EQUITIES: LANGUAGE OF THE STOCK EXCHANGE MARKET

In order to appreciate the huge potential and opportunity in the stock exchange market, one needs to really understand the language of the stock exchange market.

Just like I stated in my previous post titled 'NASDAQ FOR THE MAN WHO DOESN'T GIVE A......!' Many people get confused and lose interest in the stock exchange market when certain words or terms are thrown at them, one of them is certainly the word Equities.

The word is a  ' must understand' if one really wants to play with the big boys in the stock exchange market and come out smiling because Equities determines the attraction of investors to certain companies trading on the stock exchange.

My own simple definition of equities is  ' the real worth of a company owned by someone or some people after the costs of owning that company is subtracted.

Hang on there, I don't want to lose you, maybe this simple example will help explain.
Let's say I want to invest in a big seafood company based in Abuja- Nigeria. As a wise investor, I should be interested in the companies staff strength, profitability and how much the company spends on salaries and allowances, then I should want to know how much the company spends on power, for instance, the cost of powering her cold rooms.
I should want to know the cost of purchase and transportation of the seafood and from the port to the consumer's hinterland let's say every year, how much tax the company pays, ground rent? And if she is servicing a bank loan and so on.

Now all these listed areas of concern and others not mentioned, are what I as an interested investor should subtract from what the owners or owner of the company say the company is worth to arrive at the real worth or value of the seafood company.

That worth after all the liabilities, debts and other costs are subtracted; is what is called the equities of the company.

A Company could claim to be worth a handsome amount but the wise investor checks its equities to know if she is ' healthy' or desperately  ' sick' investment wise.

Thank God companies listed in the stock exchange save would be investors the trouble of investigation, they have their equities regularly posted in their quarterly, biannual or annual financial reports or prospectus for the general public to examine.