LEVEL 3 GLOSSARY
-
Dividend
Not all companies pay dividends, but when they do, you should say "Cha-ching!" Dividends are payments the company makes to their shareholders. They're a way of giving the shareholder a piece of the profit pie.
-
Dividend Yield
Put your dividend dinero into a percentage: a $1 annual dividend for a $10 stock has a 10% yield.
-
Earnings Per Share
This is the amount of money earned per every one share. If the company made $1 million in profits and has 1 million shares outstanding, the EPS would be $1.
-
Liability
Think of this as debt, but then cast the net a little wider. Liability is the obligation to repay its loans, IOUs, payroll, leases, pensions, vacation hours, and taxes a company owes.
-
P/E Ratio
Stocks work hard for the money, so hard for it honey—ahem. P/E ratio is "price-to-earnings": it tells you how much you’re paying for the earnings that a share is generating. For those of you who are visual learners, P/E Ratio = price per share / earnings.
-
Retained Earnings
If you're expecting a dividend check and end up empty-handed, it could be because the company decided to keep the earnings and put them back into the business. This money, and all other earnings the company keeps, are called retained earnings. The amount of a company's retained earnings can be found in the shareholders' equity section of the balance sheet.
See full glossary
In Level 3, we'll introduce you to the advanced concepts of investing. Just like the first two levels, there will be some concepts and one quiz. Ace the Level 3 quiz and people will be very impressed when they see your Report Card. So dig in, have fun, and ace that quiz! Good luck!
- The role of risk
- Diversification
- Corporate actions
- Dividends
- Reinvesting
- Issuing more shares
- P/E ratio
- LEVEL 3 QUIZ
Where's the Beef?
Let's take a look at Wendy's, the famous fast-food chain founded by the renowned Dave Thomas.
The first Wendy's opened in Columbus, Ohio, in 1969 and was helmed by — you guessed it — Thomas. After seven years of strong growth, Wendy's decided it was ready to hit the big time and become a public company.
The shares went for for $28 in the IPO. Fast forward another 20 years or so, and the company started paying quarterly dividends to its shareholders. The first one was for six cents a share, and to this day the company still pays a quarterly dividend.
And in 1996, Wendy's purchased Tim Horton's, a spot known for its breakfast. Ten years later, Wendy's decided to sell a piece of Tim Horton's to the public, so that too became a publicly traded company (but Wendy's still owned many of its shares).
Later that same year, Wendy's decided to spin off the shares of Tim Horton's (THI) that they owned to its shareholders. So if you owned shares of Wendy's on September 15, 2006, you received 1.3543 shares of Tim Horton's for every one share of Wendy's you owned.
So that's a lot of corporate actions for just a burger spot, no? But wait — there's more: In April 2008, Triarc Company — which owns the fast-food chain Arby's — announced they were buying Wendy's. Under the terms of the merger, you would receive 4.25 shares of Triarc for every Wendy's share you owned.
The merger between these two fast foodies was completed in September 2008. Just to keep us all on our toes, the companies decided the new name would be The Wendy's/Arby's Group (WEN) and would use the old Wendy's ticker as their stock symbol.
So you can find the company today listed as WEN right here on WeSeed.
- Bookmark this page:
-
-
-
-
-
-
-
