Finance terminology

11. Diluted earnings per share:

An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of common stock.

12. IRR:

The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. You can think of IRR as the rate of growth a project is expected to generate.

13. Leverage:

1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. 
2. The amount of debt used to finance a firm's assets. A firm with significantly more debt than equity is considered to be highly leveraged.

14. Intrinsic value:

The actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the investment exceeds its current market value.

15. Market capitalization (often market cap)

It  is a measurement of size of a business enterprise (corporation) equal to the share price times the number of shares outstanding (shares that have been authorized, issued, and purchased by investors) of a publicly traded company.

Happy reading

RAVI BHANDARI