The investing glossary

EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization. It approximates a company's operating profitability before financing and accounting decisions.

Free cash flow is the cash a company has left from operations after paying for the capital investments needed to maintain and grow the business. It is the cash truly available to owners and creditors.

The price-to-earnings (P/E) ratio is the share price divided by earnings per share. It tells you how much investors are paying for each euro of a company's profit.

Return on equity (ROE) measures profit as a percentage of shareholders' equity. Return on invested capital (ROIC) measures profit as a percentage of all capital — equity and debt. ROIC is harder to flatter with borrowing.

The dividend yield is the annual dividend per share divided by the current share price, expressed as a percentage. It tells you how much cash income a stock pays relative to what it costs.

EV/EBITDA divides enterprise value (market cap plus net debt) by EBITDA. It values the whole business regardless of how it is financed, which makes companies with different debt levels comparable.