Selected Business Terms

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Selected Business Terms

 

COMPANY

 

Parent Company

Company that owns a majority (51% or more) of another company's shares. It may have its own operations, or it may have been set up solely for the purpose of owning the Subject Company.

 

Subsidiary

The Company owned by a parent. A separate legal entity listed as a corporation or partnership required to file its own taxes and compile its own financial statements.

 

INDUSTRY

 

Industry

An industry is generally any grouping of businesses that share a common method of generating profits, such as the "automobile industry¡±.

 

Business ratios

Financial analysis using business or financial ratios and norms provides a means of assessing a firm's strengths and weaknesses. Using data from the balance sheet and income statement, various ratios can be calculated, which can then be compared directly to those of competing firms of varying sizes. Comparing the firm's operating results with those of specific competitors or the industry as a whole helps identify relative strengths and weaknesses. In addition, comparing changes in a firm's ratios over time can highlight improvements in performance or problem areas needing attention.

 

Market Share

The percentage of the total sales (from all sources) of a service or product represented by the sales made by your enterprise. i.e. your sales divided by total sales.

 

SIC

An SIC Code is a number (4 digit number system) used to specify what industry a particular company belongs to. The Standard Industrial Classification (SIC) code system was replaced by the North American Industry Classification system (NAICS) in 1997.

 

NAICS

The NAICS, or North American Industry Classification System, provides a method (6 digit number system) for describing the industries to which organizations belong. The NAICS replaced SIC Codes in 1997.

 

INVESTMENT

 

Bond

A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. The Federal government, states, cities, corporations, and many other types of institutions sell bonds. Generally, a bond is a promise to repay the principal along with interest on a specified date (maturity). Some bonds do not pay interest, but all bonds require a repayment of principal.

 

Mutual fund

A mutual fund is a company that brings together money from many people and invests it in stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of these holdings.

 

Stock

An instrument that signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporation's assets and profits. Ownership in the company is determined by the number of shares a person owns divided by the total number of share outstanding. For example, if a company has 1000 shares of stock outstanding and a person owns 50 of them, then he/she owns 5% of the company.

 

Ticker symbol

A system of letters used to uniquely identify a stock or mutual fund. Symbols with up to three letters are used for stocks, which are listed and trade on an exchange. Symbols with four letters are used for Nasdaq stocks. Symbols with five letters are used for Nasdaq stocks other than single issues of common stock. Symbols with five letters ending in X are used for mutual funds.

 

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