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Glossary A-Z


Accounts payable

Money which a company owes to vendors for products and services purchased on credit.

Accounts receivable

Money which is owed to a company by a customer for products and services provided on credit. Treated as a current asset on a balance sheet.


The gradual paying off of a debt in regular instalments over a period of time or the depreciation of the 'book value' of an asset over a period of time.

Annual General Meeting (AGM)

The meeting of shareholders held to approve the accounts and to reappoint directors and the auditors. It is held once a year and must be held within 15 months of the previous AGM.

Annual report and accounts

The directors' report to shareholders setting out, both in text and financial terms, details of the company's performance during the last year and the state of its finances and assets as at the reporting date.

Articles of Association

The origination of the company.


Fixed assets include land, equipment, vehicles, buildings and machinery current assets consist of cash, debtors, stock, investments and work in progress intangible assets are goodwill, trade marks, patents, etc. liquid assets are funds kept in cash or in a form that can be quickly and easily turned into cash. See also current assets, intangible assets and tangible assets.


Balance sheet

The statement featured in the accounts that indicates the value of the company's assets and liabilities as at the end of the financial period and the ways that these have been financed through external debt, internal profit generation and funds raised from the issue of shares.

Base rate

Interest rate on which interest charges are based by British banks.


A person who expects prices of shares and/or stock markets to fall.

Bear market

A period of falling share prices a pessimistic state of affairs.

Bid price

The price for your shares when you sell.

Blue chip

The term used to define a company regarded as being a solid, and generally safe, investment.


A certificate of debt issued to raise funds. Bonds typically pay a fixed rate of interest and are repayable at a fixed date.

Bond ratings

Gradings by debt rating agencies such as Standard & Poor's or Moody's Investors Services to classify the investment-worthiness of a company's debt.


A person who carries out stock market transactions as the agent of a client.

Brokers' Forecast

Estimates of future company performance issued by stockbrokers and analysts.


A person who expects the price of shares, and/or stock markets, to rise.

Bull market

A period of rising share prices an optimistic state of affairs.



Compound Annual Growth Rate. The year-on-year growth rate applied to an investment or other part of a company's activities over a multiple-year period.

Capital employed

The funds employed by a company in its activities. This represents the value in the balance sheet of the company's share capital, reserves and debt.

Cash flow statement

The statement in the accounts that indicates, for the financial period, the sources of all cash, both from operations and from external sources of finance, and how this cash has been used for trading, capital preservation and taxation purposes.

Close period

The period after the end of the company's financial year or half year but prior to the company's release of its Preliminary or Interim results, during which directors and certain employees are not permitted to trade in the shares of the company.

Consensus forecasts

A market average of stockbrokers' and bank analysts' forecasts of the future financial performance of a company.

Contract note

The record the investor receives from their broker giving details of a sale or purchase of shares.


This is the total amount of the transaction. The amount required to purchase the shares and pay the commission and stamp duty.

Convertible bond

A bond that can be converted into shares of the issuing company.

Corporate governance

The term used to describe the policies and procedures which the company's directors employ in their conduct of the company's affairs.


A settlement system that allows you to hold share certificates in an electronic form.

Current assets

The value of the assets held at the balance sheet date that are represented by cash or can be expected to be converted into cash within the next 12 months.

Current liabilities

The value of the liabilities at the balance sheet date that the company is required to pay, either on demand or within the next 12 months.


Debt/equity ratio

A ratio which describes the leverage or gearing of the company and is calculated as total debt divided by common shareholders' equity, expressed as a percentage.


The reduction in the balance sheet value of a company asset to reflect its loss of value through age and wear and tear.


The people who have been appointed as directors of a company.


The sum paid by the company to its shareholders as their direct financial reward from holding the company's shares.

Dividend cover

The indicator as to the rate that the company may be paying its dividends out of earnings and its ability to continue to pay dividends at that rate.

Dividend per share (dps)

This is the income a registered shareholder receives on each share invested in a company.


Stands for Dividend Reinvestment Plan. These schemes are more common in the US but some UK companies operate them as well. As the name suggests, they allow you to automatically reinvest your dividends with low transaction costs.



Profit available to ordinary shareholders, after all operating expenses, interest charges, taxes and preference dividends have been deducted.

Earnings per share (eps)

The profit after tax of the company divided by the weighted average number of shares in issue during the year.


Earnings Before Interest and Corporation Tax. A measure of a company's earning power from ongoing operations, equal to earnings before deduction of interest payments and Corporation Tax. EBIT excludes income and expenditure from unusual, non-recurring or discontinued activities.


Earnings Before Interest, Corporation Tax, Depreciation and Amortisation. An approximate measure of a company's operating cash flow based on data from the company's income statement. Calculated by looking at earnings before the deduction of Interest expenses, Corporation Tax, Depreciation, and Amortisation.


Extraordinary General Meeting. A meeting of shareholders which may be called to approve special events such as a take-over, or major acquisition.


Stands for Exchange Price Information Code. Also referred to as a 'symbol' or 'ticker'. This is a three or four letter code, unique to each company. Provident Financial is PFG.


That part of the company's shares represented by ordinary shares.


If you buy a share that is ex-dividend then you are not entitled to the last dividend it declared. There is normally a gap of a few weeks or even months between the time a company declares and pays its dividends. The cut-off date as to who gets the dividend, should the share change hands, is known as the ex-dividend date.


Fixed assets

Physical elements and items used in the operation of the business. It includes all fixtures and equipment, motor vehicles and land and buildings.

Free float

The proportion of a company's capital that is publicly owned.


Financial Times Stock Exchange, the joint operation for the compilation and maintenance of the indices used as the key performance benchmarks based on share prices.

FTSE indices

For UK companies, the key indices are the FTSE 100 and the FTSE Mid 250



Is used to describe the relationship between debt and equity and is calculated by dividing the company debt by common shareholders' equity. A highly geared company is one that carries a lot of debt.



Reducing exposure to risk of loss resulting from fluctuations in exchange rates, commodity prices, interest rates, etc.

Holding company

Company whose main assets are shareholdings (usually controlling) in other companies.


Institutional investor

Large financial institutions such as pension funds, unit or investment trusts and insurance companies.

Intangible assets

Describes assets that do not have a physical, tangible existence. Examples of intangible assets could include goodwill, brand value or patents, etc.

Interest payable

This is the interest that is due to be paid within one year and as such falls within current liabilities on the company balance sheet.


Unaudited first-half figures that provide an indication of the company's trading and profit performance since the last full-year accounting period.


Individual Savings Account - a tax free investment vehicle for private investors. There are limits on the amounts which can be invested each year.



The debts of a company and other financial obligations - the opposite of assets.


The proportion of cash or cash equivalents in a company's assets. Sometimes used as a measure of the near term financial health of a company. Also a measure of the volume of shares being traded, which may affect the ability of buyers or sellers to build/unwind large holdings without a substantial impact on the price.

Long-term debt

All interest-bearing financial obligations which mature in more than a year.

Limit price

When you ask a broker to buy or sell shares you can set a limit price. This will represent a maximum price you want to pay, if you are buying, or the minimum you would like to receive, if you are selling. It's best to check with your broker how they handle limit prices. For example, some will cancel your trade after a certain time if they can't do better than your limit price.



Profit margin is profit as a percentage of turnover. It is calculated either before or after interest charges.

Market price

The price at which a share can currently be traded in the market.

Market capitalisation

The number of shares in issue multiplied by the share price at the time of the calculation.

Market makers

These are the people who ensure that there is a market in a particular share. They are the people who set the bid and offer prices.

Mid price

The mid price is the price you see quoted in the financial pages and in your portfolio. It is the halfway point between the bid and offer prices.


Net income

Income (profit) shown after all operating and non-operating income and expense, reserves, income taxes, minority interest and extraordinary items but before preferred and ordinary dividends.


The most common type of account for holding shares, especially with online brokerages. Essentially the broker will hold everyone's shares rather than issuing certificates for each individual holding.


Offer price

The price for shares when you buy.

Operating profit

The difference between turnover and the costs incurred during operations (total operating expenses) - profit generated before interest and tax have been taken into account.

Ordinary Share

The most common class of share representing the owner's interest in a company.


P/E ratio

Price / earnings ratio - the ratio of a company's ordinary share price over its earnings per share.

Par value

The face, or nominal value, attributed to each of the company's shares. This has no relationship to the value of the company or to the quoted price.


Personal Equity Plans - these are no longer available to new investors, although the existing tax-free equity plans continue.

Preference shares

Shares with a fixed dividend. The holders of preference shares are entitled to their dividend before ordinary shareholders and rank above ordinary shareholders should the company be wound up. Preference shares are share capital but not equity share capital.

Pre-tax profit

The figure reported by the company in its profit and loss account reflecting the results of all business activities and decisions for the financial period before taxation.

Preliminary announcement

The first announcement made by the company each year to the Stock Exchange of its annual results, earnings and proposed dividend, which is made prior to the publication of its annual report.


The surplus of revenue generated over expenses incurred for a particular accounting period.


Real return

Return adjusted to take account of inflation.

Return on assets

Ratio which measures the return a company generates from its total assets.

Rights Issue

A method by which a company raises cash for an acquisition or expansion. If you already hold shares in a company you will be entitled to buy more at a set price, on a pro rata basis.


Return on Capital Employed. This is a key statistic reflecting the rate of return that the company's management has obtained, on the shareholders' behalf, by its management of the company's assets.


Return on Invested Capital. A measure of how effectively a company uses the money (borrowed or owned) invested in its operations.



The Stock Exchange automated electronic trading system.


A financial instrument issued by a company and traded on a stock exchange.

Securities and Exchange Commission (SEC)

The statutory body that regulates the US securities industry.

Share capital - Authorised share capital

US equivalent or brief description: Charge-offs

Share capital and Issued share capital

The number of shares that are currently in issue.

Short-term debt

The portion of debt that is payable within one year. Falls under current liabilities on the company balance sheet.

Stamp duty/Stamp duty reserve tax

A tax which is payable at approximately 0.5% on the purchase price of shares.

Stock transfer form

If you sell a share for which you have the share certificates, then the broker will send you this form, which you sign to authorise the transaction.


Tangible assets

Tangible fixed assets represent property, plant and equipment, after the deduction of depreciation.

Tracker funds

Professional investment funds that seek to emulate the investment performance of a specific share index by investing in the companies that make up the index in the same proportion that each company comprises of the index.



The annual dividend or interest income relative to the underlying security on which it is received. This is expressed as the percentage the income per share bears to the share price.


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The group has a rigorous risk management framework. This is designed to identify the risks that could adversely impact the delivery of the group's strategic aims and to ensure that adequate controls and procedures are in place to mitigate the risks. The group's risks, together with the controls and procedures in place to mitigate the risks, are as follows:


The risk of loss arising from a breach of existing regulation or regulatory changes in the markets within which the group operates.

The current volatile economic environment has resulted in greater focus on regulation, with an increase in the level of scrutiny placed upon participants in the broader banking and consumer lending market.

Controls and procedures

  • A central in-house legal team is in place which monitors legislative changes and supports divisional compliance functions.
  • Expert third party legal advice is taken where necessary.
  • Divisional compliance functions are in place which manage compliance and report to divisional boards.
  • There is constructive dialogue with regulators.
  • Full and active participation in all relevant regulatory review and consultation processes in the UK and EU.