Balance Sheet – a financial statement that shows everything the company owns and everything it owes. Click here to learn about this.
Bonds – another term for debt that a company owes to the people whom they borrowed it off (usually banks).
CAGR (Compounded Annual Growth Rate) – the long-term average growth of a company.
Capex (Capital Expenditures, or Property, Plant, and Equipment) – physical infrastructure that the company has to buy in order to make their products. Click here to learn about this.
FCF (Free Cash Flow) – the profits of a company that end up in shareholder’s pockets, and the most important version of ‘profit’. Click here to learn about this.
Growth – how much the company grew itself. The best marker for this is last year’s sales growth, or the average over 5 years. Click here to learn about this.
Income Statement – a statement that shows how much money the company made in a year (or quarter). It starts with how much a company made from selling its products, and deducts all the expenses of the company to end up at how much net income they made. Click here to learn about this.
Merger – when two companies join together to form one.
Moat – gives companies which possess it a form of protection from any sort of competition. Click here to learn about this.
NOPAT (Net Operating Profit After-Tax) – the profit a company makes from its normal operations, after taxes are deducted. Click here to learn about this.
Profit – this term is used very loosely as there is no true definition of ‘profit’ as there are multiple forms of profit. This includes; net income, free cash flow, and operating income.
ROIC (Return on Invested Capital) – the efficiency of a company, which is a strong marker for the quality of a company. Click here to learn about this.
Sum-of-the-Parts (SOTP) – when you value a company by valuing its individual segments (parts) separately, then adding them together (sum).