Financial Glossary
Every financial term you need to understand stock analysis — explained in plain English with real examples from our database.
P/E Ratio (Price-to-Earnings)
The ratio of a company's stock price to its earnings per share.
P/E Ratio = Stock Price / Earnings Per Share (EPS)Forward P/E Ratio
P/E ratio using projected future earnings instead of trailing earnings.
Forward P/E = Stock Price / Estimated Future EPSMarket Capitalization (Market Cap)
The total market value of a company's outstanding shares.
Market Cap = Share Price × Total Shares OutstandingEnterprise Value (EV)
The total value of a company including debt and excluding cash.
EV = Market Cap + Total Debt - Cash & EquivalentsEV/EBITDA
Enterprise value divided by earnings before interest, taxes, depreciation, and amortization.
EV/EBITDA = Enterprise Value / EBITDAReturn on Equity (ROE)
Net income divided by shareholders' equity — measures how efficiently a company uses equity capital.
ROE = Net Income / Shareholders' EquityReturn on Assets (ROA)
Net income divided by total assets — measures how efficiently a company uses all its assets.
ROA = Net Income / Total AssetsDebt-to-Equity Ratio (D/E)
Total liabilities divided by shareholders' equity — measures financial leverage.
D/E Ratio = Total Liabilities / Shareholders' EquityProfit Margin (Net Margin)
The percentage of revenue that remains as profit after all expenses.
Profit Margin = Net Income / Revenue × 100Gross Margin
Revenue minus cost of goods sold, expressed as a percentage of revenue.
Gross Margin = (Revenue - COGS) / Revenue × 100Free Cash Flow (FCF)
Cash generated by operations minus capital expenditures.
FCF = Operating Cash Flow - Capital ExpendituresEBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization — a measure of operating profitability.
EBITDA = Net Income + Interest + Taxes + Depreciation + AmortizationCurrent Ratio
Current assets divided by current liabilities — measures short-term liquidity.
Current Ratio = Current Assets / Current LiabilitiesDividend Yield
Annual dividend per share divided by the stock price.
Dividend Yield = Annual Dividends Per Share / Stock Price × 100PEG Ratio
P/E ratio divided by earnings growth rate — adjusts valuation for growth.
PEG = P/E Ratio / Annual EPS Growth Rate (%)Earnings Per Share (EPS)
Net income divided by the number of outstanding shares.
EPS = (Net Income - Preferred Dividends) / Weighted Average Shares OutstandingBeta
A measure of a stock's volatility relative to the overall market.
Beta = Covariance(Stock Returns, Market Returns) / Variance(Market Returns)Operating Margin
Operating income as a percentage of revenue — measures core business profitability.
Operating Margin = Operating Income / Revenue × 100Price-to-Book Ratio (P/B)
Stock price divided by book value per share — compares market price to accounting value.
P/B = Stock Price / (Total Assets - Total Liabilities) per shareSee These Metrics in Action
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