Basic Investing Terms

There are numerous internet sites that provide definitions of various investing terms. The table below provides the most common and basic terms that every investor should know. At the end of the table, there are references to other sites with more comprehensive list of investing terms.

Term Definition
Revenue Revenue is the total amount of money a company takes in before any expenses.

Income statement Income Statement is a document that records revenue and expenses to summarize a company's performances for a period of time usually quarterly or annually.

Net income Net Income, (sometimes referred to as "net profit", or simply "earnings") is the amount of profit left over after all expenses, including government taxes, have been subtracted.

Balance sheet A balance sheet, or statement of financial position, provides a snapshot of a company's assets and liabilities at a given point in time. It also shows shareholders' equity, the net value of the company, by taking the difference between the company's assets and liabilities.

Cash flow statement A Cash flow statement shows the change in a company's cash balance over a certain period.

Free cash flow Free cash flow is the cash a company produces from its operations less the cost of expanding its asset base. It is essentially the money that the company could return to shareholders if the company was to grow no further.

Dividend Dividends are payments made by a company to its shareholders. When a company earns a profit, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders of the company as a dividend.

Dividend yield Dividend Yield is the percentage return a company pays out to its shareholders each year relative to its share price. Dividend yield is calculated as Annual Dividends per Share / Price per Share

Operating margin Operating margin is expressed as a percent of revenue and is the amount of profit you have for each $1 in sales after deducting all expenses other than interest and taxes.

Market capitalization Market capitalization, also called market cap, is the overall price of the company as measured by the price of all outstanding shares. It's calculated by multiplying the share price by the number of shares outstanding.

P/E ratio The P/E ratio is defined as the price per share of a stock divided by the earnings per share of the stock. The P/E ratio (or "PE") is probably the most common and widely used of valuation metrics. It is a quick way to look at the value of a stock. One way to view it is as how many years it would take for you to recover your investment principle from the earnings a company generates, assuming no change in those earnings.

Earnings per share Earnings per share is the company's total earnings or net income divided by its shares outstanding. This is reported either for one quarter or for an entire year (four quarters). It is usually abbreviated as "EPS".

Compound interest Compound interest is, in a nutshell, interest upon interest. That is, when an interest payment is added to the principal and then the whole thing (principal + interest) earns interest.

Stock split A stock split simply involves a company altering the number of its shares outstanding and proportionally adjusting the share price to compensate. A stock split in no way affects the intrinsic value or past performance of your investment.

External References:

  11 people like this.
Invbeginner Kulim just ex the dividen why suddenly drop so much, as a beginner I don't understand , can somebody elaborate ? Thanks a lot
09/01/2013 12:58 PM
noobe Need help here ,if the minimum trade is 100 shares per lot, how to get rid of those odd shares, the kana shares burned out of bonus and splits, much appreciate yourhelp
03/06/2013 5:51 PM
Ninja Hi Invibeginner, to put it simply, the money they use to pay the dividend to you needs to come from somewhere. On the Ex date, the opening price will be lower after reflecting the value of the dividend that was taken off.

eboon, you need to sell those odd shares via your remiser. You can't do it online. Please note that the price of the odd-lots market varies a lot from the actual market price. If you intent to sell, the price would be significantly less than market value and if you want to buy, it is significantly higher than market value.
(Market price/ value is the price the regular mother share is being traded)
03/06/2013 6:13 PM
Tiago GT 1 lot = 100 or 1000???
03/06/2013 8:22 PM
yahoo80 in malaysia should be 100 but i usually use 1000 = 1 lot
03/06/2013 8:23 PM
Tiago GT yalo....i talk to remindser oso 1000=1 lot....i m newbie oso...
04/06/2013 12:40 AM
yahoo80 but some time malaysia investor said 1 lot = 100 ... wonder how they come up with this method
04/06/2013 12:42 AM
Tiago GT yalo....i talk to remindser oso 1000=1 lot....i m newbie oso...
04/06/2013 12:43 AM
Ninja 1 lot is 100 shares. Please confirm with your remiser again.

If you do online trading, it is even more obvious as transactions are done in lots. Each lots is 100 shares only.
04/06/2013 10:12 AM
Lainkalilah 1 Lot = 1000
04/06/2013 10:17 AM
ronnie2u Better to use the term "shares/units", right ? 1 lot = 1000 shares (is old school term)
04/06/2013 11:28 AM
mansor80 dulu 1 lot = 1000units, skg 1lot = 100units
04/06/2013 11:31 AM
hishamshi Remiser term usage, old 1 lot = 1000 unit shares, new term lot usage, 1 lot = 100 unit share. If you trade 1 new lot, you can't even pay the RM40.00 fees! Make sense?
23/06/2013 5:05 AM
ScrewDriver Do u all mind to share about the trading strategy that most traders in Malaysia adopt? Im a newbie who willing to learn, thx for sharing =D
23/06/2013 11:03 PM
ckk3168 any goodstock to buy
09/07/2013 9:11 PM
Teow Tenaga.
22/07/2013 1:00 AM
NightWolf Can anyone explain to me what is TP & TOP? thank you very much.
14/08/2013 7:49 PM
zKingDB TP is Target Price, A target for a Share to reach with Facts and Supports. Not Rumors or "my-fren-said"


ABC Price = 1.0

TP for ABC = 1.5 because ...........
16/08/2013 3:29 PM
NightWolf thank you
what about TOP?
19/08/2013 11:47 PM
牛角胜tanduklembu hallo pl tell me what is --- CQ eg: mas-cq tq very much
26/09/2013 11:27 PM
abuadam For TP, some research institutions like RHB, Ken, etc done the homework already. Just follow their recommendations, if u r too busy.
06/10/2013 10:42 PM
Man144324 Suppose Company A plans to give 1 bonus share for every 2 shares ....says current price is RM2.30..then u will get 3 shares..usually its price will up or down afterward their capital enlargement?
14/12/2013 7:56 PM
rinaz macamane nak bank in duit ni
23/01/2014 1:04 PM
Cobra Gigit Who will get the dividend when the announcement has two dates...expired and Entitlement?
14/05/2014 12:09 PM
haiqal28 hi, Im young and new to this. Can someone explain to me how the stock market works? i mean, not a wikipedia answer, but more of a general conversation answer?
20/05/2014 9:01 PM
Helpforinvestor Post removed. Why?
16/07/2014 4:50 PM
chermile anyone can explain " short selling - status - not allowed" found at SONA stock..what is short selling? aiyaaa
16/07/2014 11:23 PM
BumbleBee Making money in the stock market isn't easy. Now, with stock pump and dump scams it could be much worse. Learn about the stocks the stock pumpers usually buy for the scam at http://shareinvestormalaysia.com/stocks-involved-stock-pump-and-dump-scams/
28/09/2014 11:06 PM
Nyalas1955 TOP is the Theoretical Opening Price. Usually quite accurate. TOP is the price that share counter will start with at the opening at 9am or 2.30 pm.
15/02/2015 9:55 AM
Nyalas1955 Short selling is you sell the share which you don't even have. Previously is allowed. Now, no. Ppl do that when market is dropping, i.e. Sell first then buy at a lower price later on in the same day.
15/02/2015 10:00 AM
Der RanjAu their PT only for xpensive counter only... huhuhu. what about kaunter under rm1 ?
02/07/2015 10:26 PM
671204125401 what next steps
03/10/2015 12:52 PM
manjan what happen when my order status is "expired" (no match)... did it effect my trading limit?
01/12/2015 11:27 PM
huat888 my order status is "expired" (no match), means the order is "not done". There is no effect on trading limit.
01/12/2015 11:55 PM
manjan @huat888, thank you very much... good night and happy trading :-)
02/12/2015 12:00 AM
3EMWE since no short selling we can only profit from stocks uptrend movements beside dividend payout
07/12/2015 10:39 PM
kinfatt999 petronblaze coming ,,,,,,, vpower no power
13/01/2016 4:42 PM
Nintendo buy and hold or short term is a better investing method?
26/04/2016 10:38 PM
wkcalex I am a dummy investor.I analysed financial report:Revenue is comprising cash n credit sale.Trade Receivable(TR) is solely credit sale.Should I say in order to know cash sale only, just to minus TR from Revenue? Pls comment n help me, if any tqvm.
05/01/2017 5:37 PM
Violanda Howard Morning..i newbie..zero in this platform..ist'n i sign in fr facebook mean i already make CDS account..
22/02/2017 10:15 AM
ialatif wkcalex i guess u are right total sales less trade receivables (debtors)= cash sales
28/03/2017 3:28 PM
mugi96 How does warrant work? Why got expiry dates and can I sell immediately after buying or should I wait till it reach the expiry date? Please help me and thanks in advance
05/04/2017 5:16 PM
damontee Warrant is actually paying a lower amount of money for the same amount of Mother shares. Provided that the ratio is 1:1. You can buy and sell before the expiry date or you can hold until maturity and convert your warrant share to Mother share. But do take into account the premium you are paying before convert
05/04/2017 5:26 PM
mugi96 Lets say today I buy a warrant and tomorrow the price increase. Can I sell like normal share or does it involves the premium before i could sell them in the open market?
09/04/2017 11:17 AM
davendran Will someone explain what does the term 'trading buy' means, what does it imply? Thanks.
09/11/2017 10:26 AM
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09/04/2018 1:55 PM
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09/04/2018 3:31 PM
1151204499 Hi everyone, what do you think of UMWOG ? Do you guy heard of it ?
21/05/2018 10:49 PM
TheSuperInvestor Never heard of it.
22/03/2019 2:57 AM
kokwei97 Hi guys, what is the meaning of price to book ratio? Thanks!
03/04/2019 3:48 PM

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