Plain Language
Investing Glossary
Every piece of jargon, explained the way you'd tell a curious friend.
P/E Ratio
Price ÷ Earnings per share. How many rupees you pay for every ₹1 of annual profit. A P/E of 25 means you pay ₹25 for ₹1 of yearly earnings.
P/B Ratio
Price ÷ Book value. Compares the share price to the company's net assets on paper.
EPS
Earnings Per Share — the company's annual profit divided by its number of shares. The profit your single share 'earned'.
ROE
Return on Equity — profit as a % of shareholders' money. ROE 18% means the company earned ₹18 on every ₹100 of owners' capital.
ROCE
Return on Capital Employed — profit as a % of ALL money in the business (owners' + borrowed). The cleanest test of how well a business uses money.
OPM
Operating Profit Margin — how many paise of every rupee of sales survive as operating profit, before interest and tax.
EBITDA
Profit before interest, tax, depreciation and amortisation — a rough measure of the cash the core business generates.
D/E Ratio
Debt ÷ Equity. How much the company has borrowed for every rupee of its own. Below 1 is generally comfortable.
Interest Coverage
Operating profit ÷ interest cost. How many times over the company can pay its loan interest. Higher is safer.
Free Cash Flow
Cash from operations minus money spent on equipment/expansion. The cash truly left over — the hardest number to fake.
CFO/PAT
Operating cash flow ÷ reported profit. Near 1 means profits arrive as real cash; far below 1 is a red flag.
Market Cap
Share price × total shares — the price tag of the whole company on the market today.
Dividend Yield
Annual dividend as a % of the share price — the cash payout you receive just for holding.
Book Value
What the company would be worth on paper if it sold everything and paid all debts, per share.
EMA
Exponential Moving Average — an average price line that reacts faster to recent prices. Crossovers of short and long EMAs signal trend changes.
RSI
Relative Strength Index (0–100) — momentum gauge. Above 70 often means overbought, below 30 oversold.
Support
A price level where a falling stock has repeatedly found buyers and bounced.
Resistance
A price level where a rising stock has repeatedly met sellers and stalled.
Futures
A contract to buy/sell at a fixed price on a future date. Leveraged — gains AND losses multiply. Hedging tool first.
Options
The RIGHT (not obligation) to buy (call) or sell (put) at a set price before expiry. Premium is the price of that right.
Call Option
The right to BUY at a fixed price. Gains value when the underlying rises.
Put Option
The right to SELL at a fixed price. Gains value when the underlying falls — portfolio insurance.
Theta
How much an option loses in value every day just from time passing. Option buyers fight theta; sellers earn it.
Hedging
Taking an opposite position (often via options) to limit losses if the market moves against you — insurance, not speculation.
NAV
Net Asset Value — the per-unit price of a mutual fund, calculated daily from the value of everything it holds.
SIP
Systematic Investment Plan — investing a fixed amount every month, which averages your buying price across market ups and downs.
Expense Ratio
The annual fee a mutual fund charges, as a % of your money. Lower means more of the return stays yours.
Stop Loss
A pre-decided exit price that caps your loss on a position. Discipline written down before emotion takes over.
LTP
Last Traded Price — the price at which the most recent trade in the stock happened.
F&O
Futures & Options — the derivatives segment. SEBI's study found ~91% of individual F&O traders lose money; experience first.
Educational only — not investment advice. · Trade Encore · SEBI RA INH000009269