Dr. Harvey's Financial Glossary

Tuesday, March 16, 2010

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E: Fifth letter of a NASDAQ stock symbol specifying that an issue has not met the reporting date for the company's SEC regulatory filing requirements.
Each way: A broker's commission from his or her involvement on both the purchase and the sale side of a security.
EAFE index: See: European Australian and Far East index
Early distribution: See: Premature distribution
Early Exercise (assignment): The exercise or assignment of an option contract before its expiration date.
Early withdrawal: See: Premature distribution
Early withdrawal penalty: Penalty paid by the holder of a fixed-term investment penalizing an investor who withdraws money before the agreed-upon maturity date.
Earned income: Compensation earned from employment, which includes wages, salary, tips, and compensation.
Earned income credit: A tax credit for taxpayers with children.
Earned surplus: See Also: Retained earnings
Earnest money: Money given to a seller by a buyer to demonstrate the buyer's good_faith_deposit. If the deal falls through, the deposit is usually forfeited.
Earning asset: An asset that generates income, e.g., income from rental property.
Earning power: Earnings before interest and taxes (EBIT) divided by total assets.
Earnings: Net income for the company during a period.
Earnings before interest after taxes (EBIAT): A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest plus cash income tax. Equivalent to EBIT minus cash taxes.
Earnings before interest and taxes (EBIT): A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income tax.
Earnings before interest, taxes, and depreciation (EBITD): A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income tax. Depreciation expenses are not included in the costs.
Earnings before interest, taxes, depreciation, and amortization (EBITDA): A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income tax. Depreciation and amortization expenses are not included in the costs.
Earnings before taxes (EBT): A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of income taxes.
Earnings momentum: An increase in the earnings per share growth rate from one reporting period to the next.
Earnings per share (EPS): A company's profit divided by its number of common outstanding shares. If a company earning $2 million in one year had 2 million common shares of stock outstanding, its EPS would be $1 per share. In calculating EPS, the company often uses a weighted average of shares outstanding over the reporting term. The one-year (historical or trailing) EPS growth rate is calculated as the percentage change in earnings per share. The prospective EPS growth rate is calculated as the percentage change in this year's earnings and the consensus forecast earnings for next year.
Earnings response coefficient: A measure of relation of stock returns to earnings surprises around the time of corporate earnings announcements.
Earnings retention ratio: Plowback rate.
Earnings surprises: Positive or negative differences from the consensus forecast of earnings by institutions such as First Call or IBES. Negative earnings surprises generally have a greater adverse effect on stock prices than a reciprocal positive earnings surprise.
Earnings yield: The ratio of earnings per share, after allowing for tax and interest payments on fixed interest debt, to the current share price. The inverse of the price-earnings ratio. It is the total twelve months earnings divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is shown in percentage terms. We often look at earnings yield because this avoids the problem of zero earnings in the denominator of the price-earning ratio.

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