SELECTED INVESTMENT TERMS

Asset – Something of value owned by a company, such as a factory, oil well, or cash.

Balance sheet – The ledger on which a company records its assets and liabilities. A "strong balance sheet" indicates that a company is financially healthy.

Bond – An instrument reflecting that an investor has lent money to a company or government entity, and is entitled to receive a fixed rate of interest.

Book Value – A company's net worth, or its total assets minus its total liabilities. Often expressed per share of common stock.

Earnings – A company's profit, often expressed per share of common stock.

Liability – A debt or obligation of a company, such as money owed for payroll, interest payments, or lease payments.

P/E ratio – Price/earnings ratio.

Price/book ratio – The ratio of a stock's price to the company's book value (defined above). Traditionally a ratio under 1.0 is considered low, and a ratio above 4.0 is considered high. These ranges can vary with market conditions.

Price/earnings ratio – The ratio of a stock's price to the company's earnings per share. A company whose stock sells for $15 a share, and which earns $1.00 in annual profit, has price/earnings ratio of 15. Traditionally a ratio under 10 is usually considered low, and above 30 is considered high. These ranges can vary with market conditions.

Price/sales ratio – The ratio of a stock's price to the company’s sales per share. Traditionally a ratio below 1.0 is usually considered low, and above 4.0 is considered high. These ranges can vary with market conditions.

Profit – A company's revenue, minus its expenses.

Revenue – The money a company receives from sales and sometimes other sources such as licensing fees.

Sales – The money a company receives from selling goods or services to customers.

Stock – A share representing partial ownership of a company.