Friday, May 20, 2011

some investor terms

on financial newspapers and online financial news and talkshows on tv , you come across many terms which you might not understand. Some of the common examples are

EBITDA
definition of EBITDA is something like earnings before interest,tax, depreciation , amortization
It is a tool for investors to measure the cash flow / profitability of particularly large companies with significant debt.

WORKING CAPITAL
This is a measure of the liquidity available for the operations of the company and is usually used to measure the efficiency and financial health of the company

CAPEX
capex refers to capital expenditure / spending to create or acquire assets for future benefits.
Note that capex shampoo has nothing to do with capital expenditure. It is only a topical corticosteroid shampoo containing fluocinolone acetonide and used to treat inflammatory diseases of the scalp.


CURRENT RATIO
It is a ratio of current assets to current liabilities
This is a ratio that measures the company's ability to service its debts over a short term
Many people want to know the formulae for calculating current ratio and other ratios.


net income, free cash flow, operating income , operating earnings, operating profit are also used



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