A financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. The balance sheet must follow the…

Complementing the balance sheet and income statement, the cash flow statement (CFS), records the amounts of cash and cash equivalents entering and leaving a company. The CFS allows investors to understand how a company’s operations are running, where its money is coming from, and how it is being spent. Here…

The total market value of all of a company’s outstanding shares. Market capitalization is calculated by multiplying a company’s shares outstanding by the current market price of one share. The investment community uses this figure to determine a company’s size, as opposed to sales or total asset figures. Frequently referred…

A strategy whereby an investor seeks out stocks with what they deem good growth potential. In most cases a growth stock is defined as a company whose earnings are expected to grow at an above-average rate compared to its industry or the overall market. Growth investors often call growth investing…

Small cap stock investing is volatile. So, why risk your money investing in what is typically considered risky business? First, increased risk equals increased potential reward. However, there is another way to look at it. Investing in risk can actually decrease the total risk for you and your portfolio. Here…

Inflation is an upward movement in the average level of prices. Its opposite is deflation, a downward movement in the average level of prices. The boundary between inflation and deflation is price stability. The Link Between Inflation and Money Because inflation is a rise in the general level of prices,…

A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs may receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate. Individuals can invest in…

A certificate of deposit is not a physical piece of paper issued by a bank or credit union. It is an account set up under certain terms. The basic elements include the amount of deposit, the rate of interest (or return), the frequency of calculating interest, and the time frame…

It doesn’t matter whether you are an investor looking for growth or value; the first step in thinking like an analyst is to develop a probing mind. You need to find out what to buy or sell at what price. Analysts usually focus on one particular industry or a sector.

An index is a statistical measure of the changes in a portfolio of stocks representing a portion of the overall market. It would be too difficult to track every single security trading in the country. To get around this, we take a smaller sample of the market that is representative…