Common Terms

Throughout your investing journey, you will encounter some words you’re not familiar with. Below are a few common terms that you need to understand in order to read financial news and analyze companies effectively.

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Common Terms

ASSET – something owned by a particular entity

BROKERAGE ACCOUT – type of account that is used to buy and sell stocks

CASH FLOW – the amount of cash flowing in and out of an entity

CURRENT ASSET – can be used or easily converted to cash within a one-year period

CURRENT LIABILITY – must be paid or exercised within a one-year period

DIVIDEND – cash payments to shareholders by a company (not all companies pay these)

EARNINGS PER SHARE – amount of profit attributed to each outstanding share

GOODS – physical items an entity sells to customers

INDEX FUND – tracks the performance of a particular stock index, like the S&P 500

INVESTMENT – purchasing something with the goal of a financial reward

LIABILITY – something owed by a particular entity

NEW YORK STOCK EXCHANGE – an organization where stocks and bought and sold

PROFIT – amount of money left over after all expenses are paid

REVENUE/SALES – amount of money generated before expenses

SERVICES – no exchange of physical items

STOCK MARKET – overall organization where investors can buy and sell stocks (made of exchanges)

TAX – amount of money paid to a government as a percentage of profits

TICKER SYMBOL – letters that represent a company’s stock (Apple = AAPL)