Investing & Trading Glossary

Plain-English definitions for every ratio, metric and concept on FinBizNet — P/E, ROE, ROCE, EV/EBITDA, NIM, RSI, market cap and more. Educational reference for Indian investors.

Valuation

P/E Ratio (Price-to-Earnings): Share price divided by earnings per share. It shows how many rupees the market is currently paying for each rupee of a company's annual profit. A higher number means the market is pricing in more future growth; a lower number can reflect slower growth or higher perceived risk.
P/S Ratio (Price-to-Sales): Market value of the company divided by its annual sales (revenue). Useful for comparing companies that are not yet consistently profitable, since it looks at revenue rather than earnings.
P/BV Ratio (Price-to-Book Value): Share price divided by book value per share. It compares the market price to the company's net asset value on its balance sheet. Frequently used for banks and asset-heavy businesses.
EV/EBITDA (Enterprise Value to EBITDA): Enterprise value (market cap plus debt, minus cash) divided by EBITDA. It values the whole business independent of its capital structure, which makes it convenient for comparing companies with different debt levels.
PEG Ratio (Price/Earnings-to-Growth): The P/E ratio divided by the earnings growth rate. It puts the P/E in the context of how fast earnings are growing, so a high P/E backed by fast growth reads differently from a high P/E with flat earnings.
Enterprise Value: The theoretical takeover value of a company: market capitalisation plus total debt, minus cash and cash equivalents. It represents the value of the entire business rather than just its equity.

Profitability

Return on Equity: Net profit expressed as a percentage of shareholders' equity. It measures how much profit the company generates from the money its shareholders have invested.
Return on Assets: Net profit as a percentage of total assets. It shows how efficiently a company uses everything it owns to produce profit.
Return on Capital Employed: Operating profit as a percentage of the total capital (equity plus debt) used in the business. It captures returns generated on all long-term funding, not just equity.
Operating Margin: Operating profit as a percentage of revenue. It shows how much of each rupee of sales is left after covering the day-to-day costs of running the business, before interest and tax.
Net Profit Margin: Net profit as a percentage of revenue. It shows how much of each rupee of sales ultimately becomes bottom-line profit after all costs, interest, and tax.
Profit After Tax: The final profit a company keeps after subtracting all expenses, interest, and taxes from its revenue. Also called net profit or the 'bottom line'.
EBITDA: Earnings Before Interest, Tax, Depreciation, and Amortisation. A measure of operating profitability that strips out financing and accounting decisions to show the cash-generating capacity of the core business.
EBITDA Margin: EBITDA as a percentage of revenue. It indicates how much operating cash profit the business produces per rupee of sales, before interest, tax, and non-cash charges.

Per-Share

Earnings Per Share: Net profit divided by the number of outstanding shares. It shows the slice of a company's profit attributable to each single share.
Book Value Per Share: Shareholders' equity divided by the number of shares. It represents the per-share net asset value of the company according to its balance sheet.
Face Value: The nominal or 'par' value of a share as stated by the company (commonly ₹1, ₹2, ₹5, or ₹10 in India). It is an accounting figure used for dividends and stock splits, and is usually different from the market price.
Dividend Yield: The annual dividend per share expressed as a percentage of the current share price. It shows the cash return a shareholder receives from dividends relative to the price paid.

Financial Statements

Revenue: The total money a company earns from its core operations (selling goods or services) before any costs are deducted. Also called the 'top line' or sales.
Profit Before Tax: Profit remaining after all operating costs and interest but before income tax is deducted. It sits one line above net profit on the income statement.
Balance Sheet: A snapshot of what a company owns (assets), what it owes (liabilities), and the shareholders' stake (equity) at a single point in time.
Cash Flow: The actual cash moving in and out of a company, split into operating, investing, and financing activities. It shows how the business generates and spends cash, which can differ from reported profit.
Free Cash Flow: The cash left over from operations after spending on capital assets (like plant and equipment). It represents cash the company can use for dividends, debt repayment, or reinvestment.

Leverage & Liquidity

Debt-to-Equity Ratio: Total debt divided by shareholders' equity. It shows how much the company relies on borrowed money relative to its own funds. A higher ratio means more leverage.
Current Ratio: Current assets divided by current liabilities. It measures whether a company has enough short-term resources to cover its short-term obligations. A value above 1 means current assets exceed current liabilities.
Interest Coverage Ratio: Operating profit divided by interest expense. It shows how comfortably a company can pay the interest on its debt out of its earnings.
Asset Turnover Ratio: Revenue divided by total assets. It measures how efficiently a company uses its assets to generate sales.

Banking

Net Interest Margin: For banks, the difference between interest earned on loans and interest paid on deposits, expressed as a percentage of interest-earning assets. It reflects the core lending profitability of a bank.
Gross NPA: Gross Non-Performing Assets — the total value of loans on which borrowers have stopped paying, as a percentage of total loans, before any provisioning. It indicates the overall stress in a bank's loan book.
Net NPA: Net Non-Performing Assets — bad loans remaining after the bank sets aside provisions to cover expected losses, as a percentage of net loans. It shows the residual risk after provisioning.
Capital Adequacy Ratio: A bank's capital expressed as a percentage of its risk-weighted assets. Regulators set a minimum to ensure a bank can absorb a reasonable amount of loss. Higher generally signals a stronger capital cushion.
Tier 1 Capital: A bank's core capital — mainly equity and retained earnings — that can absorb losses without the bank ceasing operations. It is the highest-quality layer of regulatory capital.
CET1 Ratio: Common Equity Tier 1 ratio — the most stringent measure of a bank's core equity capital against its risk-weighted assets. It is closely watched by regulators as a measure of resilience.
CASA Ratio: The share of a bank's deposits held in low-cost Current Accounts and Savings Accounts. A higher CASA ratio generally means cheaper funding for the bank.

Insurance

Solvency Ratio: For insurers, the ratio of available capital to the minimum capital required by the regulator. It indicates an insurer's ability to meet its long-term claim obligations. India's IRDAI sets a minimum of 1.5x.
Combined Ratio: For general insurers, claims plus expenses as a percentage of premiums earned. Below 100% indicates the insurer made an underwriting profit; above 100% indicates an underwriting loss before investment income.
Persistency Ratio: For life insurers, the percentage of policyholders who continue paying premiums and keep their policies active over time. Higher persistency reflects stickier, more durable business.
Value of New Business: For life insurers, the present value of expected future profits from policies sold during a period. It measures the profitability of new business written.
VNB Margin: Value of New Business as a percentage of Annualised Premium Equivalent. It shows how profitable each unit of new premium is for a life insurer.
Annualised Premium Equivalent: A standardised measure of new insurance premium that adds regular premiums to one-tenth of single (lump-sum) premiums, so insurers with different product mixes can be compared on a like-for-like basis.
Embedded Value: For life insurers, the present value of future profits from the existing book of policies plus the company's net worth. It is a common measure of an insurer's intrinsic worth.

Shareholding

Promoter Holding: The percentage of shares held by the company's founders, their family, and affiliated entities. Changes in promoter holding are widely tracked as a signal of insider confidence.
FII Holding: The percentage of shares held by Foreign Institutional Investors — overseas funds and institutions investing in Indian markets.
DII Holding: The percentage of shares held by Domestic Institutional Investors — Indian mutual funds, insurers, banks, and pension funds.
Public Holding: The percentage of shares held by retail and non-institutional investors who are not promoters or large institutions.
Free Float: The portion of a company's shares that is freely available for trading in the market, excluding locked-in promoter and strategic holdings. Index weightings are often based on free float.
Pledged Shares: Promoter-owned shares that have been offered as collateral against a loan. A high or rising pledge level is closely watched because forced selling can occur if the loan is not serviced.

Price & Volume

Market Capitalisation: The total market value of a company's shares, calculated as share price multiplied by the number of outstanding shares. It is the common way to size a company (large-cap, mid-cap, small-cap).
Current Market Price: The latest traded price of a share in the market. It updates continuously during market hours.
Last Traded Price: The price at which the most recent trade in a stock was executed. During market hours it is effectively the live price.
52-Week High / Low: The highest and lowest prices at which a stock has traded over the past 52 weeks. They mark the recent trading range and are common reference points for where the current price sits.
Volume: The number of shares traded in a stock over a given period. Higher volume indicates greater trading activity and liquidity.
Analyst Target Price: A price level that sell-side analysts publish as their estimate of where a stock could trade over a stated horizon. FinBizNet displays these as third-party estimates for context only; they are not FinBizNet recommendations.
Breakout: A move where a stock's price crosses above a resistance level or below a support level it had been trading within, often accompanied by higher volume. It is a chart pattern observation, not a recommendation.

Technical

Exponential Moving Average: An average of recent prices that gives more weight to the latest data, so it reacts faster to new moves than a simple average. FinBizNet shows EMAs over 5, 20, 50, and 200 periods.
Daily Moving Average: The average closing price of a stock over a set number of trading days (for example, 50-DMA or 200-DMA). It smooths out day-to-day noise to show the underlying trend.
Relative Strength Index: A momentum indicator scaled from 0 to 100 that measures the speed and size of recent price moves. Readings above 70 are conventionally described as 'overbought' and below 30 as 'oversold' — descriptive labels, not signals to act.
MACD: Moving Average Convergence Divergence — a momentum indicator built from the difference between two moving averages and a signal line. It is used to describe shifts in trend momentum.
Bollinger Bands: A band plotted a set number of standard deviations above and below a moving average. The bands widen when volatility rises and narrow when it falls, framing where price is trading relative to its recent range.

Market Sentiment

Fear & Greed Index: A composite gauge that blends several market signals into a single 0–100 reading describing the prevailing mood, from extreme fear to extreme greed. It is a sentiment snapshot, not a forecast.
Market Breadth: A measure of how many stocks are rising versus falling across the market. Broad participation (many stocks advancing) reads differently from a rise driven by only a handful of names.
NIFTY 50: India's benchmark stock index, made up of 50 large companies listed on the NSE. It is widely used as a barometer for the overall Indian equity market.
Beta: A measure of how much a stock tends to move relative to the broader market. A beta of 1 moves with the market; above 1 is more volatile than the market, below 1 is less volatile.

Growth

Compound Annual Growth Rate: The smoothed average annual growth rate of a figure (like revenue or profit) over multiple years, as if it had grown at a steady rate each year. It makes multi-year growth easy to compare.
Earnings Surprise: The difference between a company's actual reported earnings and what analysts had estimated. A positive surprise beats estimates; a negative surprise falls short.
Revenue Surprise: The difference between a company's actual reported revenue and the analyst estimate for the period.
YoY Growth: Year-on-Year growth — the percentage change in a metric compared with the same period one year earlier. It removes seasonal effects by comparing like periods.
QoQ Growth: Quarter-on-Quarter growth — the percentage change in a metric compared with the immediately preceding quarter.

Scores & Misc

FinBiz Score: A composite 0–100 score FinBizNet computes to summarise a stock across four factors — Quality, Growth, Valuation, and Technical. It is an informational, data-driven summary for research, not investment advice or a recommendation to transact.
Quality Factor: The component of the FinBiz Score that reflects financial strength and consistency — profitability, returns on capital, and balance-sheet health.
Growth Factor: The component of the FinBiz Score that reflects how fast the company's revenue and earnings have been expanding.
Valuation Factor: The component of the FinBiz Score that reflects how the stock is priced relative to its fundamentals and peers.
Technical Factor: The component of the FinBiz Score that reflects recent price trend and momentum signals.
Industry Rank: Where a stock stands relative to its sector peers on a given metric or composite score. It puts a company's numbers in the context of the industry it competes in.
Order Book: For project- and contract-driven sectors, the total value of confirmed orders a company is yet to execute. The Order Book-to-Revenue ratio indicates how many years of revenue visibility the backlog provides.

Listing & Exchange Group

BSE Group (Scrip Classification): The BSE assigns every listed scrip a 'Group' code describing how it is settled and how closely it is monitored. These are exchange operational classifications — settlement and surveillance treatment — not quality or investment grades. Common codes: A — actively traded, high-liquidity shares in normal rolling settlement. B — the default group for shares not in A, T, or Z (a residual bucket, not a ranking). T / TS — trade-to-trade scrips where every transaction must result in delivery, applied as a surveillance measure. Z / ZP — companies that have not met listing requirements, have unresolved investor complaints, or lack depository arrangements, traded trade-to-trade. X / XT — equity of companies exclusively listed on BSE (not the NSE); XT settles trade-to-trade. M / MT / MS — companies on BSE's SME and Startups platform (MT settles on a gross/trade-to-trade basis). P — securities traded and settled in physical (non-demat) form, subject to a 5% price band as a surveillance measure.