The component of the diluted earnings per share denominator that includes the net of new shares potentially created by unexercised in-the-money warrants and options. This method assumes that the proceeds that a company receives from an in-the-money option exercise are used to repurchase common shares in the market. In order to comply with generally accepted accounting principles (GAAP), the treasury stock method must be used by a company when computing its diluted earnings per share (EPS). Taobiz explains Treasury Stock Method The net of new shares that are potentially created is calculated by taking the number of shares that the in-the-money options purchase, then subtracting the number of common shares that the company can purchase from the market with the option proceeds. This adds to the total number of shares in the denominator and lowers the EPS number. For example, assume that a company currently has in-the-money options that cover 10,000 shares with an exercise price of $50. If the current market price is $100, the options are in-the-money and, based on the treasury method, need to be added to the diluted EPS denominator. The proceeds the company will receive will be $500,000 ($50 x 10,000), which allows them to repurchase 5,000 shares on the market ($500,000/$100). Therefore, the net of new shares is 5,000 (10,000 option shares - 5,000 repurchased shares).
The portion of shares that a company keeps in their own treasury. Treasury stock may have come from a repurchase or buyback from shareholders; or it may have never been issued to the public in the first place. These shares don't pay dividends, have no voting rights, and should not be included in shares outstanding calculations. Taobiz explains Treasury Stock (Treasury Shares) Treasury stock is often created when shares of a company are initially issued. In this case, not all shares are issued to the public, as some are kept in the companies treasury to be used to create extra cash should it be needed. Another reason may be to keep a controlling interest within the treasury to help ward off hostile takeovers. Alternatively, treasury stock can be created when a company does a share buyback and purchases its shares on the open market. This can be advantageous to shareholders because it lowers the number of shares outstanding. However, not all buybacks are a good thing. For example, if a company merely buys stock to improve financial ratios such as EPS or P/E, then the buyback is detrimental to the shareholders, and it is done without the shareholders' best interests in mind.
The issuance of an additional class of security already existing in a firm's treasury. Taobiz explains Treasury Offering When a company needs to raise more money, but doesn't want any extra debt, they will often issue extra shares of its currently trading equity. Of course, there is a downside to this, as the offering causes dilution for existing shareholders.
A nickname given to a group of traders who were a part of an 1983 experiment run by two famous commodity traders, Richard Dennis and Bill Eckhardt. The goal of the study was to prove whether being a great trader was a genetic predisposition or whether it could be taught. Dennis believed that a person could be trained while Eckhardt thought it was an innate skill. Taobiz explains Turtle To test the idea, a trading system was taught to the participants in the research group (consisting of 10 to 12 individuals), where each were given a monetary amount - as high as $2 million - to trade. Over time it became clear that Dennis was correct in stating a person can learn to be a great trader as the research-group traders generated average annual returns of up to 80%. The title, turtles, was based on a 1989 Wall Street Journal article, where Dennis was quoted as saying, "We are going to grow traders just like they grow turtles in Singapore."
1. In accounting, the number of times an asset is replaced during a financial period. 2. The number of shares traded for a period as a percentage of the total shares in a portfolio or of an exchange. Taobiz explains Turnover 1. In accounting, turnover often refers to inventory or accounts receivable. A quick turnover is desired because it means that inventory is not sitting on the shelves for too long. 2. In a portfolio, a small turnover is desired because it means the investor is paying less in commissions to the broker. It is called "churning" when a broker unethically generates numerous trades solely in order to increase commissions.
An illegal business practice in which a majority shareholder or high-level company insider directs company assets or future business to themselves for personal gain. Actions such as excessive executive compensation, dilutive share measures, asset sales and personal loan guarantees can all be considered tunneling. The common thread is the loss to the minority shareholders, whose ownership is lessened or otherwise devalued through inappropriate actions that harm the overall value of the business. Taobiz explains Tunneling This risk is especially prevalent for investors in emerging markets, where government and regulatory controls may not be sufficient to stop the practice from occurring, often under legal guises. The practice is not reserved to moderately advanced economies; many instances can be found in advanced economies, especially those under systems of "civil law". The U.S. legal system is rooted in "common law", which provides broad enforceable laws with simple maxims like "fairness" and "for the common good". Under civil law, the letter of the law is the most respected measure, so would-be tunnelers can pass an act of tunneling off under certain technicalities, which often hold up in court.
The acquisition of a company made for the sole purpose of merging it into a division of the acquirer. Sometimes referred to as "bolt-on acquisitions." Taobiz explains Tuck-In Acquisition This type of corporate strategy is generally used to acquire companies with technological breakthroughs or comparative advantages at a cost less than implementing the changes themselves.
Originally called the Canadian Venture Exchange (CDNX), this was a result of the merger of the Vancouver and Alberta stock exchanges. The goal of TSX Venture Exchange is to provide venture companies with effective access to capital while protecting investors. Taobiz explains TSX Venture Exchange This exchange basically contains small-cap Canadian stocks and is home to a lot of high risk penny stocks. It is owned and operated by the TMX Group.
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