Hi Folks, Today I'll be attempting to put together a guide, so to speak, of terminology used in the stock market. Though the shares I trade are usually of "bulletin board stocks", it is important for you to know, and as you view the financials of companies, basic terminology to make your best decisions.
Define Market Capitalization-
Is a measurement of a corporations size, equal to it's current share price times shares outstanding of a public company. Certain levels of market cap can be grouped into something like the following:
*Large cap: $10billion-$200billion
*Mid cap: $2 billion-$10 billion
*Small cap: $200 million- $2 billion
*Micro cap: $50 million-$200 million
* What is Peg Ratio?- (price/earnings to growth ratio) Is a valuation method to determine the relative trade-off between, the price of the stock, the earnings generated per share and the company's expected growth. In general the PE is higher for a company with a higher growth rate. On many financial sites you can see what the industry growth rate is, and how your company compares.
*Define Price/Sales Ratio- this valuation metric is calculated by dividing the company's market cap by the company's revenue in the most recent fiscal year.Again, you can compare p/s on most financial sites, to competition and industry.
*Define Over-the-Counter Bulletin Board- this is a regulated trading service offered by the National Association of Securities Dealers. Real time pricing and volume action is offered.Requirements for companies listed here are not particularly stringent.
* What is Price to Book Ratio? P/B-is a ratio used to compare a stocks market value to it's book value.It is calculated by dividing current closing price of the stock by it's last quarters book value. Many traders used the measurement to assess whether a stock is a bargain at current price levels.
* Define Revenue- Is quite self explanatory.When a company reports earnings, however, it will list revenue versus the previous a quarter and also against the same quarter last year, to eliminate any seasonal fluctuations.
I will have more terminology up soon. I truly hope this information was valuable to you.
Let's go!
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