How to understand the financial papers

September 22, 2014

11840013_sSometimes reading the financial pages of your daily newspaper is like trying to understand a foreign language! To help you understand the financial papers and make sense of it all, we’ve explained what each column heading means.

ASX Code:
A code of at least three letters given by the Stock Exchange to each listed company. This code is expanded to identify securities other than ordinary shares.

Company Name and Par Value:
This company name is the official stock exchange abbreviation, not the full legal company name. Par value is the nominal value given to the company’s shares, most commonly 50c or $1.

Last sale:
This is the last sale price of the stock. It is worth noting that for smaller companies the sale may have been several days or more in the past.

+ or -:
This shows if there has been any price variation on the day. It is quoted in cents per share and if there has been no change or no sale, it is left blank.

Vol 100’s:
The turnover figure showing the number of shares sold in multiples of 100. From Tuesday to Friday the figure is for the previous day’s activity but on Monday it shows the total for the entire previous week.

Quote – Buy / Sell:
The buy and sell are the closing buyer and seller quotes. The buy quote is the highest price that prospective buyers are bidding for a stock. The sell quote is the lowest price sellers are willing to accept in the market.

Dividend yield %:
This is the theoretical return on an investment if shares are purchased on the sharemarket at the prevailing price. It is calculated by multiplying the dividend (in cents per share) by 100 and dividing this by the market price of the shares (in cents per share).

EPS (Earnings per share)
This is the profit per share that the company has earned. This is shown in cents per share, and is based on the company’s last full year’s profit.

P/E ratio (Price/Earnings ratio):
The price/earnings ratio shows the number of times the market price exceeds the earnings per share. It is calculated by taking the current share price and dividing it by the ‘per share’ earning rate.

The information in the last two columns gives an indication of the sharemarket assessment of a company’s performance.

A final word of warning

Try not to get into the habit of stock watching (checking your stocks every day). It can take all the fun out of investing for the long term. Timeframe is one factor which can constitute the difference between ‘speculation’ and ‘investment’. If you must check your share market values more frequently than quarterly, obtain a price chart which provides a pictorial view of medium-to-long-term price trends. It will put things into better perspective.

Our financial advisors and accountants are available to discuss any questions you may have regarding financial planning and the day to day terms used in the financial papers.
Call (02) 4926 2300 or email us.

Disclaimer

If you would like more information on how to better understand financial papers, please contact our team at Leenane Templeton.

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