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Finance glossary

The words you see on every stock page and finance video, explained in plain language.

P/E ratioPrice to earnings
Share price divided by earnings per share. It tells you how many rupees investors pay today for every one rupee of yearly profit.A P/E of 20 means the market pays ₹20 for ₹1 of annual profit. When profit is negative, P/E cannot be calculated.
EPSEarnings per share
The company's net profit divided by the number of shares. It is your share of the profit for each share you own.Negative EPS means the company made a loss over the period.
Market capMarket capitalisation
Share price multiplied by the total number of shares. It is what the stock market says the whole company is worth today.In India, the 100 biggest listed companies by market cap are called large caps.
52-week high and lowPrice range
The highest and lowest price of the share over the last one year.Shows where today's price sits compared with the past year. It says nothing on its own about value.
VolumeTrading activity
The number of shares bought and sold during the day.High volume means many people are trading the stock that day.
DividendProfit shared
Part of the profit a company pays to its shareholders in cash.Dividend yield is the yearly dividend divided by the share price.
RevenueTop line
All the money a company earns from selling its products or services, before any costs.Revenue growth with no profit growth is a warning sign worth checking.
Profit marginProfitability
Profit as a percentage of revenue.A 10% net margin means ₹10 of profit for every ₹100 of sales.
Debt to equityBorrowing
Total borrowing divided by the money owners have put in. It shows how much a company depends on loans.Banks and NBFCs naturally have high debt; compare within the same industry.
ROEReturn on equity
Profit divided by shareholders' money. It shows how well a company uses the owners' capital.Consistently high ROE over many years is a sign of a strong business.
Free cash flowReal cash
Cash left after running the business and paying for new machines and buildings.Profit can be adjusted in the accounts; cash is much harder to fake.
Book valueNet assets
What would be left for shareholders if the company sold everything and paid all its debts, per the balance sheet.Price to book compares the share price with this number.
SIPSystematic investment plan
Investing a fixed amount every month, usually in a mutual fund.Removes the need to time the market and builds a habit.
NAVNet asset value
The price of one unit of a mutual fund, worked out at the end of each trading day.A low NAV does not make a fund cheap.
Expense ratioFund fee
The yearly fee a mutual fund charges, as a percentage of your investment.Direct plans have lower expense ratios than regular plans.
IndexMarket benchmark
A basket of shares that tracks a part of the market. NIFTY 50 tracks 50 large NSE companies; SENSEX tracks 30 on the BSE.Index funds simply copy an index at low cost.
IPOInitial public offering
When a private company sells its shares to the public for the first time and lists on a stock exchange.Read the company's offer document before applying.
Bull and bear marketMarket mood
A bull market is a long period of rising prices; a bear market is a long period of falling prices.Both are normal parts of investing over many years.
CompoundingGrowth on growth
When returns earn their own returns. Over long periods the growth curve bends upward.Time matters more than the amount you start with. Try the calculator in Tools.
InflationRising prices
The rate at which prices rise, which slowly reduces what your money can buy.A 7% return with 5% inflation is only about 2% real growth.
DiversificationSpreading risk
Owning different kinds of investments so one bad outcome does not hurt too much.Not putting all your eggs in one basket.
F&OFutures and options
Contracts whose value depends on a share or index. They allow large bets with little money, which means large losses are possible too.SEBI studies show most individual F&O traders lose money.
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