FinanceTalking Financial Glossary

An offer made to the shareholders of a company by an individual or an organisation to buy their shares at a specified price in order to gain control of that company.

The body which governs public company takeover activity in the UK, ensuring fair play for all investors.

Assets that can be touched, ie physical objects.

A company that is subject to a takeover bid.

The price that an analyst thinks the shares will rise to within a specified period of time.

A loss made by an organisation in one period that can be carried forward to another period to reduce the tax payable in the subsequent period.

A tax shield arises when a company reduces its tax liabilities by making tax allowable payments such as interest.

The fiscal year running, in the UK, from 1st April to 31st March.

TechMARK is the London Stock Exchange's market segment for technology shares.

Technical analysts rely on past movements of economic indicators such as economic growth rates, interest rates, exchange rates, consumer spending or share prices to predict the future. They are sometimes called chartists.

The practice of offering securities to the public by inviting them to tender a price. The securities are then sold to the highest bidder. Alternatively, a company may make a tender offer to buy back shares from investors (see buy-back).

Traded Endowment Policies .TEPs or traded life policies exist because specialist companies are involved in buying second hand life insurance policies. They give the seller a proportion of the value of the policy and then keep the proceeds when the policy matures.

A fixed-period loan, usually for one to ten years, which is paid back by the borrower in regular instalments with interest.

In DCF valuation, analysts often use a multi-stage model. The terminal period is the final period, when cash flows are assumed to revert to a constant growth rate, similar to that of the economy generally.

The terminal value (continuing value) of a security is the present value at a future point in time of all future cash flows, taking into account a stable growth rate forever. It is used in multi-stage discounted cash flow valuation.

A unique code for a particular stock in a particular market.

Refers to the capital of a bank for regulatory purposes. Tier 1 capital is broadly equity capital (shareholders funds).

Refers to the capital of a bank for regulatory purposes. Tier 1 capital is broadly equity capital or shareholders funds. Tier 2 capital includes preference shares and subordinated debt.

Traded Life Policies. TLPs (or traded endowment policies) exist because specialist companies are involved in buying second hand life insurance policies. They give the seller a proportion of the value of the policy and then keep the proceeds when the policy matures.

A newspaper or magazine advertisement showing the parties involved in an acquisition, merger, new issue, large syndicated loan, or other major financial deal.

Revenue/sales/turnover ? the top line of the income statement (profit and loss account).

Capital ratios measure the amount of a bank's capital in relation to the amount of risk it is taking. The idea is that all banks must ensure that a reasonable proportion of their risk is covered by permanent capital. Banks must maintain a minimum total capital ratio of 8%. In effect, this means that 8% of the risk-weighted assets must be covered by permanent or near permanent capital. At least half of the regulatory capital must fall into tier 1, which takes into account just the pure equity capital so the tier 1 ratio must be at least 4%. The risk weighting process takes into account the relative risk of various types of lending. For example, a loan to the British Government would be given a risk weighting of 0% (not risky at all) whereas unsecured personal lending would be given a risk weighting of 100%. The higher the capital adequacy ratios a bank has, the greater the level of unexpected losses it can absorb before becoming insolvent ? so the less risky it should be.

The combination of regular dividends and capital gains (share price increase), which should compensate shareholders for the risk they are taking. TSR is important because it shows the return that the shareholders are getting on their investment. TSR is commonly used for incentivising company directors through long term incentive plans.

Target Price. The TP is often referred to in analysts research reports and is the price that an analyst thinks the shares will rise to within a specified period of time.

A company or person who is owed money by an organisation for having provided goods or services to that organisation. Also known as a payable.

Traded endowment policies (or traded life policies) exist because specialist companies are involved in buying second hand life insurance policies. They give the seller a proportion of the value of the policy and then keep the proceeds when the policy matures.

Traded life policies (or traded endowment policies) exist because specialist companies are involved in buying second hand life insurance policies. They give the seller a proportion of the value of the policy and then keep the proceeds when the policy matures.

People who buy and sell.

The shares are trading on a lower price earnings ratio (or other multiple) than the market or the sector.

The shares are trading on a higher price earnings ratio (or other multiple) than the market or the sector.

An area in a stock exchange, commodity market etc. in which dealers trade by personal contact.

Trading profit is broadly the same thing as operating profit - the profit that the company makes from what it does, before taking into account interest, tax and dividends ? also known as EBIT (earnings before interest and tax), PBIT (profit before interest and tax) or operating income.

The person responsible day-to-day for managing a company's funds. Typically the treasurer would report to the finance director and would deal with loans, overdrafts, cash and deposits as well as hedging and perhaps insurance.

The UK government department responsible for the country's financial policies and the management of the economy. Alternatively, could refer to the department within a company that is responsible for day-to-day cash management.

Government short term debt which is tradable like a bond.

Auditors of the published accounts of companies are required by law to form an opinion as to whether the accounts they audit show a true and fair view of the organisations affairs. True is generally taken to refer to numerical accuracy (to within the bounds of materiality) and fair refers to the way the information is presented - adequate disclosure.

Total Shareholder Return. TSR is the combination of regular dividends and capital gains (share price increase), which should compensate shareholders for the risk they are taking. TSR is important because it shows the return that the shareholders are getting on their investment. TSR is commonly used for incentivising company directors through long term incentive plans.

Turnover is also referred to as sales or revenues. It is the value of a firm's sales, usually stated net of sales taxes such as VAT.