Financial glossary

Income statement

Net revenue

Total income from the company's activity during the year, net of returns and discounts. It's the "top line" of the income statement.

Cost of sales

Direct cost of producing or acquiring what was sold (materials, direct labor, etc.). Also known as COGS.

Gross profit

What's left from sales after paying the direct cost of what was sold. Measures product profitability before overhead costs.Gross profit = Net revenue − Cost of sales

Cash operating expenses (excl. D&A)

Running costs of the business that involve a cash outflow (sales, admin, R&D…), excluding depreciation and amortization, which are non-cash.

Depreciation & amortization (D&A)

Accounting spread of the cost of long-term assets (machinery, intangibles) over their useful life. It's a non-cash expense.

EBITDA

Earnings before interest, taxes, depreciation and amortization. Approximates the cash the core business generates.EBITDA = Gross profit − Cash operating expenses (excl. D&A)

EBIT

Operating income: what the business earns from its core activity, before interest and taxes.EBIT = EBITDA − Depreciation & amortization (D&A)

Net interest & non-operating items

Financial result and other non-operating items (interest paid/received, net extraordinary items).

EBT (pre-tax income)

Pre-tax income right before paying corporate tax.EBT = EBIT + Net interest & non-operating items

Income tax

Corporate income tax expense for the year (current + deferred).

Net income

The year's final profit attributable to shareholders, after all expenses and taxes. It's the "bottom line".Net income = EBT − Income tax

Unusual items (after tax)

Extraordinary or non-recurring results (litigation, restructuring, asset sales…), net of their tax effect. Isolated to reveal recurring profit.

Normalization adjustment (tax and other)

Adjustment that neutralizes the tax effect and other distortions from unusual items, to arrive at a profit figure comparable across years.

Normalized income (adjusted)

Net income stripped of extraordinary and non-recurring items. Reflects the business's sustainable earnings power.Normalized income = Net income − Unusual items (after tax) + Normalization adjustment

Filing date

Date the company filed the annual report (10-K) for that fiscal year with the regulator.

Basic, diluted and normalized EPS

Basic EPS

Basic earnings per share: net income divided by the average number of shares outstanding.Basic EPS = Net income ÷ Average shares outstanding

Diluted EPS

Earnings per share also counting shares that could be created (options, convertibles). The more conservative version of EPS.Diluted EPS = Net income ÷ Diluted shares outstanding

Normalized basic EPS

Basic EPS calculated on normalized income, excluding extraordinary items.Normalized basic EPS = Normalized income ÷ Average shares

Normalized diluted EPS

Diluted EPS calculated on normalized income, excluding extraordinary items.Normalized diluted EPS = Normalized income ÷ Diluted shares

As-reported figures

Figures exactly as the company filed them in its annual report to the SEC, with no third-party adjustments and no company-defined "adjusted" metrics.

Operating cash flow and Free Cash Flow

Depreciation & amortization

Accounting wear of property, plant & equipment plus the spread of intangible asset cost over their life. Added back because it's non-cash.

Asset impairment

Value loss recognized when an asset is worth less than its book value. Non-cash.

Stock-based compensation

Expense from compensating employees with shares or options. It reduces profit but doesn't consume cash, so it's added back to operating cash flow.

Deferred taxes

Difference between the accounting tax charge and the tax actually paid, due to timing differences. A non-cash adjustment for the year.

(Gain)/loss on sale of assets

Accounting gain or loss from selling property, plant & equipment. It's backed out of net income in the reconciliation because the actual sale proceeds are captured separately, in "Proceeds from sale of PP&E" (investing section): without this adjustment it would be double-counted.

(Gain)/loss on sale of businesses and investments

Accounting gain or loss from selling businesses, equity stakes or the financial investment portfolio. Backed out of net income for the same reason as the PP&E line: the actual proceeds are captured separately, in the investing section.

Income from equity method investments

Proportional share of the results of equity-method investees. It's accounting income that usually isn't collected in cash the same year, so it's backed out; dividends actually received from those investees are added back.

Provisions and restructuring

Provisions for doubtful accounts, restructuring costs and other charges with no cash outflow in the year they're accounted for.

Change in working capital

Cash freed up or consumed by changes in receivables, inventory and payables. An increase in working capital consumes cash; a decrease frees it up.

Change in accounts receivable

Cash consumed (or freed up) by the change in trade receivables during the year. Informational breakdown of "Change in working capital": not an independent add.

Change in inventories

Cash consumed (or freed up) by the change in inventories during the year. Informational breakdown of "Change in working capital": not an independent add.

Change in accounts payable

Cash freed up (or consumed) by the change in trade payables during the year. Informational breakdown of "Change in working capital": not an independent add.

Change in unearned revenues

Cash freed up (or consumed) by the change in customer deferred/unearned revenue during the year. Informational breakdown of "Change in working capital": not an independent add.

Change in income taxes

Cash freed up (or consumed) by the change in current income taxes payable or receivable during the year. Informational breakdown of "Change in working capital": not an independent add.

Change in other net operating assets

Remaining operating working-capital items (accruals, prepaid expenses, employee-related liabilities and similar) not broken out above. Informational breakdown of "Change in working capital": not an independent add.

Other operating activities (as reported)

Other reconciliation items the filer itself groups this way in its cash flow statement (as reported), without further breakdown.

Unallocated operating remainder

Remaining part of the operating reconciliation that couldn't be assigned to any named line item or to the as-reported line above. It squares the block with the reported operating cash flow.

Operating cash flow

Cash generated by the business's ordinary activity, starting from net income and adding back non-cash charges and the change in working capital.Operating cash flow = Net income + D&A + non-cash adjustments ± Change in working capital

Capex

Investment in long-term assets (facilities, machinery, equipment). The cash the company reinvests to maintain and grow the business.

Free Cash Flow

Free cash left after investing to maintain the business. The money available for dividends, buybacks, debt reduction or growth.Free Cash Flow = Operating cash flow − Capex

Investing cash flow

Proceeds from sale of PP&E

Cash received from selling property, plant & equipment (facilities, machinery, equipment). It's the actual proceeds that match "(Gain)/loss on sale of assets" in the operating reconciliation.

Business acquisitions

Cash spent buying other companies or businesses (M&A). Shows negative when acquiring. No longer nets out business sales: those are captured separately, in "Business divestitures".

Business divestitures

Cash received from selling businesses or equity stakes. Previously netted inside "Business acquisitions"; now shown separately so purchases and sales aren't offset against each other.

Purchases/sales of investments

Net movement of the financial investment portfolio (purchases minus sales of bonds, marketable securities, short-term deposits…). Only captured when both sides of the same instrument are reported; if a year has only one side, that year is dropped.

Long-term investments

Line that merges purchases of intangibles, equity-method investments, other long-term investments and the filer's as-reported "other investing activities": small, sparsely-reported items that would otherwise fill the table with dashes if kept separate.

Unallocated investing remainder

Remaining part of the investing section that couldn't be assigned to any named line item above. It squares the block with the reported investing cash flow.

Investing cash flow

Net cash used (or received) in investing activities: capex, business acquisitions/divestitures and movements of the financial portfolio.Investing cash flow = Capex + Proceeds from sale of PP&E + Acquisitions + Divestitures + Purchases/sales of investments + other

Financing cash flow

Dividends paid

Cash distributed to the parent's ORDINARY shareholders as dividends during the year. Preferred or minority dividends aren't added here: they fall into "Other financing activities".

Share buybacks

Cash spent repurchasing own shares, which reduces the number of shares outstanding.

Tax withholding on RSU/option vesting

Cash used to cover the tax withholding when employees settle vested RSUs or options via net share settlement (the company withholds shares to pay the payroll tax). Not an open-market buyback: it's a cost tied to equity compensation.

Share issuance

Cash received from issuing new shares (capital increases, option exercises).

Debt issuance

Cash received from taking on new debt financing (loans, bonds, credit lines, commercial paper). The summable parent of the two child rows below when the filer reports them separately.

Short-term debt issued

Cash received from new short-term debt (credit lines, commercial paper, notes payable). Informational breakdown of "Debt issuance": not an independent add.

Long-term debt issued

Cash received from new long-term debt (senior or unsecured loans and bonds). Informational breakdown of "Debt issuance": not an independent add.

Debt repayment

Cash spent repaying outstanding debt (loan and bond principal, credit lines, commercial paper). The summable parent of the two child rows below when the filer reports them separately.

Short-term debt repaid

Cash spent repaying short-term debt. Informational breakdown of "Debt repayment": not an independent add.

Long-term debt repaid

Cash spent repaying long-term debt, including senior loans and long-term capital lease obligations. Informational breakdown of "Debt repayment": not an independent add.

Other financing activities

Remaining financing inflows and outflows not classified above: debt issuance costs, preferred/minority dividends, and the filer's as-reported line. It squares the block with the reported financing cash flow.

Financing cash flow

Net cash from dealings with shareholders and creditors: dividends, buybacks, issuances and debt movements.Financing cash flow = Issuances − Repayments − Dividends − Buybacks + other

Net change in cash

Foreign exchange effect

Adjustment for the exchange-rate impact on cash held in other currencies. Reconciles the total change in cash.

Net change in cash

Total change in cash for the year: the sum of the three cash flows (operating, investing and financing) plus the FX effect.Net change in cash = Operating cash flow + Investing cash flow + Financing cash flow + Foreign exchange effect

Supplementary information

Income taxes paid (cash)

Taxes the company actually disbursed during the year, as reported in the supplemental section of the cash flow statement. It doesn't feed any subtotal: its use is the comparison against "Taxes" in the income statement (the accrual figure). Paying materially less than what's booked, year after year, means part of the profit rests on tax deferral rather than cash.

Interest paid (cash)

Interest on debt actually paid during the year, reported in the supplemental section of the cash flow statement. It doesn't feed any subtotal. Divided by total debt on the balance sheet it gives the real cost of financing, and contrasting it with accrued interest expense (inside "Net interest & non-operating items") reveals capitalized or accrued-but-unpaid interest.

Gross margin

Percentage of each dollar of sales left after the direct cost of what was sold. Measures pricing power.Gross margin = Gross profit ÷ Net revenue

EBITDA margin

Percentage of sales that turns into EBITDA.EBITDA margin = EBITDA ÷ Net revenue

EBIT margin

Percentage of sales that turns into operating income (operating margin).EBIT margin = EBIT ÷ Net revenue

Net margin

Percentage of each dollar of sales that ends up as net income.Net margin = Net income ÷ Net revenue

FCF margin

Percentage of sales that turns into free cash flow. Measures how efficiently sales convert into available cash.FCF margin = Free Cash Flow ÷ Net revenue

Assets

Cash & short-term investments

Cash and equivalents (deposits, highly liquid financial investments) available immediately.

Accounts receivable

Amount customers owe the company for sales already made but not yet collected.

Inventory

Value of goods, raw materials and work-in-progress held in stock awaiting sale.

Other current assets

Assets expected to convert to cash within a year, grouped in the “Other” line. The company’s own “Other” line as reported when it tags one; when it does not, this row carries the whole remainder of the block.

Unallocated current-asset remainder

Part of the block we could not map to any specific line of the filing. It only appears when the company reports its own “Other” line: the row above is that as-reported figure and this one is what is left over. If the company does not report it, this row is empty and the “Other” row above already carries the whole remainder.

Current assets

Assets expected to be collected or consumed within a year (cash, receivables, inventory…).Current assets = Cash + Receivables + Inventory + other current assets

Property, plant & equipment (net)

Book value of facilities, machinery and equipment, net of accumulated depreciation.

Goodwill

Premium paid in acquisitions over the net asset value of the acquired company (brand, customer base, synergies).

Intangible assets

Assets without physical substance: patents, licenses, software, trademarks.

Right-of-use assets (operating leases)

Value of the right to use leased assets (premises, equipment) recognized on the balance sheet under lease accounting rules.

Financial & equity-method investments

Stakes in other companies and long-term financial investments.

Other non-current assets

Long-term assets grouped in the “Other” line. The company’s own “Other” line as reported when it tags one; when it does not, this row carries the whole remainder of the block.

Unallocated non-current-asset remainder

Part of the block we could not map to any specific line of the filing. It only appears when the company reports its own “Other” line: the row above is that as-reported figure and this one is what is left over. If the company does not report it, this row is empty and the “Other” row above already carries the whole remainder.

Total non-current assets

Assets meant to stay in the company for more than a year (fixed assets, intangibles, long-term investments).

Total assets

Everything the company owns to operate and generate revenue.Total assets = Current assets + Total non-current assets

Liabilities

Accounts payable

Amount the company owes its suppliers for credit purchases not yet paid.

Short-term debt

Loans and bonds maturing within a year.

Accrued expenses

Expenses already incurred but pending payment (payroll, interest, utilities).

Deferred revenue (current)

Advance payments from customers for goods or services not yet delivered, to be recognized within a year.

Operating lease liability (current)

Portion of lease obligations maturing within a year.

Other current liabilities

Obligations due within a year grouped in the “Other” line. The company’s own “Other” line as reported when it tags one; when it does not, this row carries the whole remainder of the block.

Unallocated current-liability remainder

Part of the block we could not map to any specific line of the filing. It only appears when the company reports its own “Other” line: the row above is that as-reported figure and this one is what is left over. If the company does not report it, this row is empty and the “Other” row above already carries the whole remainder.

Current liabilities

Debts and obligations due within a year (payables, short-term debt, accrued expenses…).

Long-term debt

Loans and bonds maturing in more than a year.

Operating lease liability (non-current)

Portion of lease obligations maturing in more than a year.

Deferred tax liabilities

Taxes to be paid in the future due to timing differences between accounting and tax rules.

Other non-current liabilities

Obligations due in more than a year grouped in the “Other” line. The company’s own “Other” line as reported when it tags one; when it does not, this row carries the whole remainder of the block.

Unallocated non-current-liability remainder

Part of the block we could not map to any specific line of the filing. It only appears when the company reports its own “Other” line: the row above is that as-reported figure and this one is what is left over. If the company does not report it, this row is empty and the “Other” row above already carries the whole remainder.

Total non-current liabilities

Obligations due in more than a year (long-term debt, long-term lease liabilities…).

Total liabilities

All the debts, obligations, and financial commitments that the company has incurred in the past to finance itself and carry out its activity.Total liabilities = Current liabilities + Total non-current liabilities

Equity

Common stock & paid-in capital

Shareholder contributions: share capital plus the premium paid above the shares' nominal value.

Retained earnings

Profits accumulated over the years that the company has reinvested instead of distributing as dividends.

Accumulated other comprehensive income (AOCI)

Gains and losses recognized directly in equity without passing through the income statement (FX translation, hedges, etc.).

Other equity adjustments

Remaining adjustment items within shareholders' equity.

Shareholders' equity

Book value belonging to the parent company's shareholders: what would remain after paying off all liabilities with the assets.Shareholders' equity = Total assets − Total liabilities (− minority interest)

Market data

Price

Current market quote of a share.

Market Cap

Market capitalization: the market value of all the company's shares.Market Cap = Price × Shares outstanding

Enterprise Value

Enterprise value: what it would cost to buy the whole company, assuming its debt.Enterprise Value = Market Cap + Net debt

Beta

The stock's sensitivity to the market. Beta of 1 moves like the index; >1 amplifies moves, <1 dampens them.

Shares outstanding

Number of the company's shares held by investors.

Applied exchange rate

Exchange rate used to convert between the financial statements' currency and the quotation currency (relevant for ADRs).

Valuation ratios

Fiscal year-end price

Share price at the close of each fiscal year.

PER

Price to earnings: How many years of net income it would take to recover company's market cap. A high PER implies growth expectations.PER = Market Cap ÷ Net income (or Price ÷ EPS)

Adjusted PER

PER calculated on normalized income, excluding extraordinary items, for a cleaner comparison.Adjusted PER = Market Cap ÷ Normalized income

Forward PER

PER calculated using next year's estimated earnings instead of trailing earnings. Reflects consensus expectations.Forward PER = Market Cap ÷ Estimated net income

Adjusted forward PER

Forward PER calculated on next year's estimated normalized income.Adjusted forward PER = Market Cap ÷ Estimated normalized income

Earnings Yield

Earnings yield: the inverse of the PER, expressed in %. Shows how much profit the company generates per dollar invested.Earnings Yield = Net income ÷ Market Cap = 1 ÷ PER

PEG

PER relative to expected earnings growth. Below 1 suggests growth isn't expensive.PEG = PER ÷ expected earnings growth (%)

EV / EBITDA

How many times enterprise value contains EBITDA. A valuation multiple independent of debt structure and taxation.EV / EBITDA = Enterprise Value ÷ EBITDA

EV / Revenue

How many times enterprise value contains annual sales. Useful for companies without profits yet.EV / Revenue = Enterprise Value ÷ Net revenue

EV / FCF

How many times enterprise value contains the free cash flow generated. Measures how expensive the cash flow is independent of debt structure and taxation.EV / FCF = Enterprise Value ÷ Free Cash Flow

FCF Yield

Free cash flow yield on market cap: how much free cash the company generates per dollar invested in its shares.FCF Yield = Free Cash Flow ÷ Market Cap

Price / Book

Price to book: how many times shareholders' equity the market pays for the stock.Price / Book = Market Cap ÷ Shareholders' equity

Working capital

Short-term liquidity cushion: what's left of current assets after covering current liabilities.Working capital = Current assets − Current liabilities

Invested capital

Capital that funds the business's operations (equity + net debt). The base against which ROIC is measured.Invested capital ≈ Shareholders' equity + Net debt

ROE

Return on equity: how much profit the company generates per dollar contributed by shareholders.ROE = Net income ÷ Shareholders' equity

ROA

Return on assets: how much profit the company generates per dollar of assets it manages.ROA = Net income ÷ Total assets

ROIC (approx.)

Return on invested capital: how well the money actually put to work in the business performs. Key for judging business quality.ROIC ≈ After-tax EBIT ÷ Invested capital

Shares outstanding dynamics

Shares outstanding, year-end

Number of shares outstanding at fiscal year-end, adjusted for later stock splits so the series is comparable across years. Its trend shows whether the company is diluting or buying back shares.

Shares issued — SBC/options

New shares created during the year, mainly from stock-based compensation and option exercises. They dilute shareholders.

Shares repurchased

Shares the company has repurchased and retired during the year, reducing the number outstanding.

Net addition/reduction

Net change in shares during the year: issued minus repurchased. Negative means the share count has shrunk, which is positive for shareholders since it increases their ownership percentage in the company.Net addition/reduction = Shares issued − Shares repurchased

Dividends

Dividend per share (DPS)

Amount distributed per share during the year. Primary source.

Dividend Yield

Dividend yield: what the company paid out in dividends that year relative to the share price at fiscal year-end.Dividend Yield = Dividend per share (DPS) ÷ Fiscal year-end price

Payout Ratio

Percentage of net income the company distributes as dividends. Measures dividend sustainability: above 100% the company is paying out more than it earns.Payout Ratio = Dividends paid ÷ Net income

Number of payments

Number of dividend payments made during the year (quarterly, semi-annual…).

Dividends paid (total)

Total cash distributed to shareholders as dividends during the year. The same line item as "Dividends paid" in the financing cash flow, converted here to the share price's currency.

Share buybacks

Cash spent repurchasing own shares, which reduces the number of shares outstanding.

Total debt

Sum of all interest-bearing financial debt, short- and long-term.Total debt = Short-term debt + Long-term debt

Net debt

Total debt net of available cash. Measures true leverage: if negative, the company holds more cash than debt, i.e. it is in a net cash position.Net debt = Total debt − Cash & short-term investments

Net debt / EBITDA

Years of EBITDA needed to pay off net debt. Below 3x is generally considered comfortable leverage.Net debt / EBITDA = Net debt ÷ EBITDA

DCF (discounted cash flow)

A method that estimates what a company is worth today by projecting the free cash flow it will generate over the coming years and bringing it to present value at a discount rate, usually the WACC.

WACC (weighted average cost of capital)

Weighted average cost of capital: the minimum return the business must generate to satisfy both shareholders and creditors. It's the discount rate used to bring future cash flows to present value (DCF, EPV).WACC = Equity weight × Cost of equity + Debt weight × After-tax cost of debt

EPV (earnings power value)

Per-share value of the business under the assumption of stable earnings, with no future growth. Comparing it with the market price shows whether the market is paying (only) for the current business or also for future growth.EPV per share = EPV of equity ÷ Shares outstanding

Margin of safety

The percentage difference between EPV per share and the market price. A positive value suggests the stock trades below its current business value (excluding growth); a negative one suggests the market is already paying for future growth.Margin of safety = (EPV per share − Price) ÷ EPV per share

Piotroski F-Score

A 0-to-9 score adding one point for each favorable signal across profitability, leverage/liquidity and efficiency, comparing the latest financial year with the previous one.

Altman Z-Score

A bankruptcy-risk indicator combining five balance-sheet and earnings ratios into a single figure; the lower it is, the higher the probability of insolvency within two years.