Glossary

The right denominator for book value per share, and for a return on equity whose numerator is profit attributable to owners. Mixing the two levels gives the flattering answer wherever the non-controlling share of profit is positive, and the pessimistic one where the partly owned subsidiary is losing money.

One post-tax line of profit and one line of carrying amount. No revenue, no assets, no borrowings and no interest cost from the investee reach your accounts at all.

The second term in return on equity. It magnifies a bad year by exactly the factor it magnifies a good one, which is why two lenders with the same headline return are not the same investment.

Three qualifiers each eliminate a shelf of products: equity shares, of domestic companies, listed. A fund can be entirely invested in equity and fail on any one of them. The class, not the fund's name or its exposure, decides the qualifying period, the rate and the annual exemption.

Meaningful for banks, nearly useless for a software company.

The lock-in is described as the cost and is arguably the benefit: three years in which you cannot redeem in a panic.

Compensation for enduring drawdowns, not a payment that arrives on schedule. It shows up over decades and can be absent for years at a stretch.

A legal slice of a real business. Own 1% of the shares and you own 1% of the company.

Above 2 means lenders fund the business more than owners do — and lenders get paid first.

A ratio that trebled for many Indian retailers in FY20 without any borrowing happening — the leases were always there, they were just not written down.

Normally 30% of approved cost. Regulated profit is roughly regulated equity × allowed return, so it grows as new projects are commissioned.

The commission sets a return rather than a price, so the analysis moves to the allowance and the disallowances. Regulatory lag is where the margin actually goes: between an input cost rising and a tariff order recognising it, the company funds the gap itself.

The fourth statement, which almost nobody opens, and the only place the year is laid out reserve by reserve. A translation reserve that has been accumulating for years becomes obvious here and nowhere else.

Money-market behaviour with equity classification for tax, because the test asks what is held and not what the holding is hedged with. The international equity fund is the same divergence running the other way.

Matters more than which stocks you pick. It determines how much a crash actually costs you.

Sold on the yield and owned for the yield; designed to be written down in a crisis so that depositors are not. If it pays materially more than a bank deposit, that gap is precisely what it is paying for.

A photograph, not a film. Where fragility shows up before it reaches profits.

Over long periods the share price tracks this far more closely than it tracks any single year of earnings.

Free, public data showing who is actually buying in size. Almost nobody reads it.

For a loss-making associate or joint venture it acts as a floor at zero. Once it is exhausted, further losses stop being recognised, and reported profit improves with nothing having changed.

Tells you whether a high ROE comes from brand power, operational speed, or just debt.

It usually carries most of the day’s volume, which means a daily commodity candle averages two very different markets — a thin Indian afternoon and an active overseas evening.

The one people confuse with multicap. A flexicap manager can sit 90% in largecaps when nervous, so in a smallcap crash two funds with almost identical names behave nothing alike.

It lowers the expected amount and narrows the range of amounts. Written down years ahead it is a rule; decided in the moment it is a market call.

It is the higher of your actual cost and the lower of the 31 January 2018 value and your sale price. The inner cap means it can never manufacture a loss; the outer floor means it can never remove a real one. Sell between what you paid and the 2018 value and the gain is exactly nil.

Partly rational, since you earn and spend in rupees. The problem is that a wholly domestic portfolio stacks your job, your property and your savings on one economy, one currency and one regulatory regime.

Tax treatment usually drives the choice: an aggressive hybrid is taxed as equity, a conservative one as debt. With balanced advantage funds the rules vary enormously, so read the methodology rather than the category name.

The accounting sense is narrower than the everyday one. It is the classification that puts a whole business, its revenue and its borrowings behind a single line of profit in your accounts.

Many investors deliberately harvest gains up to the exemption limit each year.

Return is what a report advertises; drawdown is what you actually live through.

No goodwill and nothing through profit. Earnings per share rises whenever the profit picked up beats the after-tax funding cost, which holds across a wide span of prices, and book value per share falls at any price above the carrying amount bought out — so neither movement is evidence that the price was sensible.

The Ind AS name for what older accounts called minority interest, and it has two halves. Ignore the profit half and earnings per share is overstated; ignore the equity half and book value per share is.

Very cheap equity exposure with a rigid retirement condition and a mandatory annuity at the end.

Worth knowing because older reports and a good deal of commentary still use the phrase. A joint operation looks similar on the face of the accounts but is a different thing: recognition of the party’s own assets and obligations, not a proportion of somebody else’s.

The honest version of ROE. It cannot be manufactured with leverage.

Can be inflated simply by borrowing more. Always decompose it before admiring it.

Two extra months of patience can be worth 20% of your gain.

The tier that cannot be borrowed. Subordinated debt counts towards the second tier and buys growth capacity without diluting anybody, but it never gets you here.

True of the annualised return, which converges roughly with the square root of the horizon, and false of the final amount, whose spread widens over the same years. Most arguments about it are two people each defending one half.

Unvested equity is a retention device, not wealth you own. Counting it in your net worth is how people talk themselves into staying in a job they should leave.

The formal discount rate for a DCF, which most investors reasonably simplify into a required return by business type. Running the model at three plausible rates says more than deriving one precisely.

Included by the equity method — a share of profit rather than line-by-line consolidation.

Typically one decision by one large party — a private equity exit, a promoter tranche, a fund taking a position.

Two years of spending in cash, the next few in debt, the rest in equity. You are never a forced seller.

It only matters for bar sizes that do not divide the session. Two hourly charts of the same Indian equity session, one anchored at 9.15 and one on the clock, share no interior candle at all.

Equity held over a year is taxed more favourably than under. Every switch resets the clock.

The mood is not caution — it is disgust, and people questioning whether equity works at all.

Free, detailed research answering the one question equity analysts skip: can this company survive?

Indian cash equity trading is overwhelmingly on-exchange and visible. Large negotiated trades go through the exchange block-deal window and are disclosed the same day.

The head of income decides what you keep. The entire amount is taxed at your slab rate rather than the gain at the equity rate, and the cost of the shares is not set against it — it becomes a capital loss in a different part of the return.

Equity does not become riskier as you age; this falls. The same 40% fall is a few months of saving at 25 and a permanent reduction in what can be spent at 58.

Usually 1% inside a year on equity funds. Switching schemes triggers it too.

Earnings growth plus dividend yield, plus or minus re-rating. Plan at 10–11% for Indian equity.

It can build quietly across six years of annual reports and is only properly visible in the statement of changes in equity. It reaches the profit line exactly once — when that operation is disposed of, which may be never.

It holds units, not shares, so it cannot meet the ordinary equity-oriented test; the separate route for it needs ninety per cent into an exchange-traded scheme that itself holds ninety per cent in domestic listed equity. A feeder into an ordinary index fund gives you identical exposure in a different tax bucket, and charges two layers of expense to do it.

Money needed within five years does not belong in equity, and money not needed for fifteen probably should be — applied goal by goal rather than by any formula based on your age.

At 25 it is by far the largest holding and it is largely uncorrelated with the market, which is the real reason a young person can carry a high equity share. By 55 the ratio has inverted.

Equity ranks last. When lenders take haircuts, there was nothing left below them.

Debt-to-equity says how much is borrowed; this says whether the company can actually afford it.

The same idea as cost of carry in an equity future, met on a currency chart. It is a financing number, not a view about either currency.

It wins more often than staggering, because markets rise more often than they fall. It also produces the one experience — everything deployed the week before a 20% correction — that makes people abandon equity altogether.

The older name for what Ind AS calls a non-controlling interest. Compute per-share figures after deducting it — from profit and from equity both — or you overstate earnings and book value together.

Your equity curve was one shuffle of the deck. This deals the same cards again a thousand times and shows the hands you might just as easily have got.

The half of the year earnings per share never sees. It still lands in equity, so return on equity can improve on an entirely unchanged business simply because a large OCI loss shrank the denominator.

The shape equity returns actually take. Downside stops at −100% and upside does not, so a handful of holdings produce nearly the whole result and the typical one disappoints.

Only compares businesses whose value sits on the balance sheet, and only means something read alongside return on equity.

What turns "stay mostly in equity" into a rule you can check in ten seconds.

Unlike ROE it cannot be lifted by swapping equity for debt, because the borrowed money still sits in the asset base. Most informative for banks and lenders, where the assets are the business.

The sensible way to deploy a lumpsum into equity instead of putting it all in on one day.

Excellent for the portion that must be certain. It is debt, so pair it with equity for an 18-year horizon.

Not available to an Indian equity scheme meeting redemptions. Its absence is why a manager under liquidity pressure reaches instead for the blunter tool of limiting the money coming in.

It determines the sensible equity share and almost nothing else does. Twenty years is still a long horizon.

The number that actually reconciles to the change in equity. If it sits close to net profit, nothing here needs your attention; if the two diverge by hundreds of crore, the profit line is half the year.

Funding with no interest line, no covenant and no credit rating, and none of it appears in borrowings, net debt to EBITDA or debt-to-equity. It is repayable on demand in the only sense that matters: the supplier can stop supplying.

Costs, secured creditors, workers, unsecured creditors, government, then equity. Equity usually gets nothing.

Highest on equity funds and lowest on liquid and index funds, so the mix decides it.