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Home >> Glossary > Thursday, July 24, 2014  


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Earnings after taxes (EAT)

Earnings Before Interest and Taxes (EBIT)

Earnings Per Share

Exchange

Exchange Rate

Exercise Price

Exotic currency

Expiration

Earnings after taxes (EAT). Accounting result for a company that does not have losses. This is the final quantity that can be distributed, either in the form of dividends or investments.

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Earnings Before Interest and Taxes (EBIT). A measure of a company's earning power from ongoing operations, equal to earnings before deduction of interest payments and income taxes. EBIT excludes income and expenditure from unusual, non-recurring or discontinued activities. In the case of a company with minimal depreciation and amortization activities, creditors watch EBIT closely, since it represents the amount of cash that such a company will be able to use to pay off creditors. Also called operating profit.

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Earnings Per Share. Total earnings divided by the number of shares outstanding. Companies often use a weighted average of shares outstanding over the reporting term. EPS can be calculated for the previous year ("trailing EPS"), for the current year ("current EPS"), or for the coming year ("forward EPS"). Note that last year's EPS would be actual, while current year and forward year EPS would be estimates.

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Exchange. Any organization, association or group, which provides or maintains a marketplace where securities, options, futures, or commodities can be traded; or the marketplace itself.

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Exchange Rate. Rate at which one currency may be converted into another. Also called rate of exchange or foreign exchange rate or currency exchange rate.

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Exercise Price. The specified price on an option contract at which the contract may be exercised, whereby a call option buyer can buy the underlier or a put option buyer can sell the underlier. The buyer's profit from exercising the option is the amount by which the spot price exceeds the exercise price (in the case of a call), or the amount by which the exercise price exceeds the spot price (in the case of a put). In general, the smaller the difference between spot and exercise price, the higher the option premium. Also called strike price.

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Exotic currency. Currency that does not have a large international market.

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Expiration. The date of payment of a financial obligation.

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