Financial Glossary

 
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- 1 MCF = One Thousand Cubic Feet of Gas
- 1 MMCF = One Million Cubic Feet of Gas
- 1 BCF = One Billion Cubic Feet of Gas
- 1 TCF = One Trillion Cubic Feet of Gas
- 1 MMCFD = One Million Cubic Feet of Gas per day
- 1 BOPD = One Barrel of Oil per day
1 BOED = One Barrel of Oil Equivalent per day
BCPD = One Barrel of Condensate per day
 
A  (Back to the top)
- Administrative Expenses = Costs associated with the management of a business
- AIM = Alternative Investment Market. It is a UK market composed of generally small UK firms
- AGM = Annual General Meeting. A compulsory yearly meeting which stakeholders can attend and  vote on decisions
- All cash acquisition = A takeover by one company of another that includes paying shareholders of the company being taken over a pre-determined lump sum of cash per share. These are at premiums to the share price and with these the share price will immediately rise to the given premium when the market next trades
- All share acquisition = A takeover by one company of another that includes existing shareholders receiving shares in the buyer at a given ratio in exchange for their existing shares in the seller
- Alpha = The return on your investments in relation to the return of the overall index
- Amortisation = The depreciation in the worth of assets owned by a firm. Example: When oil is pumped out of a well the value of the license depreciates in value
- Arrears = Classified as unpaid, overdue debt
- Ask Price = The price that investors can purchase shares at
- Asset = An economic resource such as land (e.g. an oil field) which is owned by a company
- Assets under administration = Assets owned by clients (usually cash funds)

B  (Back to the top)
- Base Rate = The UK's underlying interest rate set by the Bank of England
- Basis point = 0.01%
- BBLS = Barrels (usually of oil)
- Bear Market = A period of time within a market where prices encounter sustained declines
- Beta = The volatility of your investments in relation to the volatility of the overall index
- Bid Price = The price that investors can sell shares at
- Blowout = The uncontrolled flow of gas/oil from a well
- BOE (Barrel of Oil Equivalent) = A converted unit that allows for the easier calculations of a company's hydrocarbon reserves
Bond = Effectively an 'I owe you' that bears interest and have a date at which it expires
- Blue Chip Shares = Highly regarded often dividend bearing companies included in the leading national share indexes
- Bull Market = A period of time within a market where prices encounter sustained rises

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- CAC40 = The Parisian Stock index consisting of the top 40 French firms
- Capital Gains Tax = A tax that is levied on the profit you make when you sell or dispose of an asset
- Cash & Cash Equivalents = The cash figure identifiable on a company's balance sheet
- Cash flow = Cash receipts minus cash payments
- CEO = Chief Executive Officer
- CFO = Chief Financial Officer
- City Code = Rules governing offers for public companies that are set by the Takeover Panel
- Close Period = A period of time when directors are not allowed to purchase their company shares due to them having access to price-sensitive sensitive information. A close period also exists for 2 months before the publishing of a company's Annual Report and Interim Results
- Closing Auction = Between 16:30 and 16:35, this is when outstanding orders on the order book are matched up and a price at which most orders can be completed is derived. This determines the closing price of a stock
- Commission = A flat rate charge paid when both purchasing and buying shares
- Commodity = A highly demanded natural resource such as Crude Oil
- Condensate = Gas in a liquid phase. Has a similar price to oil and is caused by a drop in temperature or pressure
- Constant currency basis = Assuming that the exchange rate does not fluctuate
- Contingent Resources = Discovered sub-commercial resources
- COO = Chief Operating Officer
- COS = Chance of Success
- Creditors = People that are owed money

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- DAX = The major German stock index
- Dark Pools = A separate method through which institutions can settle the trade of equities away from the market hence not affecting the market price
- Debt = Money borrowed from one party (e.g. a firm) to another which is repayable before a date
- Debtors = People who owe other people money
- Deferred Revenue = Revenues paid in advance of product delivery by the customer. This is kept as a liability until the product in question is delivered
- Deflation = A sustained fall in the average price level in an economy
- Derivative = A security that derives its value from an underlying asset
- Directors Dealings = When a director in a company purchases or sells shares
- Directors Options = These are exercisable at a certain price and act as a performance incentive. The options can only be taken by directors if the share price meets the exercisable price
- Divestment = The sale/disposal of an asset
- Dividend = Often awarded yearly or during interims. Not all companies award these. They are effectively a reward to shareholders for investing in the company in the form of a small amount of cash per share
- Dividend Yield = Found by (annual dividend/market capitalisation). A low yield may indicate that a share is overvalued
- Dow Jones = One of the major US stock indexes comprising 30 of the top US firms

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- Earnings = Profit that is given out to shareholders (sometimes expressed as EPS or Earnings per share, where the earnings are divided by the number of shares in issue)
- EBITDA = Earnings before interest, tax, depreciation and amortisation is deducted
- EPS = Earnings Per Share. Found by (Net income - dividends)/shares in issue
- EV/2P Ratio = Generated by dividing the enterprise value of a company by its (2P - Proved and probable) reserves. A high figure means the company is trading at a premium. A low value could mean that the firm is trading at a discount
- Exceptional = A one-off payment/charge a company might incur/obtain that is shown on a company's income statement. An example of a one-off charge may be a non-recurring tax payment
- Ex-Dividend date = You must hold shares in the company before this date in order to receive an upcoming dividend
- Farm-out = The process by which a company can sell part of one of its assets to a third party
- Fixed Costs = Costs payable by a business regardless of the level of output (e.g. Rent)
- Fracking/Fracture Stimulation = Where high pressure fluid is pumped into a well bore to shatter the rock and release gases (often shale)
- Free Carry = When a joint venture leads to a company not having to pay its share of exploration/production costs as part of the agreement
Free Cash Flow = Operating Cash Flow - Capital Expenditure
- FTSE 100 = The 'Financial Times Stock Exchange' index consisting of the top 100 UK firms
- FTSE 250/350 = The 'Financial Times Stock Exchange' index consisting of the top 250/350 UK firms
- FTSE MIB = A major Italian stock index
- FTSE Techmark 100 = The 'Financial Times Stock Exchange' index consisting of the top 100 UK technology firms
- Fundamental Analysis = Analysis that involves looking at a company's financial and operating position in an attempt to predict future price movements through determining a valuation

G  (Back to the top)
- GARP Stock = A stock that offers growth at reasonable price
- Gearing = Debt/Equity expressed as a percentage (high gearing is usually a negative)
- GIIP = Gas Initially In Place. Represents the quantity of gas present within a reservoir
- Golden Cross = When a shorter term moving average crosses and passes over a longer term moving average. A 15-day/50-day Golden Cross is less reliable than a 50-day/200-day Golden Cross
- Gravity = A measure of the density of a liquid. Expressed in degrees

H  (Back to the top)
- Hang Seng = The Hong Kong Stock Index
- Hedging = The use of two opposing investment strategies to manage risk
Horizontal Integration = When a firm merges/acquires another firm in the same stage of production
- Hostile Merger/Acquisition = When the board of directors, management of the takeover target are opposed to the offer
- Hydrocarbons = These are products create solely of hydrogen and carbon atoms. These are natural gas, condensate and crude oil

I  (Back to the top)
- IBEX 35 = A major Spanish stock index
- Inflation = A sustained rise in the average price level within an economy
- Insolvency = Defined by the HMRC as being when a company:
      - do[es] not have enough assets to cover their debts, or
      - [is] unable to pay their debts when they become due

- IPO = Initial Public Offering. When a company lists on the stock market to raise cash through issuing shares
- ISA - A tax free UK savings account that has a yearly allowance
- ISIN = International Securities Identification Number
- Issue of Equity = Fundraising through issuing new shares effectively 'diluting' the worth of current shares

J  (Back to the top)
- Joint Venture = When two firms work together to pursue a specific product/objective
- JSE = Johannesburg Stock Exchange
Kerb Trading = Trading that occurs after the London Metal Exchange has closed

L  (Back to the top)
- Leverage = The high risk method of using borrowed money to boost possible returns on an  investment
- Liabilities = Include a mixture of long-term loans and short-term debt which a company may have (a firm with low liabilities highlights strong financial capabilities)
- LIBOR = The London Inter-bank Offered Rate. It is the rate at which banks can lend to each other
- Limit buy = An order to buy shares once a pre-determined price has been surpassed
- Limit sell = An order to sell shares once a pre-determined price has been surpassed so that you can lock-in profits
- Liquidation = The process by which a company's operations are halted for trading
- Liquidity = A term used to describe the how many trades in a share there have been. A highly liquid share has many trades and thus orders go through quickly (e.g. Lloyds Banking Group). An illiquid share has fewer buyers and sellers, hence fewer trades take place and orders make take some time to go through
- Liquidity risk = The risk of a firm not being able to raise funds at a point in time
- Loan Coupon = The percentage interest that a loan will accrue

M  (Back to the top)
- Major Shareholders = Own x > 3% of a company's total shares
- Market Capitalisation = An estimate of the value of a firm found by 'share price x issued shares'
- Market Share = The percentage of a market that a firm holds in terms of sales
- Merger = The process by which two companies combine operations
- Mid-Price = The quoted price that lies between the bid and ask prices
- Monopoly = A market that is controlled by one dominant company

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- NASDAQ = National Association of Securities Dealers using an Automated Quotation System
- National Debt = Total borrowings by a government that is owned to creditors
- NAV = Net Asset Value (Value of the assets of a company at a point in time)
- Nikkei = An index comprised of over 200 shares on the Tokyo Stock Exchange
- Nominated Advisor = A firm retained by a listed company to support their flotation and advise the company during its time on a stock exchange
- Non-farm payroll data = An indicator that is released on the first Friday of each month that gives an insight into US unemployment. It measures the number of people in work excluding sectors including farming
- NYSE = New York Stock Exchange

O  (Back to the top)
OHLC Charts = Each marker shows the open-high-low-close points for a stock for a specific day
- Oligopoly = A highly interdependent market system comprising of only a few major companies
- OPEC = Organisation of Petroleum Exporting Companies. An intergovernmental organisation that is able to control and stabilise petroleum exportation levels
- Open Offer = When shares (usually during a placing) are sold to a range of new investors
- Operating Margin = Determined as a percentage, it is how much per unit a company makes after all production costs and taxes are accounted for. (E.g. if operating margin is 4% off a $100 item, they make $4 per item)
- OPEX = Operating Expenditure

P  (Back to the top)
- P90 = 90% chance of occurrence
- P/E Ratio =  Found by (share price/EPS). Represents a method of valuation
- PEG Ratio = Found by (share price/earnings to growth ratio). A low value may indicate a share is undervalued
- Phase I trials = The first stage of testing that a drug undergoes
- Placing = The addition of new shares to the market often at a discount price. This often leads to a decline in the share price as each share now is worth less
- Preference Shares = Give the owner the right to a fixed dividend, but usually no voting rights. If the dividend cannot be paid, the dividend can be postponed for these shares
- Pre-tax Profits = Total profits of a company before tax is deducted
- Price/Sale = Found by (share price/EPS)
Prime Rate = The US's underlying interest rate
- Profit Margin = The difference between the profits and costs of a business expressed as a ratio
- Profit Warning = An announcement by a company that profits will be lower that previously forecast
- Prospect = A drilling target
- Prospective Resources = Undiscovered pre-mapped resources
- PSA = Production Sharing Agreement
- PSC = Production Sharing Contract

Q  (Back to the top)
- Quantitative Easing = A monetary policy where financial institutions are issued electronic money. This is aimed to increase liquidity in a market

R  (Back to the top)
- Recession = When an economy experiences two consecutive quarters of negative economic growth as defined by a negative GDP reading
- Rerate = When a share adjusts its market value (share price) significantly to a more appropriate level
- Resistance = A price at which you would expect selling (often due to technical/chart-based highs)
- RSI = Relative Strength Index (Indicator). Highlights when a share is overbought (70) or oversold (30)
- Revenue = All income for a company during a period of time (also known as 'turnover')
- Reverse Takeover = The takeover of a listed company by an unlisted company
- RNS = The Regulatory News Service operated by the LSE. RNS is a commonly used term on discussion boards for a company's news statement
- ROCE = Return on Capital Employed
- ROI = Return on Investment (the relative return of a profit/loss in comparison to the initial investment, expressed as a percentage)

S  (Back to the top)
- Scrip Dividend = A dividend that is available to be redeemed in either shares or cash
- Seismic = Available in 2D and 3D it is a method of using waves to analyse hydrocarbon reservoirs
- Share Buyback = When a company purchases back shares removing them from the market
- Shareholder = A person who owns shares in a company
- Shares in Issue = The total number of shares that have been created in a company
- Stock Split = When the value of each share is split by a ratio. (E.g. If a share is £1, you only 100 shares and a 2:1 split occurs then you receive 200 shares at £0.50 each)
- Short Selling = The process of profiting off the decline in a share price through initially selling shares, then purchasing them back at a lower price
- SIPP = Self-invested personal pension
- Spread = The percentage difference between the bid and ask prices
- Spudding = When a hydrocarbon well begins to be drilled
- Stamp Duty = A rate of tax that is paid on the purchase of shares. This is usually 0.5%, but the rate can differ. For example, shares listed on the Irish Stock Exchange inherit a 1% stamp duty
- Stockbroker = An intermediary who buys and sells shares for clients whilst charging commission
- Stock Overhang = When a large number of sells are sitting on the order book at a point in time that is likely to suppress the share price for an extensive period of time. This often occurs through institutional placings as an institution may look to offload their shares gradually thus keeping the price low
- Stop-Loss Order = An order to sell shares at a specific price when the threshold has been surpassed. A stop loss is used to cut your losses
- Support = A price at which you would expect buying (often due to technical/chart-based lows)

T  (Back to the top)
- TechMARK = The LSE's name for Main Market technology companies
- Technical Analysis = The use of a company's price action (illustrated by a chart) to predict future price movements or find areas of support or resistance
- Transaction in Own Shares = When a company completes a trade involving its issued shares
- Takeover Panel = A regulatory body that evaluates takeover bids
- TNC = Trans-National Corporation. These are firms that operate across many nations (e.g. Shell and Tesco)
- Trade and other receivables = Money due to be paid to the company
- Trade and other payables = Money due to be paid by the company
- Turnover = A company's revenue over a period of time

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- Unemployment Level = The number of individuals looking for work but without a job

V  (Back to the top)
- Variable Costs = Costs that vary with the level of output (e.g. Electricity)
- Vertical Integration = When a firm merges/acquires another firm in a different stage of production (e.g. A cheese making company merging/acquiring a company that provides the raw product (milk))
Voting Rights = The right for holders of ordinary shares to vote on corporate decisions
- VWAP = Volume Weighted Average Price

W  (Back to the top)
- Wildcat Well = A well drilled in an area where no current oil and gas production exists
Working Capital = Current assets minus current liabilities. This is money used in the daily operations of a company

X  (Back to the top)

Y  (Back to the top)
- Yield = The return on an investment expressed as a percentage of the starting sum of money
- YTD/Y.O.Y = Year to date/Year on year

Z  (Back to the top)