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.
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)
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