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Tuesday, July 8, 2008

Researching Financial Terminology for Financial Earnings Calls

In many ways, financial/investing terminology is a language all to itself. Reading financial earnings calls transcripts or press releases is a good practice that helps you develop your understanding of these terms, but chances are you will still come across some that you haven't used before for at least your first few earnings call seasons. In these situations, it's important to know what you DON'T know so that you can research anything that is at all unfamiliar.

For example, a speaker may say what sounds like "S. G. N. A.," but what they're really referring to is SG&A, which is selling, general and administrative expenses.

Another example of an acronym that has a misleading pronounciation is CAGR, or compound annual growth rate, which is not prounounced as "C. A. G. R." but rather as "kay-ger."

Others include:

  • ARPU (which, by the way, I love to say!), average revenue per user, or "ar-poo"
  • EBITDA, earnings before interest, taxes, depreciation and amortization, or "ee-bit-ah"
  • GAAP or non-GAAP, generally accepted accounting principles, or "gap"
There are many, many more of these acroynms that are not necessarily easy to decipher when spoken, so you'll want to use the context and the common terms list at the end of this post to help you figure out the terminology used.

The following sites all offer comprehensive, searchable databases as well:
Investor Words
Yahoo! Finance

Finally, here is a list of terminology. Please note that this list is not comprehensive, but it does cover a lot of the most common terms. I hope to continue adding definitions to the list for your reference, but having the correct term in front of you is more than half the battle!

Terms/Acronyms Definition
accrual, accretive, accrue growing in size
ADR American Depository Receipt
ANDA (ay en dee ay) abbreviated new drug application
annualized financial figurextrapolate a value for a given time period to reflect a full year value
antigens (medical term)
AP accounts payable
apples-to-apples to compare like values
ARPU (ar poo) average revenue per user
APR annual percentage rate
ASP average selling price
AR accounts receivable
B2B business to business
backwardationwhen futures prices are lower in the long term than the near term
Big Pharma, pharma short form for pharmaceutical companies
BOE barrel of oil equivalent
book-to-bill ratio (semiconductor industry)
BP basis point
BPD barrels per day
buy side/sell side analyst coverage of stocks
CAGR compound annual growth rate
CapEx capital expenditures
cath lab (medical term)
churn rate of customer attrition
CLEC (see-lek)(telecom) competitive local exchange carrier
COGS cost of goods sold
comp, comps, comp store sales
contango upward sloping forward curve in the futures market
covenant loan agreement
CRM customer relationship management
de novo financial reports of a new/young company
DSOs days sales outstanding
EAFE Europe and Australia Far East Equity Index
EBITDA, EBIT, EDITDAX (ee bit uh) earnings before interest, depreciation and amortization
EITF (accounting standards) Emerging Issues Task Force
EMEA Europe, Middle East and Asia
EPS earnings per share
ETA/ETD estimated time of arrival/departure
fab, wafer fab short for fabrication
FAS 142, FAS 143 financial accounting standard
FASB 123(R), FAS 123(R)
FASB Financial Accounting Standards Board
FDA Food and Drug Administration
FERC (ferk) Federal Energy Regulatory Commissions
FFO funds from operations
FICO credit score
FIFO first in, first out
FIN (financial standard)
First Call analyst reference
follow-up additional question
Form 10-K, 8-K 10-Q SEC forms
free cash flow
FX foreign exchange
GAAP, non-GAAP (gap) generally accepted accounting principles
FY fiscal year
GM gross margin
HMO health management organization
ILEC (eye-lek)
in vivo
IPO initial public offering
JV joint venture
LIBOR London Interbank Offered Rate
LIFO last in, first out
LOE lease operating expenses
LY, HY, FY, FY '04 last year, half year, full year, full year ‘04
M&A mergers and acquisitions
Mcfe (resource sector term)
MD&A management discussion and analysis
metric, metrics
Mmbtu (exploration) one million British thermal units
NAREIT board governing REITs
NDA new drug application
NOI net operating income
NYMEX New York Mercantile Exchange
OEM original equipment manufacturer
OpEx operating expenses
OPM original product manufacturer
P/E price/earnings (ratio)
P&L or P/L profit and loss
pharmacokinetics, pharmacogenomics
Phase I, II, III, IIa clinical trials on medical/pharma calls
pari passu
Private Securities Litigation Reform Act
pro forma
protease inhibitor
puts, swaps, calls stock trading terms
Q1, Q2, Q3, Q4, Q4 '04, Q2 '03 1st quarter, 2nd quarter, etc.
QA quality assurance
Q abbreviation for Form 10-Q
queue line up, as in queue for Q&A period
R&D research and development
ramp up
Regulation FD, Reg FD
REIT (reet) real estate investment trust
RevPAR revenue per available room
ROA return on assets
ROE return on equity
ROI return on investment
ROIC return on invested capital
run rate
S&P Standard & Poor's
SAC subscriber acquisition costs
Safe Harbor provisions
Sarbanes-Oxley Act, SOX, SarbOx
SEC Securities and Exchange Commission
SG&A, G&A selling, general and administrative costs
share repurchase
Six Sigma
SKU (skew) stock keeping unit
spend (noun) the amount spent
spud (oilfield term)
stent, shunt
stock buy-back
TBA/TBD to be announced/determined
the Street (the City in the UK) the analyst community
The Patriot Act
top line, bottom line
tranche, traunche
true up
turnkey system
turns (inventory)
VoIP Voice over Internet Protocol
YTD year to date

1 Comment:

craftymom said...

I want to thank you for listing these definitions!

I recently started doing some contract work for an IR company and have no experience in transcription other than medical, so this is very helpful for me!

I look forward to exploring your site in more depth over time.