An income statement may also be referred to as a "profit and loss statement". The income statement provides information on how much revenue a company earned over a specific time period. The statement also shows the costs and other operating expenses the company encountered. The bottom line of the income statement shows the company's net earnings or losses.
All the jargon used in investing can seem overwhelming at times. Explore the Lexicon to learn the language that will help make you a smart investor.
An IPO occurs when shares of a company are sold to the general public on a securities exchange (typically NYSE or NASDAQ) for the first time. The company needs to file a registration statement with the SEC, which includes detailed and complex disclosure, high costs with hiring lawyers, accountants, investment bankers, etc. In addition, the company has to provide ongoing annual and quarterly reporting, and any material corporate events and changes in shareholdings of insiders. The company can be sued for any "material misstatements or omissions" in its filings.
Property that results from original creative thought. Intellectual property protected under U.S. law include patents, trademarks, and copyrighted material.
A systematic review of intellectual property assets owned, used, or acquired by a company used to examine use of intellectual property and indentify risks in the company's intellectual property portfolio.
The use of modern mass communication by companies to raise investment directly from the general public.
An exit for investors is an event that allows the investors to get their money (or some of their money) back. For example, when a company makes an IPO, the existing investors may be able to sell all their shares in the same public marketplace. However, if the stock is not publicly traded, the investor will need an event such as a private sale of the investment in order to recover the investment. In general, an investor cannot exit an investment and recoup his gains (or losses) unless there is a marketplace where such investments can legally be offered and sold (and these are rare for small holdings of securities) or another investor (such as a VC group) offers to buy the securities.
The Jumpstart Our Business Startups Act, or JOBS Act, was passed with bipartisan support and signed into law by President Obama on April 5, 2012. It was intended to encourage funding of small businesses in the US by easing various securities regulations. The JOBS Act includes the CROWDFUND Act, which enables crowdfunding.
Companies take time to grow from the startup phase to a public company, if they make it at all. The most successful examples are Apple which took three years (founded 1977, IPO 1980), Google which took six years (founded 1998, IPO 2004), and Facebook which took eight years (founded 2004, IPO 2012). However, many startups go out of business before then, as seen in the dot com bust. If you are holding crowdfunding securities and decide to sell them, your options for exit are limited.
A type of partnership used to raise funding for a company. In exchange for an investment, the limited partner receives a share of the profits of the company and is shielding from the potential liabilities of the company. A limited partnership must have a general partner or partners who receive a greater share of the profits, but may be personally liable for the liabilities of the company.
A limited liability is a legal entity that combines the characteristics of a corporation and a partnership. The owners of an LLC are called members and act in a capacity similar to shareholders of a corporation.
An occurrence, event, or information that a reasonable person would find important when making a decision.
A wrong or false statement.