Price per share is the current market price of a single share of stock.
Archive for the ‘Daily Definition’ Category
Price Per Share is…
Thursday, May 19th, 2011A Management Fee is…
Thursday, May 19th, 2011A management fee is the compensation that investment fund managers get in exchange for constantly trying to make a fund profitable. The money for management fees comes from investors, who pay into the management fee pot every time they invest in a fund.
The amount of the fee is determined in different ways. Sometimes it is a fixed rate and sometimes it is a percentage based on the manager’s investing success. Sometimes it’s both!
A Windfall Profit is…
Thursday, May 19th, 2011A windfall profit is a big profit that you don’t expect. If you own a store and make a steady amount of profit every month, you probably expect that the next month you’ll keep making the same amount.
But if one month you bring in twice as much money as you normally do, then the unusually large profit is called a windfall profit. Windfall profits are unexpected and sometimes you don’t even know why they happened!
A Reverse Stock Split is…
Thursday, May 19th, 2011A reverse stock split is when a company adjusts the number of shares they have available to artificially increase the price per share. Technically, the shareholders don’t lose or gain any money when this happens, but the company buys itself some time to rebound from an economic drop.
The easiest way to explain reverse stock splits is with an example. Let’s say you own 100 shares of Apple stock, each worth $10. (For the record, AAPL is nowhere near that cheap in real life.) Unfortunately, Apple is suddenly hit hard by the recession – nobody’s buying iThings anymore – and the price of their stock falls to $0.50.
Apple knows that if their stock price remains under $1 for 30 days, it may be delisted from the NYSE. So in order to increase the price per share, Apple asks for a 10 to 1 reverse stock split. Suddenly, instead of having 100 shares worth $0.50 each, you have 10 shares worth $5 each.
In order to get from $0.50 to $5, you have to multiply $0.50 by 10. Imagine smooshing 10 of your $0.50 shares into one big ball of shares. Instead of 10, you now have one. And that one is worth $5.
You haven’t lost a penny. But Apple has just saved itself from being delisted.
A Keogh Plan is…
Thursday, May 19th, 2011A Keogh plan (named after U.S. Representative Eugene Keogh) is a type of tax-deferred retirement plan specifically for small businesses or people who are self-employed. It allows you to set aside a certain amount from your income before it is taxed, so that you can rack up savings while saving money on your taxes today. Meanwhile, you’re accumulating the cash you’ll need when you stop working in the future.
The plan is tax-deferred, not tax-free, so you will eventually have to pay Uncle Sam when you start withdrawing that money.
An Intangible Asset is…
Thursday, May 19th, 2011An intangible asset is an asset that a company owns even though it isn’t a physical thing – you can’t see it, touch it or measure how much of it you have, but it does have value. For example, an idea (also known as intellectual property) is an intangible asset because no matter how good an idea it is, it’s just a thought until you do something to turn it into a physical reality.
Accounts Receivable is…
Wednesday, May 18th, 2011Accounts receivable (A/R) is an accounting term that refers to money someone owes to a store or business. If you buy something from a store, but don’t pay them right away – the amount that you owe goes into the store’s accounts receivable record.
Most large companies have an entire accounts receivable department that is solely focused on keeping track of money owed to the company.
Accounts Payable is…
Wednesday, May 18th, 2011Accounts payable (A/Ps) is an accounting term that refers to money owed by a person or business to another person or business.
For example, if an office has bottled water delivered each week but doesn’t pay for it until the end of the month, the charge goes into accounts payable until the check is written. Employee paychecks also fall into the category of accounts payable until they are actually given out to employees.
An Intermediary is…
Monday, May 16th, 2011An intermediary is someone who connects people who want to borrow money with people who are willing to lend money. It’s sort of like being a financial matchmaker – your job is to figure out who goes together best.
Sunk Costs are…
Monday, May 16th, 2011Sunk costs are costs that you can’t undo or get out of. So let’s say that you have a beat-up, old car and there’s no way anybody would buy it from you. The amount that you spent on that car would be a sunk cost, because you already spent it and you can’t get your money back.