The Sunday Mail
Cash flow: The cycle of money coming into and out of an account according to income/revenue and expenses. Negative cash flow is when expenses fall due before income/revenue is available and the account experiences a shortfall. Positive cash flow is when income/revenue outstrips expenses and there is excess cash in the cycle.
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Dividend Yield: A dividend is a payment made to a company’s shareholders, usually a divvying up of a company’s earnings. Say ‘Company X’ makes some profit. And say you own shares of ‘Company X’. If those shares pay dividends, you may get a certain amount of the profit of the company. Cha-ching! The dividend yield is that amount, expressed as a percentage of the stock price!
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Equity: The value of an asset after all debts against it have been calculated. A property may be worth $800 000, for example, but if it has a $500 000 mortgage against it, the equity the owner has is $300 000.
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Net Worth: The difference between your assets and liabilities. You can calculate yours by adding up all of the money or investments you have, including the current market value of your home and car, as well as the balances in any checking, savings, retirement or other investment accounts. Then subtract all of your debt, including your mortgage balance, credit card balances and any other loans or obligations. The resulting net worth number helps you take the pulse on your overall financial health.
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Net Income: In its most basic definition, net income refers to a company’s total earnings or profit. Simply put, net income is the difference calculated when subtracting all expenses (including tax expenses) from revenue. When a company’s net income increases, it’s normally a result of either revenue increasing or expenses being slashed. It goes without saying that an increase in net income is generally perceived as a positive thing and factors into a stock’s performance.
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Portfolio: Your portfolio is the investments that you have purchased, and that you still hold (aka, that you haven’t sold). If you only have one investment (ex: Moderate Mix), then that’s your portfolio! If you’ve got a bunch of investments, all of them together make up your portfolio.
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