The following is a glossary of common business terms - predominately used with
reference to public companies. Links to related sites given where appropriate.
| ACCC |
Australian Competition and Consumer
Commission, formerly the Trade Practices Commission.
|
| All Ordinaries Index |
a share price index measuring the market
prices of the major stocks listed on the ASX.
|
| ASIC |
Australian Securities & Investments
Commission.
|
| ASX |
Australian Stock Exchange.
|
| asset backing |
net assets divided by the number of
issued shares.
|
| at a discount |
below par value.
|
| at a premium |
above par value.
|
| bear market |
a falling market.
|
| blue chip stocks |
shares in large, soundly-based public
companies.
|
| bonus issue |
shares in a company which are issued free
to existing shareholders. Often made in lieu of a dividend payout.
|
| bull market |
a rising market.
|
| call option |
a right held by a person to buy at any
time during a certain period a certain number of issued shares at a price fixed
at the time the option is given.
|
| cash issue |
a new issue of shares made to existing
shareholders in proportion to their existing shareholding for the purpose of
raising additional working capital.
|
| contributing share |
a partly paid share.
|
| convertible note |
a fixed interest security issued to a
lender by a company in return for cash.
|
| convertible redeemable
preference shares |
similar to convertible notes in that they
may be converted to ordinary shares, though the holders of convertible
redeemable preference shares rank above noteholders should the company be wound
up.
|
| debenture |
a type of fixed interest security, issued
by companies in return for medium and long-term investment of funds. Issued to
the public through a prospectus and secured by a trust deed.
|
| debt-to-equity ratio |
a measure of a company's gearing, or
borrowing. Calculated by dividing all financial debt by shareholders' funds.
|
| delisting |
the removal of a company's shares from
listing on the stock exchange.
|
| depreciation |
the accounting process by which the
wastage of a fixed asset with a limited useful life is progressively brought
into account by periodic charges against revenue.
|
| dividend |
what is paid out of a company's net
profit to its shareholders. Expressed as cents per share.
|
| dividend cover |
the number of times the amount of
dividend paid by a company is covered by its earnings. Calculated by dividing
the net profit by the amount paid in dividends.
|
| dividend imputation |
the tax rule that allows dividends to be
taxed only once, either by the company or, if the company does not pay tax, by
the shareholder.
|
| dividend reinvestment plan |
an option given to shareholders allowing
them to reinvest all or part of their dividends in additional new shares,
usually at a discount from the market price.
|
| dividend yield |
the return on an investment. Calculated
by dividing the dividend per share by the current share price. Expressed as a
percentage.
|
| Dow Jones Index |
a share price index measuring the market
prices of 30 representative industrial companies on the New York Stock
Exchange.
|
| due date |
the maturity date; the date when a bond,
note or other evidence of debt becomes payable or legally demandable.
|
| due diligence |
the process of checking and verifying
information contained in a statement (eg. a prospectus) to be released to the
public prior to the registration of that statement.
|
| earnings per share (EPS) |
earnings attributable to each ordinary
share. calculated by dividing the company's after-tax profit (excluding
extraordinary items) by the number of issued ordinary shares.
|
| EBIT |
earnings before interest and tax.
|
| escrow |
a deed delivered subject to a condition
so that it is not to operate until that condition is fulfilled.
|
| exercise |
the act of converting on option into its
underlying commodity or security.
|
| extraordinary items |
income or expenses which are quite
outside the normal course of a company's business and which are shown
separately from the annual profit or loss calculations.
|
| FDA |
Food and Drug Administration, a US
government authority.
|
| float |
to issue shares in a company to the
public.
|
| franked dividends |
dividends paid out of company profits on
which the full tax has been paid, so that the dividends are tax-free in the
hands of shareholders.
|
| fully paid shares |
shares on which no uncalled capital is
due.
|
| gearing |
the relationship between a company's
shareholders' funds and some form of outside borrowing. Expressed as a ratio.
|
| gross yield |
return on an investment before tax is
deducted.
|
| Hang
Seng Index |
the principal Hong Kong share price
index, equivalent to the Australian All Ordinaries Index.
|
| home exchange |
when an organisation is admitted to the
official list of Australian stock exchanges, one of those exchanges is
designated the Home Exchange of the organisation.
|
| interim dividend |
a dividend declared in advance of the
annual accounts and paid as an advance instalment of the dividend for the year.
|
| issued capital |
that part of the share capital which has
been issued to subscribers for shares in the company.
|
| joint venture |
cooperation between two or more companies
on the one project to produce mutually agreeable results.
|
| limited company |
a registered company in which the
liability of each shareholder is limited to the uncalled capital liability on
his/her shares.
|
| liquidity ratio |
a measure of the ratio between current
assets and current liabilities.
|
| market capitalisation |
the stock market's assessment of a
company's value. Calculated by multiplying the number of shares on issue by the
individual share price.
|
| merger |
corporate restructuring in which two
companies combine into one.
|
| mW |
megawatts.
|
| NZSE |
New Zealand Stock Exchange.
|
| options |
contracts which give the holder the right
to buy or sell shares during a given period of time.
|
| ordinary shares |
fully paid shares, which rank after
debentures and preference shares for dividend payments.
|
| paid-up capital |
the proportion of a company's issued
capital that has been paid for by its shareholders.
|
| Part A statement |
details of an off-market takeover offer
which must be sent by the offeror to all shareholders of the target company.
|
| Part B statement |
the target company's response to an
off-market takeover offer.
|
| Part C statement |
the same as a Part A statement, yet for
an on-market takeover offer.
|
| Part D statement |
the same as a Part B statement, yet for
an on-market takeover offer.
|
| par value |
the value given to a share when first
offered to the public. Also called face value or nominal value.
|
| payout ratio |
a measure of the proportion of profit
that is distributed through dividends to ordinary shareholders. Calculated by
dividing the dividends by the net profit after tax, minority interests and
preference dividends (but before extraordinary items).
|
| preference shares |
shares which rank ahead of ordinary
shares for the purpose of claiming dividend payments or any assets of the
company should it be wound up. They rank below creditors and debentures.
|
| premium |
the amount by which shares are issued
above par value.
|
| price-earnings ratio (PE) |
measures the relationship between the
market price of a company's shares and the earnings per share.
|
| prospectus |
a document issued by a company seeking to
raise money from the public through the issue of shares.
|
| PSC |
production sharing contract.
|
| R&D |
research and development.
|
| retained earnings |
the proportion of profit that is held in
a business after dividends have been paid.
|
| rights issue |
an offer of additional shares to existing
shareholders, in proportion to their holdings, to raise money for the company.
Rights issues are renounceable, meaning the shareholder can sell his or her
right to the shares.
|
| second board |
the stock exchange board through which
smaller companies raise capital and on which their shares are listed.
|
| shareholders' funds |
what belongs to the shareholders of a
company - issued capital, retained profit.
|
| share register |
the record of a company's shareholders,
showing their holdings.
|
| SIA |
Securities Institute of Australia.
|
| Standard
& Poor's |
a highly regarded US corporate credit
ratings bureau.
|
| subsidiary |
a company under the control or parentage
of another company which owns all or most of it. It is its own entity and pays
its own tax.
|
| substantial shareholder |
a shareholder whose shares total more
than 10% of a company's issued capital. They must advise the stock exchange of
any purchase or sale that changes their holding.
|
| suspended |
trading in a company's shares is
temporarily stopped, either by the company or the exchange, pending an
announcement by the company or a decision by the exchange.
|
| takeover |
the acquisition of a controlling interest
in a company by another company through the purchase of its shares.
|
| tpa |
tonnes per annum.
|
| trust deed |
a document conveying title to trust
property to the trustee and setting out the purposes for which a trust has been
formed, the rights and obligations of the trustee, of the trust's manager and
of the trust's beneficiaries.
|
| trustee |
all trusts have a trustee who monitors
the trust's activities on behalf of the beneficiaries.
|
| trust fund |
money held on behalf of investors or
depositors, to be used at the discretion of the trustee in their interest.
|
| turnover |
total sales for a given period.
|
| unit trust |
a company which allows investors with
small amounts of money to pool their funds and have them invested by a
professional fund manager.
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