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Glossary of Accounting, Financial & Investing Information - E

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Earnings per share (EPS)

Net earnings of the company divided by the total number of common shares outstanding.

Note that beginning in 2002, corporations are no longer required to amortize the cost of their intangible assets such as goodwill every year.  Intangible assets are recorded at cost on the balance sheet.  That cost must be reviewed annually to determine if its current value is less than cost, in which case the value would be written down on the balance sheet.  Due to this change in accounting rules,  corporate net earnings will be increased over prior years, as will earnings per share.

It is best to look at the history of a corporation's earnings per share for the past decade, which can usually be found in their annual report.  Most annual reports are available on the company's web site.

Analysts also predict the future earnings per share for corporations.  This information can be found on many investing web sites.

Earnings per share fully diluted

Net income of the company divided by the total number of common shares that would be outstanding if all convertible financial instruments (convertible debentures, convertible preferred shares, stock options, etc.) were converted into common shares.


Earnings before interest, taxes, depreciation and amortization.

Effective interest rate

See interest rates.

Enterprise value

The enterprise value of a corporation is calculated as its market cap plus debt and preferred shares, less cash and short term investments.  This value is also referred to as a theoretical takeover value.  

Consider a corporation with a market cap, or market value, of $100 million, which has no debt, but has $10 million in cash and short term investments.  In a takeover, the buyer would pay $100 million, but would then have the $10 million in cash, for a net cost of only $90 million.

Consider the same corporation, but this time it has $20 million in debt as well as the $10 million in cash.  The buyer would need an additional $20 million to pay off the debt, or else would have to pay interest on the debt.  Thus, the net cost would be $100 million, less $10 million, plus $20 million, or $110 million.


When a stock is sold ex-dividend, this means the purchaser is not entitled to the most recently announced dividend.

Ex-dividend date

The ex-dividend date is the first trading day on which the seller of the stock, not the purchaser, is entitled to the most recently announced dividend.  When the trade date is before the ex-dividend date, the purchaser is entitled to the dividend.  The ex-dividend date is two business days prior to the record date.  See also settlement date.

Exchange traded funds (ETFs)

ETFs are funds which hold shares of individual companies.  Index-linked ETFs have the goal of achieving the same return as a stock index, and they can help you diversify your investments among many different countries and industries.

The MER, or management expense ratio for ETFs is usually much lower than for mutual funds, and there are no front end or back end loads (fees) for ETFs.  They are traded like a stock, with brokerage commissions paid on the purchase and sale.  There are many types of exchange traded funds available, such as SPDRs (Standard & Poor Depositary Receipts, also known as Spiders), iShares, Diamonds, and others.

Revised: October 12, 2021

Copyright 2008 Boat Harbour Holdings Ltd.   See Reproduction of information on

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