This is a summary of money flowing in and out of a country. If a country is spending more for imported goods and services than it receives for goods and services it exports, a deficit results. If the country received more money by selling goods, services and other payments in foreign markets than it spent on imports and other outgoing payments, it would result in a surplus.
Beta is a measure of a stock’s risk in relation to the market. A BETA of 0.7 for a stock means that a stock price is likely to move up or down 70 % of the market change; while a BETA of 1.3 means the stock is likely to move up or down 30 % more than the market.
A steep and rapid increase in prices that immediately followed by a steep and rapid drop in price. This is an indicator seen in charts and used in technical analysis of stock price and market trends.
A broker is an individual or firm that acts as an intermediary between an investor and a stock exchange. Brokerage firms are financial institutions that help you buy and sell securities. They act as the middleman between the buyer and the seller
The depository system handles the electronic (paperless) settlement of shares on the stock exchanges. Electronic book entry means that the shares do not physically get traded and the transfer from one client account to another takes place electronically. In Pakistan the depository company is called the Central Depository Company of Pakistan (CDC).
A confidence indicator is a measure of an investor’s faith in the economy and the securities market. A measure of the willingness of investors to attempt higher returns by assuming more risk. A low or deteriorating level of confidence is considered by many technical analysts as a negative sign.
Depreciation is an accounting method of expensing the cost of a physical asset over its useful life to account for its decline in value. You may think of depreciation as something that happens to your car as it loses value.
Financing refers to the process of acquiring capital to fund a start-up, an expansion, basic operations, or whatever else the company needs the extra funds for. The financing activities cash flows section covers these types of activities.
How well the company is performing in the current scenario and how well it will grow in the future, A new and small company may have a lagging revenue but it is expected to have a higher growth trajectory than an already well-established business
Inflation is a general rise in the prices of most goods and services. On average, the inflation rate for Pakistan is approximately 8%. This means that Sugar that can be bought in PKR 100 today, would cost PKR 108 next year and so on depending on the inflation rate.
Any cash flow changes that result from the purchase or sale of investment assets belong in the investing activities cash flows portion of the statement of cash flows. Whenever a company purchases or sells any form of investment, including large, long-term assets, the cash flows result in either a gain or loss in cash from the total cash and cash equivalents (although they could also break even)
In a long (buy) position, the investor is hoping for the price to rise. An investor in a long position will profit from a rise in price. The buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value, or in other words a position which gives profit from an increase in price is called Long Position.
It is an account in which stocks can be purchased for a combination of cash and a loan. A margin account allows you to invest in stock by borrowing money against the securities in the account. Because you can borrow in a margin account, you have to be qualified and approved by the broker.
A mutual fund is a way to invest in things like stocks and bonds, but without the research and risk involved with choosing individual investments. With a mutual fund, your money is pooled with money from other investors and is then managed professionally, for a fee.
The income earned by a business which are outside of it’s main/core operations.These can be the sale of assets, investment windfalls, the money awarded through litigation, and many more
Prepaids are any expense the business pays for in advance, such as rent, insurance, office supplies, postage, travel expense, or advances to employees. They also list as current assets, as long as the company envisions receiving the benefit of the prepaid items within 12 months of the balance sheet date.
A stock’s price movement over the past year as compared to a market index. Value below 1.0 means the stock shows relative weakness in price movement (underperformed the market); a value above 1.0 means the stock shows relative strength over the 1-year period.
A Risk Profile is the level of the risk that you are comfortable with. It is important to identify the risk profile of an individual to determine the nature of investment that will suit them.
It is what is left from your income after you have spent it on your needs and wants. The leftover money that you plan to keep aside ‘safe’ for the future; either in a savings account, under the bed, inside a locker, or in a piggy bank.
Securities Exchange Commission of Pakistan(SECP) keeps check and balance on the overall process of the stock exchange, making sure that all rules and regulations are being followed.
A tick is an upward or downward price change. A tick indicator/index compares the number of shares whose prices are increasing with the number of shares whose prices are decreasing on the stock exchange.
It is the degree of change that happens rapidly and unpredictably. As volatility increases, the potential to make more money quickly also increases. However, higher volatility also means higher risk.
A business may have a warranty policy, under which it promises customers to repair or replace certain types of damage to its products within a certain number of days following the sale date.
An Annual Report is the yearly record of a company’s financial condition that includes a description of the firm’s operations, its balance sheet and income statement. accrued expenses. It is a type of liability.
This can be described as the average length of time it takes for a security to mature. A bond’s maturity date is a specified date in the future on which the principal amount (the amount borrowed) becomes due for repayment.
The balance sheet iis a snapshot of your business’s financial health as of a particular date. The balance sheet should show that your company’s assets are equal to the value of your liabilities and your equity. It uses the formula Assets = Liabilities + Equity.
Bonds are a loan from you to a company or government. By buying a bond, you are giving a loan and in return you get interest payments along the way as well as the actual amount at the end of a specified period.
The assets that can be converted into liquid cash immediately are regarded as cash equivalents. Usually this includes bank accounts and government bonds/ Cash equivalents are the total value of cash on hand that includes items that are similar to cash; cash and cash equivalents must be current assets.
In trading, circuit breakers are emergency measures established by stock markets that shut down trading activity temporarily or for the rest of the trading day when market prices drop significantly.
This is the indicator of the change in prices of goods and services. Consumer prices are important because consumer buying drives the economy. No consumer demand at the retail level means no demand for products along with the other steps in the chain of manufacturers, wholesalers, and retailers.
The money invested in a business by the owners without taking any loans is called Equity. This is the investment of the owners in the business and the income earned by it, which is reduced by any amount paid out to the owners
Gross national product, or GNP, is the total value of the goods and services produced by a country’s economy during a specific period of time, usually a year. It includes all economic production by a country’s people or its companies whether the production takes place within the country or in another country.
A holding company is a type of company that owns a controlling interest in another company or companies, controlling their management policies and decisions.Mostly, a holding company does not conduct any day-to-day operations or activities such as producing goods or providing services
The act of investing which basically refers to putting money in buying those financial assets that can potentially give a profit to the person who has invested. There are multiple ways and options to invest, including but not limited to, stocks, commodities, precious metals, forex, crypto currencies and so on and so forth.
The income statement summarizes your company’s financial transactions for a particular time period, such as a month, quarter, or year. It starts with your revenues and then subtracts the costs of goods sold and any expenses incurred in operating the business. The bottom line of the income statement shows how much profit (or loss) the company made during the accounting period.
Goods available for sale reflect on a merchandiser’s balance sheet in this account. A merchandiser is a retail business, like your neighborhood grocery store, that sells to the general public. For a manufacturing company, a business that makes the items merchandisers sell, this category also includes the raw materials used to make items. For companies: Raw materials, items available for sale or in the process of being made ready for sale.
Any money a business must pay out for more than 12 months in the future is considered a long-term liability. Long-term liabilities don’t throw a company into bankruptcy, but if they become too large, the company may have trouble paying its bills in the future. Amount owed by a company for loans, leases, bond repayment and other liabilities due for payment after 1 year.
A margin call refers specifically to a broker’s demand that an investor deposit additional money or securities into the account so that it is brought up to the minimum value, known as the maintenance margin.
Transactions executed in the stock exchanges are registered with clearing and settlement companies where the final execution of a trade takes place. In this way it reduces the risk of one or more parties failing to meet the terms of the agreement.
A stock exchange is a platform where shares can be publicly traded. For Pakistan, there is only one stock exchange called PSX, Pakistan Stock Exchange, where the shares of public listed companies are bought and sold daily.
Risk is a possibility of either losing the profit or investment or both. You could lose the profit or invested amount because of the businesses not being able to generate revenue due to various market conditions. And Risk Profile in investment refers to the level of risk a person is willing to take.
A market that provides for the purchase or sale of previously owned securities. Most trading is done in the secondary market. The Stock Exchanges and the bond markets, etc., are examples of secondary markets.
Market turnover indicates how much trading activity took place on a given business day in the market as a whole or individual stock. Turnover can be represented in two ways, traded value in rupees and traded volume in number of trades.
A share warrant represents the right to buy a share at a specific price on a specific date. It is issued by the company directly to the investor. It is a long term option to buy a share at a fixed price.