In his book “Investing in stocks and shares” Dr. John White states several definitions of financial terms, such as share, asset, nominal value…

Let’s list them all, and make a brief summary from the definitions given by the book extract:

Share: Is a unit of ownership of a company, a small part of its assets and properties. A share will give to its owner the right to receive company’s dividends (once or twice a year) and to vote and assistance to the Annual General Meeting.

Assets: Everything of value that the company owns; cash, properties, accounts receivable and stock of raw materials, less its liabilities.

Nominal share value: Is the original value that represents the assets value of the company. Once shares are floated in the stock market, the value of shares is a real value, higher than the nominal one. The issued share capital of the company is the total sum of nominal shares.

There is an especial type of shares, non-voting shares, which are disappearing due to the inability for the owner to vote on the company’s strategy. This type of shares were initially created in order to retained the control of the company by the founding family.

The dividend and its cover: Payments made by a company to its shareholder members, it’s a portion of corporate profits paid out to investors.

The cover of the dividends is the number of times the net dividends could have been given to shareholders.

P/E Ratio: Is the quotient between the earnings of the company and the number of shares in existence. Earnings per share ratio measures how many years of earnings per share at the current share price would be needed to pay for the share.

Yield: Is the amount in cash returned to the owners of securities, normally expressed as a net percentage of the current share price.

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