Stock Market Terms By Letter: P

P

Paper Profit: A surplus over the purchase price that has yet to be realised.

Par Value: Nominal or face value of each share. This is usually $1.00 or $0.50 in Malaysia and Singapore.

Parent Company: A company that has Subsidiaries. Se: Holding Company. Peri Faun: Of equal standing. Position: A market commitment, long or short.

Pass A Dividend: To forgo a dividend payment when a firm would have paid a dividend under normal circumstances.

Payout-Ratio: Measures that proportion of profit that is distributed to ordinary share~ holders in the form of dividend.

Per Capital Income: The average per head annual income of’ the residents of a country.

Pre-Acquisition Profit: When a holding company prepares its Consolidated Profit and Loss Accounts, all or a pro rata part of” the profit made by a newly acquired Subsidiary or Associate during that particular Financial Year is included in the accounts irrespective of when the latter is acquired during the Financial Year. In order to give the true picture of the profit obtained during the year, the profit which was made by the Subsidiary or Associate before it was acquired (i.e. the Pro-Acquisition Profit) is taken out before the Earnings is computed.

Preferred Shares: A class of shares which is half way between a Common Share and a Fixed-Income Security. A Preferred Share pays a fixed dividend but has no maturity date. It is usually issued subject to several conditions: Cumulation, Participation and Convertibility.

Present Value: The discounting of sums of money to be received in future so as to make them comparable to sums of money being received currently (i.e. to convert them to their respective Present Value). The rate of discount is applied on a compounded basis such that sums of money to be received in the distant future are worth very little in Present Value terms.
Price Earnings Ratio (PER or PIE or PE): The commonest measure of the ‘value‘ of I share lt ls computed by dividing the market price of a share by its Earnings Per Share Sea Innings Multiple.

Prime Rate: This is the interest rate which a bank charges on lending to its best customers.

Profit and Loss Account (P I: L): A statement outlining the amount of profit (or loss) incurred by a firm for a given financial year.

Proforma: Projected or estimated. Usually used in relation to accounting statements. A Proforma Balance Sheet is a projected Balance Sheet for the next accounting period.

Prospectus: A document issued when a company proposes to raise funds from the public A prospectus is usually prepared to satisfy certain requirements of the controlling authority/ies.

Proxy: A person empowered to act for another, usually during company meetings.

Public Expenditure: Expenditure of federal government, local authorities, municipalities and public corporations which has to be financed by public borrowing or taxation.

Public Issue: An invitation to the public to buy the shares of a company which will be listed soon.

Public Sector: The part of the economy which is made up by the federal government, local authorities, municipalities and public corporations.

Put Option: An option which entitles the ‘buyer’ to sell a specified number of shares within a specified period of time at a specified price.

Pyramiding: This term can be applied to several economic activities. In the stock market, it refers to the making of further purchases in a rising market by relying on the increased margin facilities which become available through rising prices. In corporate takeover, it refers to the use of debt capacity of the company taken over to finance further takeovers.