Investing Glossary

Market cap is the market value of a company's equity.

Why it matters: It helps frame company size, but it does not explain profitability, debt, or valuation quality by itself.

Revenue is the money a company earns from selling goods or services before expenses.

Why it matters: It shows business scale and demand, but it should be read with margins and cash flow.

Revenue growth measures how much sales increased or decreased over a period.

Why it matters: It can show demand changes, but growth quality depends on profitability, cash flow, and sustainability.

EPS means earnings per share, or profit attributed to each share of common stock.

Why it matters: It is widely used in earnings analysis, but it can be affected by one-time items and share count changes.

Free cash flow is cash left after operating cash flow and capital spending.

Why it matters: It helps show whether a company is turning business activity into usable cash.

Operating margin shows operating profit as a percentage of revenue.

Why it matters: It helps explain core business profitability before interest and taxes.

Gross margin shows how much revenue remains after direct costs of goods or services.

Why it matters: It helps show pricing power, product cost structure, and production efficiency.

Net income is accounting profit after expenses, interest, taxes, and other items.

Why it matters: It is the bottom-line profit figure, but it should be compared with cash flow.

EBITDA means earnings before interest, taxes, depreciation, and amortization.

Why it matters: It can help compare operating performance, but it excludes real costs and should not replace cash flow.

Debt-to-equity compares a company's debt with shareholders' equity.

Why it matters: It helps frame leverage and balance sheet risk.

Return on equity compares net income with shareholders' equity.

Why it matters: It can show profitability relative to equity, but leverage can influence the result.

The P/E ratio compares a company's share price with earnings per share.

Why it matters: It is a common valuation metric, but it needs growth, margins, debt, and risk context.

Price-to-sales compares company market value with revenue.

Why it matters: It can be useful when earnings are low or negative, but it does not show profitability.

The current ratio compares current assets with current liabilities.

Why it matters: It helps frame short-term liquidity, though industry context matters.

Cash flow from operations shows cash generated or used by the core business.

Why it matters: It helps test whether reported earnings are supported by cash generation.

A 10-K is an annual report filed by a public company with the SEC.

Why it matters: It gives a broad annual view of the business, financial statements, risks, and management discussion.

A 10-Q is a quarterly report filed by a public company with the SEC.

Why it matters: It updates investors on recent financial results and changes between annual reports.

MD&A means Management's Discussion and Analysis.

Why it matters: It explains management's view of results, trends, liquidity, and business changes.

Risk factors are company-disclosed issues that could materially affect the business.

Why it matters: They help identify what could challenge the company, but they are not predictions.

An annual report is a yearly company report, often connected with the 10-K filing.

Why it matters: It helps users review a full year of business performance and disclosures.

A quarterly report updates company performance during the year.

Why it matters: It can show what changed since the annual report.

Segment reporting breaks a company into operating units or business lines.

Why it matters: It can show which parts of the company drive revenue, profit, or risk.

Legal proceedings describe material legal or regulatory matters involving the company.

Why it matters: They can provide context about disputes, compliance issues, or potential costs.

Forward-looking statements describe expectations about future events or performance.

Why it matters: They are not guarantees and should be read with assumptions and risk factors.

Business risk is the possibility that company operations, demand, or strategy may not perform as expected.

Why it matters: It helps users understand what could affect the core business model.

Financial risk relates to debt, cash flow, liquidity, financing, or balance sheet pressure.

Why it matters: It helps frame whether the company has financial flexibility.

Competitive risk is the chance that rivals, substitutes, or pricing pressure hurt the business.

Why it matters: It can affect growth, margins, and market position.

Regulatory risk comes from rules, oversight, approvals, or compliance obligations.

Why it matters: It can affect costs, operations, products, and timing.

Customer concentration means a company depends heavily on a small number of customers.

Why it matters: Losing or reducing business with a key customer can affect revenue and operations.

Margin pressure means costs, pricing, or mix changes are reducing profitability.

Why it matters: It can show that revenue growth is becoming less profitable.

Liquidity risk is the risk that a company may not have enough cash or financing flexibility.

Why it matters: It matters when debt, operations, or investment needs require cash.

Execution risk is the risk that management cannot carry out a plan as expected.

Why it matters: It often appears during product launches, integrations, turnarounds, or expansion plans.

A bull case is the positive research argument for a company.

Why it matters: It helps identify what could support a favorable business view without making a recommendation.

A bear case is the cautious or negative research argument for a company.

Why it matters: It helps identify what could challenge the business or expectations.

A watchlist is a saved list of companies to research or monitor.

Why it matters: It helps organize research without implying any action.

A stock thesis is a structured research view about what matters for a company.

Why it matters: It makes assumptions, risks, and open questions easier to review.

An earnings report is a company update about recent financial results.

Why it matters: It can show changes in revenue, earnings, margins, guidance, and management commentary.

Guidance is management's outlook for future financial or business performance.

Why it matters: It frames expectations, but it is not a guarantee.

Valuation is the process of comparing a company's price with business fundamentals.

Why it matters: It helps put expectations in context, but no single valuation metric tells the full story.

A moat is a durable advantage that may help a company defend its business.

Why it matters: It can affect margins, customer retention, and competitive position.

A catalyst is an event or development that could change how the market views a company.

Why it matters: It helps users understand what events may affect attention or expectations.

A drawdown is a decline from a prior high to a lower value.

Why it matters: It helps describe downside movement, but it does not explain business quality by itself.