Glossary of Investment Terms

Safety Rank—a measurement of potential risk associated with individual common stocks. The Safety Rank is computed by averaging two other Value Line indexes—the Price Stability Index and the Financial strength Rating. Safety Ranks range from 1 (Highest) to 5 (Lowest). Conservative investors should try to limit their purchases to equities ranked 1 (Highest) and 2 (Above Average) for Safety.

Sales—gross volume less returns, discounts, and allowances; net sales.

Sales Per Share—net sales divided by the number of common shares outstanding at year end.

Savings Deposits Per Share (Thrift Industry)—total savings deposits at year end divided by the number of common shares outstanding at year end.

Savings Rate—the personal savings rate, expressed as a percentage, published monthly by the Commerce Department.

Seasonally Adjusted—a statistical method of adjusting economic data for seasonal differences in economic activity. For example, monthly retail sales are adjusted for the surge of buying that takes place during the end-of-year holiday season.

Shareholders' Equity—a balance sheet item showing net worth less the liquidating or redemption value of any preferred issues outstanding. Represents the sum of the value of common stock at par, the surplus of capital received (over par value), and retained earnings (i.e., earned surplus). Retained earnings are the sum of net profits earned in all years less dividends paid in all years.

Short-Term Debt—all debt due in the next 12 months and, therefore, considered a current liability. Same as Debt Due. See Total Debt.

Small Cap—a market capitalization (stock price times shares outstanding) of less than $1 billion.

Spot Market—a market in which commodities are purchased or sold and delivered quickly, that is, on the spot.

Standard Deviation—a statistical measure of volatility.

Standard & Poor's 500—a market-capitalization weighted index of 500 large U.S. common stocks.

Statistical Array—the large statistical section in the center of each Value Line company report in Ratings & Reports. The section contains up to 17 columns of historical information and three columns of estimates on 23 different data items.

Statutory Insurance Accounting (Insurance Industries)—the accounting method required for insurance companies reporting to state insurance regulatory authorities. It is a cash bookkeeping technique, rather than the usual method used in business.

Stock Dividend—the issuance of additional common shares to common stockholders, with no change in total common equity. From an accounting standpoint, retained earnings (i.e., the earned surplus) are reduced and the value of the reported common stock component of common equity (usually called the ``par value'' account) is increased. (The reduced level of retained earnings is important since bond indentures limit dividend payouts by stipulating minimum levels of retained earnings.) See Stock Split.

Stock (Preferred)—a class of stock that generally has preference over common stock in the payment of dividends and the liquidation of assets and normally pays dividends at a specified rate.

Stock's Price Stability—a relative ranking of the standard deviation of weekly percent changes in the price of a stock over the past five years. The ranks go from 100 for the most stable to 5 for the least stable.

Stock Split—an increase in the number of common shares outstanding by a fixed ratio, say 2-to-1 or 3-to-1, with proportionate allocation of underlying common equity (i.e., the sum of common stock, capital surplus, and retained earnings) and earnings to the increased number of shares outstanding. Total common equity remains the same. From an accounting standpoint, the mix of retained earnings, capital surplus, and common stock remains unchanged. See Stock Dividend. When there is a stock split or dividend, all historical per-share numbers (including past share prices) are adjusted to reflect the new shares outstanding. If, for example, a company's stock traded in a range of 40 to 60 last year and it reported earnings of $2.00 per share, after adjustment for a 2-for-1 stock split, the price range for last year would be 20 to 30 and earnings would be $1.00 a share.

Successful Efforts Accounting (Canadian Energy, Natural Gas [Diversified], and Petroleum Industries)—a method of accounting under which exploratory wells found to be dry are expensed as incurred. See Full Cost Accounting.

Supplementary Report—an update of a regular full-page Value Line company report published in the back of the Ratings & Reports section when there is a significant development relating to a company. Among the most likely reasons for a Supplementary Report are a major corporate development, such as a merger or acquisition, an unexpectedly good or poor earnings announcement, a change in the sales or earnings outlook, an increase or decrease in the Timeliness rank.

Surplus (Insurance Industries)—the amount by which assets exceed liabilities on a legally defined accounting basis.