Earnings Per Share (EPS) Earnings Per Share (EPS) measures a company’s profitability by dividing net income by the number of outstanding shares. In the UK, EPS is a crucial metric for investors to assess a company’s financial health. Higher EPS generally indicates better profitability, making it an essential factor in evaluating stock performance and investment returns.
Equity Equity represents ownership in a company, also known as shareholders’ equity. In the UK, equity is the residual interest in assets after liabilities are deducted. Investors buy equity in public companies through shares, seeking capital appreciation and dividends. Equity is a fundamental component of a balanced portfolio.
Exchange-Traded Fund (ETF) An Exchange-Traded Fund (ETF) is a fund that trades on stock exchanges like a regular stock, holding a basket of assets such as stocks, bonds, or commodities. In the UK, ETFs are popular due to their low costs, tax efficiency, and flexibility, providing investors with diversified exposure to various sectors and markets.
Ex-Dividend Date The ex-dividend date is the date on which a stock begins trading without the right to receive the declared dividend. In the UK, investors must own shares before the ex-dividend date to qualify for the dividend. Stocks often see slight price drops on the ex-dividend date, reflecting the payout.
Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) EBITDA measures a company’s operating performance by excluding non-operational expenses. In the UK, EBITDA is widely used by investors to compare companies within industries, as it provides insight into core profitability without the impact of capital structure, tax rates, and accounting policies.
Economic Moat An economic moat is a competitive advantage that allows a company to maintain profitability over time. In the UK, investors seek companies with strong moats—like brand reputation, patents, or network effects—as these companies are more likely to generate sustainable profits and withstand competitive pressures.
Exchange Rate Risk Exchange rate risk is the risk of loss due to fluctuations in currency exchange rates. UK investors with foreign investments face exchange rate risk, as changes in the pound’s value impact returns from international assets. Hedging strategies are often used to mitigate this risk in global portfolios.
Equity Financing Equity financing is the process of raising capital by issuing shares to investors. In the UK, companies use equity financing to fund expansion without incurring debt, though it can dilute existing shareholders’ ownership. Investors benefit from potential capital gains and dividends, though equity investments carry market risk.
Earnings Yield Earnings yield is the inverse of the price-to-earnings ratio, calculated as EPS divided by the stock price. In the UK, earnings yield is used to compare stock returns with bond yields, helping investors decide between stocks and fixed-income securities. Higher earnings yield indicates better value relative to price.
Emerging Market Emerging markets refer to economies in the early stages of development, offering high growth potential but increased volatility. In the UK, investors allocate to emerging markets to diversify portfolios and capture growth opportunities, though these investments are sensitive to political and economic instability.
Earnings Call An earnings call is a conference where a company’s management discusses quarterly or annual financial results with analysts and investors. In the UK, earnings calls are valuable for gaining insights into performance, strategic direction, and future outlook, providing key information that influences stock prices and investment decisions.
Equity Risk Premium The equity risk premium is the return investors expect from equities over the risk-free rate. In the UK, the equity risk premium is used in investment analysis to assess expected returns, with higher premiums indicating greater compensation for the inherent risks of stock market investments compared to bonds or cash.
Endowment Fund An endowment fund is a pool of assets donated to institutions, like universities or charities, to generate income for long-term sustainability. In the UK, endowment funds invest in diversified portfolios, providing regular income for operations while preserving capital. Endowments are popular for stable, income-focused investments.
Environmental, Social, and Governance (ESG) ESG refers to environmental, social, and governance factors in investment analysis. In the UK, ESG investing has gained traction as investors seek to support sustainable practices and responsible corporate behaviour. ESG funds avoid companies with poor environmental or social practices, favouring those with strong governance and ethical practices.
Eurobond A Eurobond is an international bond issued in a currency other than that of the country where it’s issued. In the UK, Eurobonds offer diversification and are often issued by corporations to access global capital. UK investors benefit from Eurobonds by gaining exposure to foreign currencies and economies, though currency risk remains.
Equity Multiplier The equity multiplier is a financial leverage ratio calculated as total assets divided by shareholders’ equity. In the UK, the equity multiplier helps investors assess how much debt a company uses to finance assets. A higher multiplier indicates greater leverage, which can amplify both returns and risk.
Efficient Frontier The efficient frontier is a set of optimal portfolios offering the highest return for a given level of risk. In the UK, investors use the efficient frontier in portfolio management to identify asset mixes that maximise returns while minimising risk, balancing equities, bonds, and alternative investments.
Earnings Management Earnings management is the use of accounting techniques to influence reported earnings. In the UK, earnings management is sometimes used by companies to meet targets or smooth income fluctuations. Investors view aggressive earnings management cautiously, as it can distort true performance and affect valuation accuracy.
EBIT (Earnings Before Interest and Taxes) EBIT measures a company’s operating income before interest and taxes. In the UK, EBIT is widely used for assessing a company’s profitability from core operations, as it excludes costs related to debt and taxes, allowing for comparison across companies with different capital structures.
Enterprise Value (EV) Enterprise Value (EV) is a measure of a company’s total value, including market capitalisation, debt, and minus cash. In the UK, EV is used to evaluate acquisition targets, as it reflects both equity and debt. EV is preferred over market capitalisation alone, as it provides a more comprehensive picture of a company’s value.
Excess Return Excess return is the return on an investment above a benchmark or risk-free rate. In the UK, excess return is used to measure the performance of a portfolio or fund relative to an index, helping investors assess active management’s value and compare funds with similar benchmarks.
Equity Swap An equity swap is a financial contract where two parties exchange cash flows based on equity returns and interest rates. In the UK, equity swaps are used by institutional investors to gain exposure to equities without directly owning shares, offering tax efficiency and flexibility in portfolio management.
Employee Stock Ownership Plan (ESOP) An Employee Stock Ownership Plan (ESOP) is a program that gives employees ownership interest in the company. In the UK, ESOPs are used as a motivational tool, aligning employee interests with company success. They are popular for retaining talent and fostering loyalty, especially in private and small businesses.
Exchange Rate Mechanism (ERM) The Exchange Rate Mechanism (ERM) was a system to reduce exchange rate variability and stabilise currency within the European Union. The UK participated in the ERM briefly to control inflation but withdrew in 1992. ERM history remains significant, highlighting the UK’s currency policies and the pound’s value in global markets.
Economic Indicator An economic indicator is a statistic that reflects the health of the economy, like GDP, inflation, or unemployment. In the UK, investors monitor indicators to assess economic conditions, as they affect corporate earnings, interest rates, and stock performance. Leading indicators like PMI can provide early signals of economic trends.
Economic Cycle The economic cycle, also known as the business cycle, represents the fluctuations in economic activity over time, including periods of expansion, peak, contraction, and trough. In the UK, understanding the economic cycle helps investors anticipate market shifts, as certain sectors perform better during different phases, influencing investment decisions.
Euro Stoxx 50 The Euro Stoxx 50 is a stock index of 50 leading companies from the Eurozone. Although it doesn’t include UK stocks, UK investors monitor the index to assess European economic performance, as it impacts UK exports and investment portfolios with European exposure. The index serves as a benchmark for European market performance.
Earnings Surprise Earnings surprise occurs when a company’s reported earnings differ from analyst expectations. In the UK, earnings surprises can lead to significant stock price volatility, as investors adjust their positions based on unexpected results. Positive surprises often boost stock prices, while negative surprises can result in declines.
Equity Capital Market (ECM) The Equity Capital Market (ECM) is the market for issuing and trading equity securities. In the UK, the ECM includes activities such as IPOs, rights issues, and private placements, providing companies with access to capital while giving investors the opportunity to buy shares in publicly traded companies.
Economic Value Added (EVA) Economic Value Added (EVA) is a financial performance measure that calculates a company’s profitability after deducting the cost of capital. In the UK, EVA is used by investors and analysts to assess value creation, as it highlights whether a company generates returns above its cost of capital, making it a useful metric for investment analysis.
Equities Market The equities market, also known as the stock market, is where shares of public companies are bought and sold. In the UK, the London Stock Exchange is a central equities market, providing a platform for companies to raise capital and investors to trade shares. It’s an essential component of wealth generation for retail and institutional investors.
Emerging Growth Company (EGC) An Emerging Growth Company (EGC) is a business in its early stages, showing high growth potential. In the UK, EGCs are often in technology, biotech, or other innovative sectors. While these companies can offer substantial returns, they also carry higher risk due to limited operating history and financial stability.
Earnings Before Tax (EBT) Earnings Before Tax (EBT) represents a company’s profit before tax expenses are deducted. In the UK, EBT is used to evaluate operating profitability, offering a clear view of earnings generated from core activities. Investors use EBT to compare profitability across companies without the influence of varying tax structures.
Efficient Market Hypothesis (EMH) The Efficient Market Hypothesis (EMH) proposes that asset prices reflect all available information, making it impossible to consistently achieve above-average returns. In the UK, EMH influences passive investing strategies, as it suggests that trying to outperform the market through stock-picking or timing may be futile due to market efficiency.
Equity-Linked Note (ELN) An Equity-Linked Note (ELN) is a structured financial product that combines a fixed-income instrument with equity exposure. In the UK, ELNs provide investors with a fixed return and the potential for additional gains based on the performance of a specific stock or index, appealing to those seeking both income and growth.
Excess Capacity Excess capacity refers to a situation where a company or economy can produce more goods or services than currently demanded. In the UK, excess capacity can signal economic slowdown or inefficient use of resources. Investors watch for excess capacity as it impacts profitability and may lead to cost-cutting measures by companies.
Excess Reserves Excess reserves are bank reserves held above the required minimum. In the UK, banks maintain excess reserves as a buffer against economic uncertainty, though they represent idle capital. Investors track excess reserves as they reflect lending capacity and can signal banking sector confidence or caution.
Exchange-Traded Commodity (ETC) An Exchange-Traded Commodity (ETC) is a security that tracks the performance of a commodity, such as gold or oil. In the UK, ETCs provide an easy way for investors to gain exposure to commodities without directly buying physical assets, offering diversification benefits and a hedge against inflation.
European Central Bank (ECB) The European Central Bank (ECB) is the central bank of the Eurozone. While the UK is no longer part of the EU, the ECB’s policies impact UK investors with European exposure, as they affect exchange rates, economic stability, and market sentiment in Europe. ECB decisions are relevant for currency and bond markets.
Enterprise Value-to-EBITDA (EV/EBITDA) EV/EBITDA is a valuation metric that compares a company’s enterprise value to its EBITDA, indicating how much a company is valued relative to its earnings. In the UK, EV/EBITDA is commonly used to assess acquisition targets, as it provides insight into a company’s value without the influence of capital structure.
Economic Shock An economic shock is an unexpected event that has a significant impact on the economy, such as a natural disaster, financial crisis, or political event. In the UK, economic shocks affect stock markets, currency values, and interest rates. Investors monitor economic shocks closely as they can cause rapid shifts in asset prices and volatility.
Earnings Guidance Earnings guidance is a company’s forecast of expected earnings, often provided as a range. In the UK, earnings guidance helps investors set expectations and make informed investment decisions. Positive guidance can boost investor confidence, while downward revisions may lead to stock sell-offs.
Exchange Rate Mechanism II (ERM II) Exchange Rate Mechanism II (ERM II) is a system used by EU countries as a precursor to adopting the euro. Although the UK is no longer part of the EU, ERM II affects UK-based investors with European holdings, as it influences currency stability and investment conditions in Europe.
Equity Fund An equity fund is a type of mutual fund or investment trust that primarily invests in stocks. In the UK, equity funds offer diversified exposure to the stock market, appealing to investors seeking capital appreciation. Equity funds vary by investment style, such as growth or value, and may focus on specific sectors or regions.
Ex-Ante Return Ex-ante return is the expected return on an investment based on forward-looking projections. In the UK, ex-ante returns help investors gauge potential performance before making an investment, especially in the context of financial models or analysts’ estimates. It contrasts with ex-post returns, which reflect historical performance.
Employee Share Scheme An Employee Share Scheme is a program where companies offer shares to employees as part of their compensation. In the UK, share schemes like Share Incentive Plans (SIPs) and Enterprise Management Incentives (EMIs) aim to boost employee engagement and retention by providing ownership and aligning employees’ interests with company success.
Earnings Before Interest After Taxes (EBIAT) Earnings Before Interest After Taxes (EBIAT) measures a company’s profitability after taxes but before interest expenses. In the UK, EBIAT is used to evaluate operating efficiency without the impact of financing decisions, providing a clearer view of core business profitability for investment analysis.
Endowment Policy An endowment policy is a type of life insurance policy that pays out after a set period or upon the policyholder’s death. In the UK, endowment policies are used for savings and investment, often linked to mortgage repayment plans. They offer both life coverage and a return on premiums paid, appealing to risk-averse investors.
European Securities and Markets Authority (ESMA) The European Securities and Markets Authority (ESMA) is an EU regulatory body that oversees securities markets. While the UK is no longer part of the EU, ESMA’s regulations still affect UK firms operating in Europe and UK investors with European assets, especially in terms of cross-border investment rules.
Exit Strategy An exit strategy is a planned approach to liquidate an investment to realise profits or minimise losses. In the UK, exit strategies are crucial for both public and private investments, helping investors achieve financial goals. Common exit strategies include selling shares, mergers, acquisitions, or initial public offerings (IPOs).
Economic Order Quantity (EOQ) Economic Order Quantity (EOQ) is an inventory management formula that determines the optimal order size to minimise costs associated with ordering and holding inventory. In the UK, EOQ is used by manufacturing and retail firms to improve inventory efficiency, reducing both stockouts and excess holding costs.
Environmental Impact Fund An Environmental Impact Fund is an investment fund focused on companies that contribute positively to environmental sustainability. In the UK, these funds are part of the broader ESG investing movement, attracting investors who prioritise environmental responsibility, renewable energy, and conservation initiatives alongside financial returns.
Earnings Season Earnings season is the period when many public companies release their quarterly earnings reports. In the UK, earnings season is closely monitored by investors and analysts, as it provides insight into corporate performance, industry trends, and market sentiment. Stock prices often fluctuate based on reported results and outlook.
Equity Market Neutral Strategy An equity market neutral strategy is an investment strategy that seeks to generate returns independent of market direction by balancing long and short positions. In the UK, this strategy is popular among hedge funds, as it aims to reduce market risk while focusing on stock selection, making it appealing during volatile periods.
Exchange-Traded Note (ETN) An Exchange-Traded Note (ETN) is a debt security issued by a financial institution that tracks an underlying index or asset. In the UK, ETNs provide investors with exposure to specific markets or sectors, similar to ETFs but with credit risk linked to the issuer. They are commonly used for commodities and niche markets.
Economic Rent Economic rent is the excess income earned by an asset or resource above its opportunity cost. In the UK, economic rent often applies to property and natural resources, where limited supply creates price premiums. Investors consider economic rent in sectors with high barriers to entry, as it can enhance profitability.
Excess Profits Tax Excess Profits Tax is a tax levied on profits exceeding a certain threshold, often applied during wartime or economic crises. While currently not in practice in the UK, excess profits taxes have been implemented historically. Investors monitor discussions around such taxes, as they can impact profitability in high-earning sectors.
Endowment Mortgage An endowment mortgage is a type of mortgage linked to an endowment policy, where policy proceeds are used to pay off the loan. In the UK, endowment mortgages were popular in the 1980s and 1990s, though they have since declined due to changes in regulation. Investors with endowment mortgages may review performance to ensure mortgage repayment goals are met.
Event-Driven Strategy An event-driven strategy is an investment approach that seeks to capitalise on events like mergers, acquisitions, and bankruptcies. In the UK, event-driven funds are popular in hedge fund circles, as they focus on identifying opportunities around specific events that may lead to price changes, often requiring in-depth research and timing precision.
Equity Ratio The equity ratio is a financial metric calculated as total equity divided by total assets, indicating the proportion of assets financed by shareholders. In the UK, investors use the equity ratio to assess financial stability, with higher ratios indicating lower reliance on debt, often preferred in industries with stable, predictable income.
Expected Rate of Return Expected rate of return is the anticipated return on an investment based on historical performance, forecasts, or financial models. In the UK, investors calculate expected returns to compare investment options and assess risk-reward profiles, with higher expected returns generally carrying greater risk.
Excess Liquidity Excess liquidity refers to the amount of cash or liquid assets that exceed a company’s operational needs. In the UK, companies with excess liquidity may invest in expansion or return funds to shareholders through dividends or buybacks. Investors monitor liquidity levels to assess capital efficiency and potential for reinvestment.
Exit Load Exit load is a fee charged to investors when they redeem shares in a mutual fund within a specified period. In the UK, exit loads are used to discourage short-term trading in certain funds, helping fund managers maintain stability. Investors consider exit loads when choosing funds, particularly if they may need to withdraw funds early.
Equity Carve-Out An equity carve-out is a transaction where a parent company sells a portion of its subsidiary’s shares to the public, creating a separate legal entity. In the UK, equity carve-outs are used to unlock value in specific business units, allowing investors to invest directly in a particular division while retaining ownership by the parent company.
Ex-Ante Risk Ex-ante risk is the expected risk of an investment based on forecasts and assumptions before the actual investment period. In the UK, ex-ante risk measures are essential for portfolio planning and risk management, allowing investors to anticipate potential volatility and adjust portfolios accordingly.
Earnings Yield Gap Earnings yield gap is the difference between the earnings yield of stocks and bond yields, used to assess relative value. In the UK, a higher earnings yield gap suggests that stocks offer better value compared to bonds, influencing asset allocation decisions, especially in low-interest-rate environments.
Economic Downturn An economic downturn is a period of negative economic growth, often marked by declining GDP, high unemployment, and reduced consumer spending. In the UK, downturns impact corporate earnings and market performance, prompting investors to shift toward defensive assets or re-evaluate portfolio risk.
Equity Linked Savings Scheme (ELSS) Although more common in India, an Equity Linked Savings Scheme (ELSS) offers tax benefits on equity investments. In the UK, similar schemes, like ISAs, provide tax-free returns, appealing to investors seeking growth with tax efficiency. ELSS-like options in the UK are valuable for long-term investment and tax planning.
Exchange-Traded Derivative An exchange-traded derivative is a derivative instrument traded on an organised exchange, such as futures and options. In the UK, these derivatives provide standardised terms and centralised clearing, reducing counterparty risk. Exchange-traded derivatives are popular for hedging or speculative purposes, offering liquidity and transparency.
Equity Market Capitalisation Equity market capitalisation is the total market value of a company’s outstanding shares. In the UK, market capitalisation determines a company’s size category, such as large-cap, mid-cap, or small-cap. Investors use market cap to assess risk levels, with larger companies generally seen as more stable but offering lower growth potential.
Equity Cushion Equity cushion is the amount of equity in an investment relative to debt, providing a buffer in case of asset devaluation. In the UK, an equity cushion is crucial for mortgage-backed securities and leveraged investments, as it protects lenders and investors against loss, especially in volatile markets.
Earnings Manipulation Earnings manipulation occurs when a company uses accounting practices to misrepresent its financial performance. In the UK, earnings manipulation is closely monitored by regulators, as it can mislead investors and inflate stock prices. Red flags include unusual revenue recognition or significant changes in expense timing.
Exchange Rate Peg An exchange rate peg is a policy where a country’s currency is fixed to another currency, like the British pound pegged to the US dollar. While the UK does not have a pegged currency, pegs in other countries affect UK investors with international exposure, as they influence currency stability and trade relationships.
Equity Multiple Equity multiple is a return metric calculated as the total cash inflows divided by the initial investment. In the UK, equity multiple is used by real estate and private equity investors to measure total return on investment, with a multiple above 1 indicating positive returns, while lower multiples may reflect underperformance.
Equity Reinvestment Rate The equity reinvestment rate measures the portion of net income reinvested into the business rather than paid out as dividends. In the UK, a higher reinvestment rate is typical for growth companies, signalling investment in expansion, while lower rates in mature companies often indicate a focus on shareholder returns through dividends.
Ex-Post Return Ex-post return is the actual return on an investment based on historical data, as opposed to forecasted returns. In the UK, ex-post return analysis helps investors evaluate past performance, providing insight into how investments have performed relative to expectations and informing future decisions.
Excess Return on Equity Excess return on equity measures the returns above the expected rate of return for shareholders. In the UK, this metric is used to evaluate a company’s performance relative to investor expectations, with positive excess returns indicating that a company has generated shareholder value above the cost of equity.
Employee Benefit Trust (EBT) An Employee Benefit Trust (EBT) is a structure that holds assets, such as shares, on behalf of employees as part of a reward or incentive scheme. In the UK, EBTs are commonly used for stock-based compensation, offering tax advantages and aligning employee interests with company performance, particularly in executive compensation plans.
Early Stage Venture Capital Early stage venture capital is funding provided to startups and small businesses that are in the initial stages of development. In the UK, early-stage venture capital is essential for high-growth sectors like technology and biotech, offering potential for significant returns but with high associated risks.
Effective Tax Rate The effective tax rate is the average tax rate paid by a company or individual, calculated as total tax expense divided by pre-tax income. In the UK, the effective tax rate helps investors assess a company’s tax efficiency, comparing it with statutory rates and industry averages to identify any tax advantages or potential issues.
Economic Value of Equity (EVE) Economic Value of Equity (EVE) is a measure of a bank’s or financial institution’s sensitivity to interest rate changes. In the UK, EVE analysis is used to assess potential changes in net worth under various interest rate scenarios, particularly useful for banks in managing interest rate risk on balance sheets.
Environmental Risk Environmental risk refers to the potential financial impact of environmental factors, such as natural disasters, climate change, or regulatory changes related to sustainability. In the UK, investors increasingly consider environmental risks in investment decisions, particularly in sectors like energy, utilities, and real estate.
Equity Attribution Equity attribution analyses the factors contributing to changes in a company’s equity over a given period. In the UK, this analysis helps investors understand the sources of equity growth, such as retained earnings, capital gains, or new equity issues, providing insights into financial performance and shareholder value.
Equity-Adjusted Return on Assets (EAROA) Equity-Adjusted Return on Assets (EAROA) is a profitability ratio that measures returns generated from assets while adjusting for the equity portion of financing. In the UK, EAROA is used to gauge asset efficiency, particularly in leveraged companies, by isolating the impact of debt on asset returns.
Exchange Rate Policy Exchange rate policy refers to a government’s approach to managing its currency’s value relative to others. In the UK, exchange rate policy impacts trade, inflation, and interest rates. Investors consider exchange rate policies, especially in international portfolios, as they influence currency risk and returns on foreign investments.
Equity Book Value Equity book value is the total value of a company’s equity as reported on the balance sheet, representing net assets. In the UK, investors use book value to assess a company’s intrinsic worth, especially in value investing. Companies trading below book value may be undervalued, though they could also indicate financial challenges.
Equity Investment Trust An equity investment trust is a closed-ended fund listed on an exchange, investing in equities to provide growth and income. In the UK, investment trusts are popular for their ability to use leverage and offer access to various asset classes, providing long-term capital appreciation and income potential for retail investors.
Equity Premium Puzzle The equity premium puzzle is the question of why historical returns on equities have been significantly higher than risk-free rates, despite the assumed lower risk tolerance of most investors. In the UK, the puzzle influences asset allocation and the understanding of risk premiums in portfolio construction, driving the appeal of equities for long-term returns.
Excess Supply Excess supply occurs when the quantity of a good or service supplied exceeds the quantity demanded, leading to price reductions. In the UK, excess supply impacts industries like housing and retail, where oversupply can reduce prices, impacting corporate profitability and investor returns.
End-of-Day Order An end-of-day order is a buy or sell order that remains active until the close of trading on that day. In the UK, end-of-day orders are used by investors to take advantage of daily price movements, often as part of short-term trading strategies. The order is cancelled if not executed by market close.
Earnings Acceleration Earnings acceleration refers to a period where a company’s earnings growth rate increases. In the UK, earnings acceleration is viewed positively, as it often indicates strong operational performance or successful business initiatives. Investors seek companies with accelerating earnings, as they typically provide robust growth potential.
Elasticity of Demand Elasticity of demand measures how demand for a good changes in response to price changes. In the UK, understanding demand elasticity helps companies and investors assess how pricing strategies affect sales and revenue, with goods showing high elasticity sensitive to price changes, impacting profitability in consumer-driven sectors.
Equity Line of Credit (ELOC) An Equity Line of Credit (ELOC) allows businesses to access capital by using company equity as collateral. In the UK, ELOCs provide flexible financing for companies seeking to fund growth or manage cash flow without selling shares outright. Investors view ELOCs as a sign of confidence, though they can increase debt levels.
Equity Crowdfunding Equity crowdfunding is a method of raising capital by pooling small investments from a large number of people, typically online. In the UK, equity crowdfunding is popular for startups and small businesses, offering investors the chance to own equity in early-stage companies, though it carries higher risk and less liquidity.
Enterprise Investment Scheme (EIS) The Enterprise Investment Scheme (EIS) is a UK government program offering tax relief to investors who invest in small, high-risk companies. EIS is designed to encourage investment in innovative UK businesses, providing income tax relief and capital gains exemptions, making it attractive for investors seeking both growth and tax benefits.
Earnings Coverage Ratio The earnings coverage ratio, or interest coverage ratio, measures a company’s ability to meet interest payments on its debt. In the UK, a higher ratio indicates stronger debt-servicing ability, which is positive for bondholders and creditors, as it reduces default risk, making it a key metric in credit analysis.
Earnings Power Earnings power represents a company’s potential to generate profit in the long run. In the UK, investors use earnings power to assess the sustainability of a company’s profitability, often by focusing on core operations and disregarding one-off gains or losses, giving a clearer picture of long-term value.
Earnings Revision Earnings revision occurs when analysts update their earnings estimates for a company. In the UK, upward revisions can lead to stock price gains, while downward revisions may trigger declines. Investors monitor earnings revisions, as they signal changing expectations about a company’s performance and impact stock sentiment.
Environmental Impact Bond (EIB) An Environmental Impact Bond (EIB) is a bond issued to fund projects with positive environmental impacts, such as renewable energy or conservation initiatives. In the UK, EIBs appeal to socially conscious investors seeking returns while supporting environmental goals, reflecting the growing demand for sustainable finance.
Exponential Moving Average (EMA) The Exponential Moving Average (EMA) is a weighted moving average that gives more importance to recent data points. In the UK, technical analysts use EMA to identify trends and momentum in stock prices, as it is more responsive to price changes than a simple moving average, aiding in short-term trading strategies.
