Glossary of financial terms


Zodiac Aerospace glossary of financial terms: useful definitions for stock market terms.

 

Share

A share is a transferable variable-income security. It is a certificate of ownership issued to shareholders of a limited company and represents a share of the company’s capital.


French Market Regulator (AMF)

The body responsible for the supervision of all French financial markets. It has general authority over the protection of savings and oversight of the regularity of transactions and the quality of information provided by issuers. It defines the general principles for the organization of the markets, and the rules of conduct with which all parties are required to comply. It oversees public offers (takeover bids, exchange offers and squeeze-outs).
www.amf-france.org


Financial analyst

A finance professional working in a bank or brokerage firm who analyzes listed companies for investors. The financial analyst assesses the company’s environment, strategy, financial statements, and earnings outlook. Based on these elements, the analyst calculates the estimated earnings, generally over a three-year period.


General Meeting

A meeting to which the shareholders of a limited company are invited at least once a year, within six months of the financial year-end. In particular, it is required to approve the financial statements and elects members of the Supervisory Board. An Extraordinary General Meeting is convened to approve exceptional decisions (such as mergers and capital increases).


Treasury shares

Shares of its own capital held by the company. Treasury shares carry no voting right or dividend entitlement.


Earnings per share (EPS)

This is the company’s consolidated net profit divided by the weighted average number of shares outstanding in the relevant period.


CAC40 or CAC40 index

This is the leading index of the Paris stock market and it is composed of the 40 most active stocks. It is calculated from a base of 1,000 at December 31, 1987. It is weighted by the stock market capitalization of each of the companies included in it. Inclusion in the CAC 40 is decided by the Conseil Scientifique des Bourses de Valeur based on various criteria, including liquidity and the representative weight of the companies in economic terms. (CAC stands for Cotation Assistée en Continu or automated quotation.)


Market capitalization

The value of a company calculated by multiplying the number of shares comprising its capital by the stock price at a given moment.


Consolidation

An accounting method used to present the financial position of various companies of a group as if they were a single company. Accordingly, a group composed of several subsidiaries will present consolidated sales revenues or consolidated results.


Stock price

The stock price is the value in euros (for a stock listed in Paris) of the stock at a given moment. It is based on the match up of asks and bids (buy and sell orders).


Dilution

If the number of shares is increased (due to a capital increase or payment of the dividend in shares), the net earnings per share will decrease if the company’s overall result is constant. This is called the dilutive effect (its opposite is an accretive effect).


Dividend

A share in the earnings distributed to every shareholder in proportion to the number of shares held. This constitutes remuneration for the shareholders' invested capital. The amount of the dividend is subject to a vote at the General Meeting which is required to review and approve the financial statements for the year ended.


Voting right

Each ordinary share is entitled to a single vote. This offers the possibility of voting at Shareholders’ Meetings. When stipulated by the Bylaws, the voting right may be doubled for shareholders who hold their shares for two years or more. Preference shares and investment certificates have no voting right. The Zodiac Aerospace bylaws provide for a double voting right for regi