Definition The Price to Sales Ratio (P/S Ratio) is a financial metric that compares a company’s stock price to its revenue per share. It is calculated by dividing the market capitalization of a company by its total sales or revenue. This ratio is particularly useful for evaluating companies that do not have positive earnings, making it a valuable tool for investors looking to assess the relative value of stocks.
Definition The Price/Earnings to Growth (PEG) Ratio is a financial metric that provides insight into a company’s valuation by comparing its price-to-earnings (P/E) ratio to its expected earnings growth rate. It is a popular tool among investors and analysts to evaluate whether a stock is overvalued or undervalued based on its growth potential. Components of PEG Ratio The PEG Ratio is calculated using the following components: Price per Share: This is the current market price of a single share of the company’s stock.
Definition Private Equity (PE) refers to capital investment made into companies that are not publicly traded on a stock exchange. It encompasses a range of investment strategies, including direct investments in private companies, leveraged buyouts (LBOs) and investments in venture capital. Private equity firms raise funds from institutional investors and accredited individuals, aiming to acquire, restructure or grow companies, ultimately seeking to sell the investment at a significant profit.
Definition Pro Forma Financial Statements are essentially “what-if” statements. They provide a way to project a company’s financial performance based on certain assumptions. These documents are not just for accountants; they are valuable tools for business owners, investors and anyone interested in the financial health of a business. Components of Pro Forma Financial Statements Income Statement: This shows projected revenues, expenses and profits over a specific period. It helps businesses forecast their earning potential.
Definition PNL, short for Profit and Loss, is a crucial financial statement that summarizes the revenues, costs and expenses incurred during a specific period. It is often referred to as the income statement and is a key component of a company’s financial health. Understanding PNL is essential for evaluating a company’s performance and making informed business decisions. Components of PNL The PNL statement consists of several key components: Revenue: This is the total income generated from sales of goods or services before any costs are deducted.
Definition A profit sharing plan is a retirement plan that allows employers to contribute a portion of their profits to employee retirement funds. This plan not only helps employees save for their future but also promotes a sense of ownership and dedication to the company’s success. The contributions can vary from year to year, based on the company’s profits, making it a flexible option for both employers and employees.
Definition The protective put strategy is a risk management technique used by investors to guard against potential losses in their underlying stock or asset holdings. By purchasing a put option, an investor can secure the right to sell their asset at a specific price within a defined period, thus providing a safety net against unfavorable market movements. Components of a Protective Put Underlying Asset: This is the stock or asset that you currently own and seek to protect.
Definition A proxy fight refers to a proxy contest, wherein a group of shareholders attempts to gain control or influence over a company’s management or board of directors by collecting votes from other shareholders. Shareholders provide their voting rights to someone else (the proxy) to vote on their behalf, often in situations where they are dissatisfied with the existing management or strategic direction of the company. Components of a Proxy Fight The key components involved in a proxy fight include:
Definition Public debt, often referred to as government debt, is the total amount of money that a government owes to creditors. This debt arises when a government borrows funds to cover budget deficits, invest in infrastructure or respond to economic challenges. Public debt can be issued in various forms, including bonds, loans and other financial instruments and is a vital component of a country’s fiscal policy. Components of Public Debt Public debt consists of several key components:
Definition A put option is a type of financial derivative that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price, known as the strike price, before or at the expiration date of the option. Investors typically use put options to hedge against potential declines in the price of an asset or to speculate on downward price movements.