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Financial education

Financial analysis glossary

Consistent vocabulary helps investors read data without confusing a measure, an interpretation and a decision.

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What it provides

A clearer financial workflow

  • Price-to-earnings ratio: share price compared with earnings per share
  • Net margin: revenue retained as net income
  • Cash flow: cash generated by business activities
  • Drawdown: maximum decline from a historical peak

Financial strength and profitability

Debt to assets measures the share of assets financed by debt. Interest coverage compares available earnings with interest expense. Net and operating margins show profitability after different layers of costs. Return on equity compares earnings with shareholder capital.

Market behavior and risk

Historical beta measures sensitivity to a reference market. Momentum describes recent price dynamics. Maximum drawdown measures the largest historical decline from peak to trough. Sentiment summarizes the information environment and does not predict future returns.

Growth and valuation

Revenue growth compares equivalent periods. The price-to-earnings ratio connects price with earnings per share. A multiple should always be read with history, sector, growth and earnings quality.

QUESTIONS

Frequently asked questions

Is a definition enough to interpret a ratio?

No. Period, unit, sector, source and historical context remain essential.

Does one ratio summarize a company?

No. Ratios describe separate dimensions and should be used together with financial statements and business context.

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