Financial Glossary


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Objectives. The means by which a goal is to be attained.

Odd Lot. Any number of securities that represents less than a board lot.

Offering. A distribution of securities from a company through a public offering or a private placement.

Offering Document. A document for either a public offering or a private placement that is prepared by a company and its advisors to present information about the company's business. See Memorandum.

One-Time Charge. A cost that a company must pay once, as compared with costs it must pay regularly. If, for instance, the company spends money to acquire another company, that may be considered a "one-time charge." One-time charges are generally backed out of earnings for comparisons to prior time periods so that they don't artificially inflate or deflate the company's performance.

Open Mortgage. A mortgage that can be paid-off, refinanced, or renewed at any time, without any penalty. Also known as a open-end mortgage.

Open Order. An order to buy or sell a security at a specific price which is valid until filled by the trader or cancelled by the client.

Operating Cash flow. The cash generated from the operations of a company, generally defined as revenues less all operating expenses, but calculated through a series of adjustments to net income. The Operating Cash Flow (OCF) can be found on the statement of cash flows. It's arguably a better measure of a business's profits than earnings because a company can show positive net earnings (on the income statement) and still not be able to pay its debts. It's cash flow that pays the bills! You can also use OCF as a check on the quality of a company's earnings. If a firm reports record earnings but negative cash, it may be using aggressive accounting techniques.

Operating Cycle. The time it takes to sell a product and collect cash from the sale. An operating cycle can last from several weeks to a number of years.

Operating Expenses. The cost of doing business. Operating expenses are deducted from revenues, and the result is, hopefully, profits.

Operating Lease. Generally, a short-term lease where the lease payments are less than 90% of the value of the underlying asset.

Operating Profit Before Depreciation. Also known as EBITDA, the Operating Profit Before Depreciation is the operating revenue less cost of sales, operating expenses, and SG&A expenses.

Optimum Capital Structure. The capital structure, including debt, preferred equity and common equity, which creates the lowest cost of capital. 

Option. A device used to speculate or hedge in securities markets. Buying a "call" option gives an investor the right to buy 100 shares of a stock at a certain price within a specified time; buying a "put" option allows an investor to sell as stock under the same conditions. Put another way, it is the right (but not the obligation) during a specified period to acquire a security or asset by paying an agreed amount of money (called the exercise price). The exercise price can be significant or nominal ($.001).

Original Basis. The amount originally paid for an asset or security, including any commission or fees paid. This original or cost basis is not the same as the Current Basis, which includes the cost of an asset plus any improvements, less any depreciation.

Original Issue Discount (OID). A debt instrument originally issued at a lower price where the holder is to receive a higher amount at maturity. The issuer is required to amortize the difference, or OID, over the life of the security. A taxable investormay also be required o recognize a portion of OID as taxable income tax each year. 

Over The Counter. A geographically decentralized market in which stock and other securities transactions are not conducted in person -- as on the much-televised floor of the New York Stock Exchange -- but through a telephone and computer network. The over-the-counter market is regulated by the National Association of Securities Dealers (NASD). This is the market for securities not listed on one of the exchanges.  

Over The Counter Bulletin Board - (OTCBB). This is a regulated electronic trading service offered by the National Association of Securities Dealers (NASD) that shows real-time quotes, last-sale prices and volume information for over-the-counter (OTC) equity securities. Companies listed on this exchange are required to file current financial statements with the SEC or a banking or insurance regulator. There are no listing requirements, such as those found on the Nasdaq and New York Stock Exchange, for a company to start trading on the OTCBB. Stock that trade on the OTCBB, will have the suffix ".OB". It is important to note that companies listed on the OTCBB are not a part of the Nasdaq Exchange. The truth is, OTCBB stocks are not especially large or stable and are considered very risky. As a result, very few OTCBB stocks are successful in making the jump from this market to the Nasdaq or any other major exchange because they are unable to meet the listing requirements. Furthermore, because OTCBB stocks tend to trade infrequently, the bid-ask spread is larger.

Out-of-the-Money. The difference between the market price of the underlying security and the option's strike price. A call is out-of-the-money if the market price of the security is below the strike price while a put is out-of-the-money if the market price of the underlying security is above the strike price.