Stock Market Fundamentals

Published: July 1, 2024

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Basic terms and concepts in the stock market:

Certificates or book entries representing ownership in a corporation or similar entity.

Par/Face Value :

Usually important for debt/bonds, because interest is calculated on based of this face value Decided when releasing the stocks Par value is usually very low in stocks, because company doesn’t want to have liability if stock prices go down below the par value It has no connection to the market value of the share of stock

Outstanding stocks :

Stocks held by shareholders Publicly traded companies are obligated to report the number of issued and outstanding shares,

Treasury stock :

Treasury stock (treasury shares) are the portion of shares that a company keeps in its own treasury Treasury stock may have come from a repurchase or buyback from shareholders, or it may have never been issued to the public in the first place Treasury stock is not considered when calculating dividends or earnings per share. These are kept in the company’s treasury to be used to create extra cash if it is needed. Another reason may be to keep a controlling interest within the treasury to help ward off hostile takeovers.

It consists of all funds raised by a company in exchange for shares of their stocks.

Share capital less the par value of shares that are held as the company’s treasury stock.

Earnings per share(EPS) :

A company’s profit divided by its number of common outstanding shares. If a company earning ₹200 in one year had 200 common shares of stock outstanding, its EPS would be ₹1 per share. The one-year (historical or trailing) EPS growth rate is calculated as the percentage change in earnings per share(EPS).

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