Research FAQs

Price per share multiplied by the total number of shares outstanding; also the market’s total valuation of a public company.

Net income divided by common shares outstanding. A company that earns Rs.1 million for the year and has a million shares outstanding has an EPS of Rs.1. This EPS figure, which represents how much of earnings each share is entitled to, is important as the basis for various calculations an investor might make in assessing a stock’s price. The most widely used indicator of whether a stock is over- or undervalued, for example, is the price/earnings (P/E) ratio, which relates share price to earnings per share.

A measure of a fund’s trading activity, computed by dividing the lesser of purchases or sales (excluding all securities with maturities of less than one year) by average monthly assets. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio’s holdings that have changed over the past year.

Measures the price performance of a stock in comparison to all other stocks. Many analysts believe that stocks with strong and improving relative strength tend to continue to outperform all other stocks, all other things being equal. The figure is obtained by calculating the percent price change of a stock over a particular time period and ranking it against all other stocks on a scale of 1 to 100, with 100 being best. Stocks that are ranked from 70 to 100 are considered to have good relative strength, while stocks ranked less than 50 are considered to have poor relative strength.

The sum of cash and receivables from the most recent quarter divided by the total current liabilities from the most recent quarter. This assessment of a company’s ability to meet short-term obligations is also known as the acid test. In general, the quick ratio should be 1 or better. A high quick ratio is usually a sign of a solid, conservatively run company in no danger of imminent demise even if for some awful reason sales immediately ceased. A firm’s quick ratio might be of special interest to investors anticipating some kind of downturn in the firm’s business or the economy at large.

YoY is an abbreviation for year-on-year.

MFY is an abbreviation for Month Financial Year i.e. 9MFY10 would mean 9 Month Fiscal Year 2010. QFY is an abbreviation for Quarter Financial Year i.e. 3QFY10 would mean 3rd Quarter of Fiscal Year 2010.

Working capital can be calculated as current assets minus current liabilities. A firm’s working capital is the money it has available to meet current obligations (those due in less than a year). A firm with a great deal of working capital is in little danger of failing in the near future, but enormous working capital over a prolonged period could also imply excessively conservative management. Working capital, after all, is short-term in nature and hasn’t been put to work in the company’s profit-making business operations. As with most measures of corporate wellbeing, this one varies by industry and even by season.

An investment return projected over a one-year period, compounded daily. For example, if an investment returned 1% over one month, it would have an annualized return of approximately 12%. Total annualized return can be useful in assessing the performance of an investment held for a brief period.

Real return can be defined as the return on an investment after taking inflation into account. To calculate the real return, simply subtract the inflation rate from the stated return. For instance, a 12 percent annual return in a year of 5 percent inflation results in a 7 percent real return.

All the money (or other items of value) that came into the company during the given period. Revenue includes everything: sales, interest income, proceeds from the sale of a subsidiary and so forth. Revenue is thus one of the most reliable items on the income statement, as opposed to net income, which is subject to various accounting and managerial judgments. But the all-inclusive nature of revenue can make it misleading. If 50 percent of revenue in a given year came from the one-time sale of some land, clearly one shouldn’t assume that the business will have similar revenue in future years.

YTD is an abbreviation for year-to-date.

QoQ is an abbreviation for quarter-on-quarter.

FY is an abbreviation for Fiscal Year i.e. FY10 would mean Fiscal Year 2010.