| Overview | Investing Options | Research Basics| Types of Orders |
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Savvy investors keep track of what is going on in the financial world.
The Internet, newspapers, magazines, business periodicals, television and radio news broadcasts and stock tickers and tables provide easy access to information about the economy and the stock market - whether it's up or down, and what that might mean.
Additional information about a specific company can be found online and in a company's annual report.
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| Indexes |
If someone says, “stock prices rose” or “the market was up,” they're generally referring to an index. A stock index is a specific group of stocks. Whether its value is up or down reflects the combined price movements of all of the stocks in the index.
The stock market reports its moves through a variety of indexes because no single index tells investors everything they need to know.
Widely cited indexes include:
- Dow Jones Industrial Average, which tracks the stock prices of 30 key “blue-chip” companies;
- Standard & Poor's 500 - commonly referred to as the S&P 500 - which combines the stock prices of 500 large company stocks; and
- NYSE Composite Index, which includes all common stocks traded on the New York Stock Exchange
The NYSE Composite Index is the only major measure that reflects the whole NYSE market. It's supplemented by separate indexes for four industry groups: industrial, transportation, utility, and finance. |
| Annual Reports |
To get an idea of a company's financial health, review its annual report.
The report contains detailed information about the company's financial condition and management policies, and can help investors decide whether to buy or sell a stock and how to vote at the annual shareholders' meeting.
Each NYSE-listed company is required to send an annual report to all its shareholders. Current annual reports are easily obtained. Just contact the company and request one. Also, many companies post their most recent annual report on their website in a format suitable for downloading and printing.
Most annual reports include:
- Balance sheet;
- Statement of income and retained earnings;
- Statement of changes in financial position; and
- Accountant's report
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| Balance Sheet |
The balance sheet is a summary of a company's assets and liabilities. It offers a snapshot of the company's financial health at a specific point in time. Data from the end of the current year is compared to the same data from the previous year so that investors can note changes and attempt to analyze the company's performance.
Balance sheets are comprised of three sections: Assets, liabilities and stockholders' equity. The assets side of the ledger must equal or “balance” the liabilities section plus the shareholder's equity section.
Assets. The first section lists all the company's assets, or resources. For example, a company that makes cellular phones might list as its assets cash, accounts receivable (money other companies owe it), inventories (all the finished cell phones, plus all the supplies used to make the phones such as plastic and electronic parts), the cell phone factory itself, the land the factory is built on, and the machines in the factory.
Liabilities. The second section lists liabilities, or debts. The same cell phone company might list as liabilities its accounts payable (money it owes for cell phone supplies and other services), unpaid wages, outstanding loans, taxes, and the dividends it will pay to shareholders. The liabilities section also includes shareholders' equity, the value of all the stock owned by shareholders. This section lists the value of the company's preferred and common stock, the money made from selling stock, and the profits that have been reinvested in the company.
Stockholders' equity. The third section lists stockholders' equity, which is also called the net worth of a company. It is not a tangible amount of money stored in a bank, but the value of all the shareholder investment in the company. |
| Statement of Income and Retained Earnings |
If the balance sheet is a snapshot of the company's finances at a single moment, the income statement is more like a movie. It links together several balance sheets and shows the company's financial performance over the period of a month, a quarter, or even several years.
The income statement tallies up all income, subtracts expenses, and shows how much money is left to reinvest in the company. It compares that number over a period of time. The desirable trend is when a company is taking in more money than it is spending and is investing in growth. |
| Statement of Changes in Financial Position |
| This statement deals with working capital - money used on daily operations of the company. The statement, which may compare several years, shows how much working capital was available, and how it was spent. |
| Accountant's Report |
Every annual report includes a report from an independent accountant. The accountant's report usually says that the annual report is a truthful reflection of the company's finances and that it was compiled in compliance with normal auditing standards and accounting practices.
The accountant will note if the annual report fails to meet one of these standards. |
| Stock Ticker and Tables |
One way to get a stock quote during the day is to look at a stock ticker on the Internet.
The ticker is a telegraphic system that provides the last sale prices and volume of securities transactions on exchanges. It is continually updated and lists the price at which the most recent trade took place in that stock. |
| Online |
Investors can download a stock tape to run continuously on their computers while connected to the Internet. Alternatively, many web sites have tickers.
To get more information than just the price, use the symbol lookup or listed company directory on nyse.com. Type in the company's name and information about the stock, including its current price and past performance, will be returned. The same information can be obtained by typing in the company's stock symbol. Every company that is traded on a securities market is assigned a unique stock symbol.
Nyse.com and other financial sites can also be used to track news stories, examine performance graphs, and get other information about a stock and its company. |
| Stock tables |
Basic stock information is available in the stock tables in the business section of the newspaper.
Stock tables break down what is happening at each company listed on the stock exchanges, including stocks, bonds, money market funds, and mutual funds.
Here is a sample stock table for a fictitious company called Future Comm.
| 52 Week |
| High |
Low |
Stock |
(Sym) |
Div |
Yld % |
P/E |
Sales 100s |
Close |
chg |
| 132.94 |
80.06 |
Fut Comm |
(FTC) |
$.56 |
.6 |
21 |
100927 |
96.47 |
-.12 |
52-weeks Hi/Lo. The highest and lowest prices paid for Future Comm stock during the past year. Knowing the past year's high and low can help an investor evaluate a stock's current price.
Stock. The name of the company.
Sym. The stock's trading symbol. Every stock that is traded on a securities market is assigned a symbol. Some newspapers do not provide the stock's trading symbol but instead provide an abbreviation of the company's name.
Div. Short for dividend. For each share of stock owned, a Future Comm shareholder should receive 44 cents from the company's annual profits. Payment is usually made on a quarterly basis.
Yld. The yield, or the rate of return, on a stockholder's investment. It is calculated by dividing the annual dividend by the current price of the stock. Future Comm stockholders earn .6 percent of today's stock price from dividends.
PE. Short for price/earnings ratio. The price of a share of stock divided by the company's earnings per share for the last year.
Vol 100s. The total amount of stock traded during the previous day. On that day, 10,092,700 shares of Future Comm stock changed hands. The number does not include “odd lots,” which are sales of less than 100 shares.
Close. The last price paid for this stock at the end of the previous day was $96.47.
Net Chg. The last price on the previous day, $96.47, was 12 cents less than the last price on the preceding day.
In addition to the standard abbreviations, stock tables often include other symbols indicating a variety of factors, such as stock splits, dividend changes, first day of trading, new 52-week hi or lo, warrants, and many other relevant conditions. |
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