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IPO. ROI. YTD… Huh? Yahoo Finance’s acronym cheat sheet

Your ultimate finance cheat sheet. (Source: Getty)
Your ultimate finance cheat sheet. (Source: Getty)

They’re the familiar acronyms you’ve seen on the news, on your payslip or in your company communications, but you’re not quite sure what they stand for.

Yahoo Finance has you covered: in alphabetical order, here’s the cheat sheet to the financial acronyms worth knowing:

ASX: Australian Stock Exchange. This is the primary stock exchange of Australia. The ASX200 tracks the top 200 listed companies in Australia. There are other smaller stock exchanges, such as Chi-X (CXA), the Bendigo Stock Exchange (BSX), and the National Stock Exchange of Australia (NSX).

EBITDA: This one’s a curly one: it stands for earnings before interest, tax, depreciation and amortization. EBIDTA measures a company’s performance before factoring in finance decisions, accounting decisions or tax environments, and stands as a proxy for a company’s net income of a business.

EOFY: End of financial/fiscal year. This represents the end of the financial year as determined by the ATO, which starts on 1 July and ends on 30 June. You might see ‘EOFY sales’ around from May, which is when businesses want to start clearing their stock as they have to report their tax affairs to the ATO. (There’s a bunch of things individuals should do with their tax before EOFY, too.)

EFT: EFT stands for electronic funds transfer, which is a system of transferring money from one account to another without any need for physical paperwork. You’ll often find this acronym in the more commonly known acronym of EFTPOS.

EFTPOS: The better-known brother of EFT, EFTPOS stands for electronic funds transfer at point of sale. You’ll likely have used this several times before when paying for goods or services with your card.

ETF: Not to be confused with EFT, ETF means exchange-traded funds. These are a collection of assets, such as stocks, that tracks an underlying index. The best way to think about this is like the stock exchange, except each ‘stock’ is a basket of other shares. For example, SPDR’s S&P/ASX 200 Fund, by investment management firm State Street Global Advisors, tracks the ASX 200 Index.

FY: Financial year (see above). Often you’ll see this in the form of FY2019-20, for example, which indicates the financial year of 2019-20 (starting 1 July 2019 and ending 30 June 2020).

ICO: Initial coin offering. This is the cryptocurrency’s equivalent to an IPO. Hopeful cryptocurrency start-ups launch an ICO and investors buy into the offering, either with regular currency or pre-existing crypto (like Bitcoin or Ether), in exchange for a cryptocurrency token specific to that ICO. It’s a highly risky investment but investors are hoping that the new crypto will take off, giving them excellent ROI.

IPO: Initial public offering. This is the process a private company goes through when it become listed on the stock exchange, whereby shares of a company are sold to the public for the first time. IPOs allow the company to raise capital, which can then be reinvested to help grow the business.

NASDAQ: One of America’s three major stock index, NASDAQ stands for the National Association of Securities Dealers Automated Quotations. The Nasdaq composite tracks more than 3,300 stocks.

PAYG: This acronym appears on every pay slip. PAYG stands for ‘pay as you go’, which is an employer or business’ withholding of employees’ tax that eventually gets paid to the ATO. Up until this year, employers were required to report PAYG monthly, quarterly or annually, but now, with the roll-out of Single Touch Payroll (STP), businesses have to report this after processing every payroll.

ROI: Return on investment. This is a performance measure used to evaluate the efficiency of an investment or compare a number of investments. ROI is the ratio between net profit and the cost of investment. You generally want a higher ROI.

RBA: The Reserve Bank of Australia. This is the central bank of Australia, and their job is to manage the country’s monetary policy, such as maintaining the stability of Australia’s currency, economy, and keeping people in jobs. The RBA has been making headlines lately as our finances are closely tied with the national interest rate, which the RBA decides on on the first Tuesday of every month (bar January). The current interest rate is at 1 per cent.

S&P: Standard & Poor’s. Standard & Poor’s is an American financial services company and is best known for its stock market indices, such as the S&P 500 or the more local S&P/ASX 200.

YTD: Year to date. This acronym is used in a number of contexts but typically used when recording results of an activity in the time between a certain date and the beginning of the year (calendar or fiscal). For example, a company’s YTD revenue in August may be $50,000, meaning the company has made $50,000 in profit since the year began.

Any other common financial or business acronyms we missed? Let us know at jessica.yun@yahoofinance.com.

Yahoo Finance’s All Markets Summit will bring together the best and brightest minds in the country on the 26th September 2019 in the Shangri-La, Sydney. Check out the full line-up of speakers and agenda for this groundbreaking event here.