Financial terms

Net Asset Value – NAV

The net asset value ( NAV) represents the net value of an entity and is calculated as the total value of the entity’s assets minus the total value of its liabilities. Most commonly used in the context of a mutual fund or an exchange-traded fund ( ETF), the NAV

represents the per share/unit price of the fund on a specific date or time.

Oligopoly

Oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. The concentration ratio measures the market share of the largest firms. A monopoly is one firm, duopoly is two firms and oligopoly is two or more firms. There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly influence the others.

Operating Margin

The operating margin measures how much profit a company makes on a dollar of sales, after paying for variable costs of production, such as wages and raw materials, but before paying interest or tax. It is calculated by dividing a company’s operating profit by its net sales.

Overhead

Overhead refers to the ongoing business expenses not directly attributed to creating a product or service. It is important for budgeting purposes but also for determining how much a company must charge for its products or services to make a profit. In short, overhead is any expense incurred to support the business while not being directly related to a specific product or service.

Price-to-Earnings Ratio – (P/E Ratio)

The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings ( EPS). The priceto-earnings ratio is also sometimes known as the price multiple or the earnings multiple.

P/E ratios are used by investors and analysts to determine the relative value of a company’s shares in an apples-toapples comparison. It can also be used to compare a company against its own historical record or to compare aggregate markets against one another or over time.

Prospectus

A prospectus is a formal document that is required by and filed with the Securities and Exchange Commission ( SEC) that provides details about an investment offering for sale to the public. A prospectus is filed for stock, bond, and mutual fund offerings. A prospectus is used to help investors make a more informed investment decision.