd with the stock code ASX.

ASX200

The Standard & Poor's/ASX index of the 200 largest stocks on the ASX weighted by market capitalisation. When introduced in 2000 it replaced the All Ordinaries as Australia's stock market benchmark, although S&P/ASX also publish 20, 100 and 300 stock indices as well as other measures.

AUM

Assets under management: The value of assets held in a fund, such as a real estate investment trust.

Beta

The risk associated with, or stock price movement attributable to, the market as a whole and not to factors specific to that individual stock (alpha).

BoC

Bank of Canada: Central bank of Canada.

BoE

Bank of England: Central bank of the UK.

BoJ

Bank of Japan: Central bank of Japan.

CAGR

Compound annual growth rate (%). Often this will be pronounced as "cagar".

Cap rate

Capitalisation rate: A measure used for property funds (REITs) representing net operating income divided by property value.

Capex

Capital Expenditure: Money invested by a company in plant & equipment which is carried as assets on the balance sheet.

Capitalisation

The value of a stock implied by the current share price mutiplied by the number of ordinary shares on issue. Typically called "market capitalisation" or "market cap".

CET1

Common equity tier one: In simple terms, ordinary shares. By regulation, bank balance sheets must carry a certain percentage of CET1 capital ("capital ratio") as a balance against risk in their loan books.

CODB

Cost of doing business

COGS

Cost of goods sold

Coking coal

See: Metallurgical coal

Comparables (comps)

The comparison of earnings (or another measure) against a previous corresponding period (See: pcp). Eg if a company had a bad quarter a year ago due to some negative influence, then a percentage increase in earnings from that previous corresponding period may look misleadingly positive if "cycling negative comps".

Core Inflation

The change in the price of a basket of goods & services excluding the prices of food & energy. The RBA uses a core measure called the "trimmed mean".

CPI

Consumer Price Inflation: The change in the retail price of a basket of goods and services.

cps

Cents per share: The measure of a quantum of a dividend.

CY

Calendar Year: January to December, as opposed to financial year (See: financial year).

D-SIB

Domestic Systemically Important Bank: In any country, a bank deemed by global regulation to be "too big to fail" within that economy. D-SIBs are required to hold a higher capital ratio (See CET1) than smaller banks.

DCF

Discounted cash flow: One form of stock valuation, in which forecast future cash flows are discounted at the prevailing interest rate to a value today.

Deflation

The prices of goods & services and wages are declining.

DFS

Definitive Feasibility Study: If a PFS has suggested viability, a mining/oil & gas company will move to a DFS as it tightens its assessment of a proposed new project.

Dilution

An increase in the number of a company's shares on issue due to a capital raising, DRP or other corporate action, thus reducing earnings and dividends per share.

Disinflation

The pace of growth in the prices of goods & services and wages is slowing.

DJIA

Dow Jones Industrial Average. See: "Dow".

Dow

"The Dow" is the default market expression for the Dow Jones Industrial Average of the largest 30 US stocks, as published by the Dow Jones company. It is a share price average, not a market capitalisation-weighted average such as the S&P500. Dow Jones also publishes a Dow Transports Average and various other sector averages.

DPS

Dividends Per Share: A listed company's dividends paid over a period divided by its share price.

DRP

Dividend reinvestment plan: While dividends are typically paid in cash, from time to time companies may offer shareholders the choice of taking their dividend in new shares to the equivalent value. DRPs incrementally increase capital, and thus are a capital raising by stealth, to some extent.

DSO

Days sales outstanding

EBIT

Earnings Before Interest & Tax

EBITDA

Earnings Before Interest, Tax, Depreciation & Amortisation

EBITDAX

Earnings Before Interest, Tax, Depreciation, Amortisation & Exploration (cost)

ECB

European Central Bank: Central bank of the eurozone, being those EU members with the euro as their currency.

EIA

Energy Information Administration of the US.

Enterprise value

A measure of valuation of a stock which moves beyond market cap (which reflects only ordinary shares) and takes into account all claimants on a company, both equity and debt.

EPS

Earnings Per Share: A listed company's net earnings value for a period divided by its share price.

EU

European Union: The 28 member states (27 if Britain leaves) forming a European free trade, and to some extent fiscal, bloc. Of the 28, 9 still use their original currencies, while 19 have adopted the euro. These are collectively known as the eurozone.

eurozone

The nineteen EU member states with the euro as their currency.

FCF

Free cash flow: Earnings generated by a company considered to be available for distribution (dividends), but then dependent on what the company may actually decide to distribute.

FEED

Front-End Engineering & Design: If a DFS has suggested viability, a mining/oil & gas company will next look at FEED before making a decision on whether to progress with a proposed new project.

FFO

Funds from operations

FID

Final Investment Decision: Having completed feasibility studies and FEED, a mining/oil & gas company will then make a final decision on whether to proceed with a proposed new project.

FOMC

Federal Open Market Committee: The committee appointed from US Federal Reserve officials and regional presidents charged with setting monetary policy (interest rate decisions). The committee's members are appointed on a rotational basis.

Franking

An Australian shareholder only pays tax on a company's profit once. If that company has paid all its tax in Australia then the dividend paid to a shareholder is not again taxed, but "fully franked". Levels of franking less than 100% imply either a company has earned a proportion of its profit offshore, or has received tax rebates (eg for exploration expense) and thus not paid "full" tax. Foreign investors are not eligible for franking.

FUM

Funds under management: The value of funds being managed by a fund manager.

FY

Financial Year: The twelve month period over which a company accounts for its business. Typically in Australia this is July-June but some companies run on different cycles.

GDP

Gross Domestic Product: The total of goods and services produced by a nation over one year. GDP measures the total output from all resources located in the country, wherever the owners of the resources live.

Gearing

The amount of debt a company is carrying as a proportion of equity.

GPV

Gross payment volume

GWP

Gross written premium

Headline Inflation

The change in the price of a basket of goods & services including the prices of food & energy.

hoh

Half on half

IEA

International Energy Agency

IMF

International Monetary Fund

Inflation

Prices of goods & services and wages rise over time. (See: Headline Inflation; Core Inflation; Disinflation; Deflation; CPI; PPI)

Institutional placement

A company raises capital by placing stock with institutional funds managers prepared to accept the price on offer.

IRR

Internal rate of return: In simple terms, the return required on an investment for that investment to break even.

JORC

Joint Ore Reserves Committee: This body sets international standards for the classification of mining reserves, proven, probable and possible. (See: 1P, 2P, 3P). Mining companies will disclose a "JORC reserve of x".

LFL

Like for like: An expression used predominantly with regard retailers which may have added/closed stores over a period. LFL sales is a meaure of sales growth for incumbent stores and thus a more "apples to apples" comparison.

LME

London Metals Exchange: Primary global exchange for the trade of base metals and other related commodities.

Market cap

See: Capitalisation

Metallurgical coal

Coal used in conjunction with iron ore to produce steel. Also known as coking coal.

MHE

Manufactured Housing Estate

mom

Month on month

Multiple

See: PE

MVNO

Mobile virtual network operator

Nasdaq

National Association of Securities Dealers Automated Quotient: "The Nasdaq" is the default market expresion for the Nasdasq Composite Index of all stocks traded on the electronic Nasdaq exchange, which is an alternative US exchange to, for example, the New York Stock Exchange.

NAV

Net asset value

NIM

Net Interest Margin: In simple terms the difference between the net rate a bank has borrowed money at and the net rate at which the bank has lent money at.

NPAT

Net profit after tax

NPV

Net present value: The value of future earnings discounted to a value today by the prevailing interest rate.

NTA

Net tangible assets: Today's value of a company's tangible assets (eg buildings) and not intangible assets (eg goodwill). An important measure for, eg, property trusts.

OPEC

Organisation of Petroleum Exporting Countries: A cartel of oil producing nations, mostly, but not all, based in the Middle East, lead by Saudi Arabia.

Opex

Operational expenditure: The cost to a company of keeping a business running, as oppoed to capex. (See: capex)

PBoC

People's Bank of China: Central bank of China.

PCP

Previous corresponding period: Eg if we are discussing the June quarter 2015, the pcp is the June quarter 2014.

PDL

Purchased Debt Ledger

PE

Price/earnings ratio: The current stock price of a company divided by past earnings (historic PE) or forecast earnings (forward PE) expressed as a multiple, eg 10x. PEs are effectively a measure of market sentiment, as a higher PE implies a greater demand for a stock and a lower PE lesser demand, all else (earnings) being equal.

PEG

Price/earnings growth ratio: A second derivative of price/earnings (PE), PEG is the current price of a stock divided by that company's forecast earnings growth rate.

PFS

Pre-Feasibility Study: The first step in a mining/oil & gas company's assessment of a proposed new project.

PMI

Purchasing Managers' Index: A survey of companies in a specific sector (eg manufacturing, services, construction) designed to gauge that sector's month-on-month performance. The index measures the pace of expansion/contraction (>50/<50).

POP

Point of purchase: Were sales are made, eg at the counter. In terms of packaging, the reference is to POP displays.

PPI

Producer Price Inflation: The change in the wholesale price of a basket of goods and services.

QE

Quantitative easing: An alternative monetary policy tool for central banks to cutting cash rates. The central bank buys bonds issued by the government (or corporates) thus keeping rates low.

qoq

Quarter on quarter

QP

Quotational pricing

RAD

Refundable Accommodation Deposit

RASK

Revenue per average seat kilometre

RBNZ

Reserve Bank of New Zealand: Central bank of New Zealand.

REIT

Real Estate Investment Trust: Listed property funds. Australian REITs are known as A-REITs.

ROCE

Return on capital employed

ROE

Return on equity

ROIC

Return on invested capital

ROTE

Return on tangible equity

RRR

Reserve Requirement Ratio: China's answer to CET1 regulations for western banks. Chinese banks must hold a certain level of capital reserves against their loan books and the government implements changes in this ratio as a monetary policy tool.

RWA

Risk weighted assets

S&P500

A market capitalisation-weighted index of the largest 500 US stocks, as published by Standard & Poor's.

SME

Small and medium enterprises

SOTP

Sum of the parts: One form of stock valuation, in which the different businesses of a company are evaluated and added together.

SPP

Share Purchase Plan: Typically accompanying an institutional placement, an SPP allows retail investors to particpate in a company's capital raising on a book-build basis, meaning the balance of supply and demand determines the final purchase price.

SSS

Same store sales

Thermal coal

Coal used to power electricity generators.

TSR

Total shareholder return: The capital gain/loss on a share price over a given period, plus any dividends paid in that period.

VWAP

Volume-weighted average price

WALE

Weighted average lease expiry

WTI

West Texas Intermediate: By traditional market default, the price of WTI futures is the global "price of oil" and the benchmark for the US, despite the US producing several blends of oil. Brent crude (North Sea) is now nevertheless considered an alternative global benchmark. WTI is specifically the price of oil stored at Cushing, Oklahoma.

Yield

Annual dividend/distribution divided by share price expressed as a percentage per annum. Historical yield is last year's dividend over today's share price, forward yield is forecast dividend over today's share price, and the yield achieved by a shareholder is the dividend divided by the price of entry into the stock.

Yield (bond)

Equivalent to Yield above, a bond yield is the coupon divided by bond price expressed as a percentage per annum.

Yield compression

Share price rises but dividend remains the same, such that new shareholders enter at a lower achieved yield.

yoy

Year on year