Every finance word, made simple.
From PAT and EBITDA to DCF, IRR and term sheets. Plain-English meaning, the formula, a worked example and why it matters.
106
detailed terms
14
categories
3
levels
Browse by category
Each category has its own link to share.
Investing
Compounding, returns and how long-term wealth is built.
10 termsStock Market
Indices, market cap and how exchanges work.
4 termsTrading
Orders, risk control and short-term market mechanics.
5 termsTechnical Analysis
Charts, trends and price patterns.
3 termsFundamental Analysis
Ratios that judge a company's quality and value.
5 termsMutual Funds
NAV, SIPs, expense ratios and fund types.
5 termsIPO
How companies list and how issues are priced.
3 termsBonds
Yields, coupons and fixed income basics.
1 termPersonal Finance
EMIs, credit scores and everyday money decisions.
3 termsTax
Capital gains, TDS and how investments are taxed.
2 termsEconomics
Inflation, GDP and interest rates.
3 termsFinancial Statements
Balance sheet, P&L and cash flow: PAT, EBITDA, margins and ratios.
24 termsInvestment Banking
M&A, DCF, WACC, EV and how deals are valued and raised.
24 termsPrivate Equity & VC
Funds, term sheets, IRR, MOIC and start-up rounds.
14 terms106 terms
A
Absolute Return
The total percentage gain or loss on an investment, ignoring how long it took.
Read definition →Accretion / Dilution Analysis
Checking whether a deal raises or lowers the buyer's earnings per share.
Read definition →AIF
Alternative Investment Fund
A SEBI-regulated pooled fund in India for private equity, venture capital, hedge funds and similar strategies.
Read definition →Alpha
The return a portfolio earned beyond what its risk level and benchmark explain.
Read definition →Anchor Investor
A large institutional investor allotted IPO shares a day before the issue opens to the public.
Read definition →Angel Investor
An individual who invests personal money in early-stage start-ups.
Read definition →Asset Allocation
How your money is split between equity, debt, gold, cash and other asset classes.
Read definition →Assets
Everything a company owns or controls that is expected to bring future benefit.
Read definition →AUM
Assets Under Management
The total market value of all the money a fund or manager currently manages.
Read definition →B
Balance Sheet
A snapshot of what a company owns, what it owes, and what is left for owners.
Read definition →Benchmark
The index a portfolio is compared against to judge whether it performed well.
Read definition →Beta
How much a stock or fund tends to move when the market moves.
Read definition →Bid-Ask Spread
The gap between the highest price buyers offer and the lowest price sellers accept.
Read definition →Bond Yield
The return a bond gives at its current market price, not its face value.
Read definition →Book Building
The process of discovering an issue price by collecting investor bids within a price band.
Read definition →C
CAGR
Compound Annual Growth Rate
The steady yearly rate that would take an investment from its start value to its end value.
Read definition →Candlestick
A chart bar showing the open, high, low and close for one time period.
Read definition →Capex
Capital expenditure
Money spent on buying or upgrading long-term assets like plants and machinery.
Read definition →Capital Gains Tax
Tax on the profit made when you sell an asset for more than you paid.
Read definition →CAPM
Capital Asset Pricing Model
A formula to estimate the return shareholders expect, based on market risk.
Read definition →Carried Interest
Carry
The share of a fund's profits paid to the managers, typically around 20%.
Read definition →Cash Flow Statement
The report showing actual cash coming in and going out, split into operating, investing and financing.
Read definition →Comparable Company Analysis
Trading comps
Valuing a company by comparing it with similar listed companies' multiples.
Read definition →Compound Interest
Interest earned on your original money and on the interest it has already earned.
Read definition →Control Premium
The extra amount a buyer pays above the market price to gain control of a company.
Read definition →Cost of Goods Sold
COGS
The direct cost of making the products a company sold in the period.
Read definition →Credit Rating
An independent opinion on how likely a borrower is to repay its debt on time.
Read definition →Credit Score
A three-digit number summarising how reliably you have repaid borrowings.
Read definition →Current Ratio
Current assets divided by current liabilities: a test of short-term liquidity.
Read definition →D
Debt Capital Markets
DCM
The team that helps companies and governments raise money through bonds.
Read definition →Debt-to-Equity Ratio
D/E
Total borrowings divided by shareholders' equity.
Read definition →Demat Account
An electronic account that holds your shares and securities in digital form.
Read definition →Depreciation & Amortisation
D&A
The yearly charge that spreads the cost of long-lived assets over their useful life.
Read definition →Dilution
The fall in existing owners' percentage stake when new shares are issued.
Read definition →Discounted Cash Flow
DCF
Valuing a business as the present value of the cash it will generate in future.
Read definition →Diversification
Spreading money across different assets so no single failure can sink the portfolio.
Read definition →Dividend Yield
The annual dividend expressed as a percentage of the current share price.
Read definition →Drawdown
The fall from a portfolio's peak value to its lowest point before a new peak.
Read definition →DRHP
Draft Red Herring Prospectus
The draft offer document a company files with SEBI before an IPO.
Read definition →Due Diligence
A detailed investigation of a business before a deal is signed.
Read definition →E
EBIT
Operating profit
Profit from operations before interest and tax.
Read definition →EBITDA
Earnings Before Interest, Tax, Depreciation and Amortisation
Operating profit before interest, tax and non-cash depreciation charges.
Read definition →Emergency Fund
Cash set aside to cover several months of essential expenses if income stops.
Read definition →EMI
Equated Monthly Instalment
The fixed monthly payment that repays a loan's interest and principal over its tenure.
Read definition →Enterprise Value
EV
The value of a whole business to all its investors, lenders and shareholders.
Read definition →EPS
Earnings Per Share
The company's net profit divided across each outstanding share.
Read definition →Equity Capital Markets
ECM
The team that helps companies raise money by issuing shares.
Read definition →ESOP
Employee Stock Option Plan
A plan that gives employees the right to buy company shares at a fixed price in future.
Read definition →ETF
Exchange-Traded Fund
A basket of securities that trades on the stock exchange like a single share.
Read definition →EV/EBITDA
Enterprise value divided by EBITDA: the most common deal valuation multiple.
Read definition →Expense Ratio
The annual percentage of your investment that a fund charges to run the scheme.
Read definition →G
GDP
Gross Domestic Product
The total value of all goods and services produced in a country in a period.
Read definition →General Partner & Limited Partner
GP / LP
The GP manages a fund; LPs are the investors who provide most of the money.
Read definition →Grey Market Premium
GMP
An unofficial, unregulated price at which IPO shares trade before listing.
Read definition →Gross Margin
The share of revenue left after paying the direct cost of goods sold.
Read definition →I
Income Statement
Profit & Loss statement
The report that shows a company's revenue, expenses and profit over a period.
Read definition →Index Fund
A fund that simply copies an index such as the NIFTY 50 instead of picking stocks.
Read definition →Inflation
The general rise in prices that reduces what each rupee can buy.
Read definition →Interest Coverage Ratio
How many times operating profit covers interest payments.
Read definition →Inventory
Raw materials, work in progress and finished goods a company holds for sale.
Read definition →Investment Banking
Advisory and capital-raising services for companies, governments and investors.
Read definition →IPO
Initial Public Offering
The first time a private company sells its shares to the public and lists on an exchange.
Read definition →IRR
Internal Rate of Return
The annual return that makes the present value of all cash flows equal zero.
Read definition →L
Leverage
Using borrowed money to increase the potential return on your own capital.
Read definition →Leveraged Buyout
LBO
Buying a company using a large amount of borrowed money, repaid from its own cash flows.
Read definition →Liabilities
Everything a company owes to outsiders.
Read definition →Liquidation Preference
An investor's right to get their money back before others when the company is sold or wound up.
Read definition →Liquidity
How quickly you can convert something into cash without moving its price.
Read definition →M
Market Capitalisation
Market Cap
The total value the market places on a company's shares.
Read definition →Mergers & Acquisitions
M&A
Combining companies, or one company buying another.
Read definition →MOIC
Multiple on Invested Capital
How many times the original investment was returned.
Read definition →Moving Average
The average closing price over the last N sessions, recalculated each day.
Read definition →N
NAV
Net Asset Value
The per-unit price of a mutual fund, published at the end of each trading day.
Read definition →Net Debt
Total borrowings minus cash and cash equivalents.
Read definition →Net Profit Margin
PAT margin
Net profit as a percentage of revenue.
Read definition →NIFTY 50
India's benchmark index of 50 large companies listed on the NSE.
Read definition →P
P/B Ratio
Price-to-Book Ratio
Share price compared with the accounting net worth behind each share.
Read definition →P/E Ratio
Price-to-Earnings Ratio
How many rupees you pay for every rupee of a company's annual profit.
Read definition →PAT
Profit After Tax, Net profit
The profit left for shareholders after every expense, interest and tax.
Read definition →PBT
Profit Before Tax
Profit after all expenses and interest, but before income tax.
Read definition →Pitch Book
The presentation a bank prepares to win a deal mandate from a client.
Read definition →Pre-money & Post-money Valuation
A start-up's value just before and just after new investment comes in.
Read definition →Precedent Transaction Analysis
Deal comps
Valuing a company using multiples paid in past acquisitions of similar firms.
Read definition →Private Equity
PE
Investment in companies that are not listed, usually taking a large stake to improve and later sell them.
Read definition →R
Repo Rate
The rate at which the RBI lends short-term money to commercial banks.
Read definition →Revenue
Top line, Turnover
Money a company earns from selling its goods or services, before any costs.
Read definition →ROCE
Return on Capital Employed
Operating profit earned on all the capital a business uses, debt and equity together.
Read definition →ROE
Return on Equity
How much profit a company generates on every rupee of shareholders' money.
Read definition →S
Seed Funding
The first formal money a start-up raises to build its product.
Read definition →Shareholders' Equity
Net worth, Book value
What would be left for owners if all assets were sold and all liabilities paid.
Read definition →SIP
Systematic Investment Plan
Investing a fixed amount in a mutual fund at fixed intervals, usually monthly.
Read definition →Stop-Loss
A pre-set order that exits a position once the price hits your maximum acceptable loss.
Read definition →Support and Resistance
Price zones where buying or selling has repeatedly turned the trend before.
Read definition →Synergies
Extra value created when two companies combine, through cost savings or higher revenue.
Read definition →T
TDS
Tax Deducted at Source
Tax withheld by the payer and deposited with the government on your behalf.
Read definition →Term Sheet
A short, mostly non-binding document listing the key terms of an investment.
Read definition →Terminal Value
The value of all cash flows beyond the explicit forecast period in a DCF.
Read definition →V
W
Quick glossary
Shorter definitions for other common finance terms.
- Asset
- Anything of economic value that can produce income or grow in value.
- Amortization
- Gradual repayment of a loan through scheduled installments.
- Annuity
- A series of equal payments made at regular intervals.
- APR
- Annual Percentage Rate the yearly interest cost of a loan including fees.
- Arbitrage
- Simultaneous buying and selling to profit from a price difference between markets.
- Bear Market
- A market that has fallen 20% or more from its recent high.
- Blue Chip
- Large, established, financially sound companies with a history of reliable performance.
- Bond
- A debt instrument where the issuer pays interest and returns principal at maturity.
- Book Value
- Net asset value of a company (assets minus liabilities).
- Bull Market
- A market marked by sustained rising prices.
- Capital Gain
- Profit from selling an asset for more than its purchase price.
- Cash Flow
- Net amount of cash moving in and out of a business.
- Circuit Breaker
- Automatic trading halt triggered by extreme market moves.
- Commodity
- A raw material (gold, oil, wheat) traded on exchanges.
- Convertible Bond
- Bond that can be converted into a fixed number of company shares.
- Correction
- A short-term decline of 10%+ in a market from recent highs.
- Coupon
- The periodic interest payment made by a bond.
- Currency Risk
- The risk that foreign exchange rate movements reduce returns.
- Debt-to-Equity
- Ratio comparing a company's total debt to shareholders' equity.
- Deflation
- A general decline in prices, opposite of inflation.
- Depreciation
- Accounting method to allocate the cost of an asset over its useful life.
- Derivative
- A contract whose value depends on an underlying asset (futures, options).
- Dividend
- Portion of profit paid to shareholders.
- DMA
- Direct Market Access placing trades directly on an exchange.
- Equity
- Ownership interest in a company, represented by shares.
- FD
- Fixed Deposit a savings product with a fixed interest rate and tenure.
- Federal Reserve
- The central bank of the United States.
- Fiat Currency
- Government-issued currency not backed by a physical commodity.
- Financial Statement
- A formal record of financial activities (income, balance sheet, cash flow).
- Fiscal Deficit
- The gap between government expenditure and revenue in a year.
- Forex
- The foreign exchange market where currencies are traded.
- Fundamental Analysis
- Evaluating an investment based on financial and economic factors.
- Futures
- Contract obligating parties to buy/sell an asset at a set price and date.
- Growth Investing
- Focus on companies expected to grow earnings faster than the market.
- Hedge
- An investment made to reduce the risk of adverse price moves in another asset.
- Hedge Fund
- Pooled investment vehicle using diverse strategies, usually for accredited investors.
- Holding Period
- Length of time an investment is held.
- Index
- A statistical measure of a group of stocks (e.g., NIFTY 50, S&P 500).
- Interest Rate
- The percentage charged on borrowed money or paid on deposits.
- Intrinsic Value
- Perceived true value of an asset based on fundamentals.
- Junk Bond
- High-yield bond with a low credit rating and higher default risk.
- Large Cap
- Companies with a large market capitalization (typically top 100 by size).
- Liability
- A financial obligation or debt owed to others.
- Long Position
- Owning an asset expecting its price to rise.
- Market Cap
- Total value of a company's outstanding shares.
- Margin
- Borrowed funds from a broker used to buy securities.
- Maturity
- The date when a bond's principal is repaid.
- Mid Cap
- Companies with medium market cap, typically ranked 101–250.
- Mutual Fund
- Investment vehicle pooling money from many investors into a managed portfolio.
- Net Worth
- Total assets minus total liabilities.
- Nominal Return
- Return before adjusting for inflation.
- NPS
- National Pension System India's voluntary retirement savings scheme.
- Option
- Contract giving the right, not obligation, to buy/sell an asset at a set price.
- Options Chain
- List of all available option contracts for an underlying asset.
- Passive Investing
- Investing to match a market index rather than beat it.
- PPF
- Public Provident Fund long-term tax-saving savings scheme in India.
- Preferred Stock
- Shares with priority over common stock for dividends and asset claims.
- Principal
- The original amount borrowed or invested.
- Prospectus
- Legal document describing an investment offering.
- Quantitative Easing
- Central bank policy of buying assets to inject money into the economy.
- Rebalancing
- Adjusting portfolio weights back to target allocation.
- Real Return
- Return after subtracting inflation.
- Recession
- Two consecutive quarters of negative GDP growth.
- REIT
- Real Estate Investment Trust pools capital to own income-producing real estate.
- Risk Tolerance
- An investor's ability and willingness to withstand losses.
- SEBI
- Securities and Exchange Board of India India's markets regulator.
- Short Selling
- Selling borrowed assets hoping to buy back at a lower price.
- Small Cap
- Smaller companies ranked below 250 by market cap.
- Spread
- Difference between bid and ask price of an asset.
- Stagflation
- High inflation combined with stagnant economic growth.
- Stock Split
- Company increases share count by splitting existing shares.
- STP
- Systematic Transfer Plan periodic transfer between mutual funds.
- SWP
- Systematic Withdrawal Plan periodic withdrawals from a mutual fund.
- Technical Analysis
- Studying charts and price patterns to forecast future movement.
- Tenor
- The length of time until a bond or loan matures.
- Term Insurance
- Pure life insurance paying only on death within the policy term.
- Treasury Bill
- Short-term government debt with maturity up to one year.
- Underwriting
- Process of evaluating and pricing risk for insurance or securities.
- Unit Trust
- Pooled investment vehicle similar to a mutual fund.
- Valuation
- Estimating the worth of an asset or company.
- Value Investing
- Buying assets trading below their intrinsic value.
- Volume
- Number of shares/contracts traded in a period.
- Yield
- Income return on an investment, expressed as a percentage.
- Yield Curve
- Graph of bond yields across different maturities.
- Zero-Coupon Bond
- Bond that pays no periodic interest but is issued at a discount.

