Investments glossary terminology
The cash conversion cycle (CCC) is a metric that expresses the time (measured in days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Also called the Net Operating Cycle or simply Cash Cycle, CCC attempts to measure how long each net input dollar is tied up in the production and sales process before it gets converted into cash received.
The Ulcer Index (UI) is a technical indicator that measures downside risk in terms of both the depth and duration of price declines. The index increases in value as the price moves farther away from a recent high and falls as the price rises to new highs. The indicator is usually calculated over a 14-day period, with the Ulcer Index showing the percentage drawdown a trader can expect from the high over that period.
An interest rate swap is a forward contract in which one stream of future interest payments is exchanged for another based on a specified principal amount. Interest rate swaps usually involve the exchange of a fixed interest rate for a floating rate, or vice versa, to reduce or increase exposure to fluctuations in interest rates or to obtain a marginally lower interest rate than would have been possible without the swap.
An international depository receipt (IDR) is a negotiable certificate that banks issue. It represents ownership in the stock of a foreign company that the bank holds in trust. International depository receipts are also known as American Depository Receipt (ADR) in the U.S. ADRs represent stocks of quality issuers in a number of developed and emerging markets. In Europe, IDRs are known as Global Depository Receipts, and trade on the London, Luxembourg, and Frankfurt exchanges. IDR can also specifically refer to Indian Depository Receipts (IDRs).
A private equity firm buys all the stock in a troubled public company, thus taking the company private with the intention of revamping its operations and re-selling it at a profit. This process is called repackaging.
Net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted to account for depreciation and is calculated by subtracting depreciation from the gross domestic product (GDP).
Net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted to account for depreciation and is calculated by subtracting depreciation from the gross domestic product (GDP).
Illiquid refers to the state of a stock, bond, or other assets that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets may also be hard to sell quickly because of a lack of ready and willing investors or speculators to purchase the asset. Additionally, a company may be illiquid if it is unable to obtain the cash necessary to meet debt obligations. Illiquidity is the opposite of liquidity.
Open source refers to a program with source code that can be modified or enhanced by anyone. Open source grants users of an application permission to fix broken links, enhance the design, or improve the original code. Open source software (OSS) is an example of a kind of open collaboration that can broaden design perspectives far more than a single company or design work group. Open source practices can also lead to considerable savings.
Fundamental analysis (FA) is a method of measuring a security’s intrinsic value by examining related economic and financial factors. Fundamental analysts study anything that can affect the security’s value, from macroeconomic factors such as the state of the economy and industry conditions to microeconomic factors like the effectiveness of the company’s management.