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EN 2139 - Media Management (O'Connor): Home

Library resources in the field of communication for Dr. O'Connor's course

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Terms and Definitions

Stock: A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.There are two main types of stock: common and preferred. 

Common stock: Usually entitles the owner to vote at shareholders' meetings and to receive dividends. 

Preferred stock: Generally does not have voting rights, but has a higher claim on assets and earnings than the common shares.

Outstanding: Used in the context of general equities. Stock held by shareholders (verses the company's treasury stock).

Market capitalization: The total dollar value of all outstanding shares. Computed as shares times current market price. Capitalization is a measure of corporate size.

Market value: (1) The price at which a security is trading and could presumably be purchased or sold. (2) What investors believe a firm is worth; calculated by multiplying the number of shares outstanding by the current market price of a firm's shares.

Value stocks: Stocks with low price/book ratios or price/earnings ratios. Historically, value stocks have enjoyed higher average returns than growth stocks (stocks with high price/book or P/E ratios) in a variety of countries.

Earnings per share (EPS): A company's profit divided by its number of common outstanding shares. If a company earning $2 million in one year had 2 million common shares of stock outstanding, its EPS would be $1 per share. In calculating EPS, the company often uses a weighted average of shares outstanding over the reporting term. The one-year (historical or trailing) EPS growth rate is calculated as the percentage change in earnings per share. The prospective EPS growth rate is calculated as the percentage change in this year's earnings and the consensus forecast earnings for next year.

Price earning ratio: Ratio for valuing a company that measures its current share price relative to its per-share earnings. For example, suppose that a company is currently trading at $43 a share and its earnings over the last 12 months were $1.95 per share.

Subject Guide

Karen Sheldon
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