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To: The Other Analyst who wrote (109)	10/8/1999 12:40:00 AM
From: The Other Analyst	of 214

Let's pick on the Washington Post. washingtonpost.com Earnings per share is net income available for common shareholders divided by average shares outstanding. If you want to be even more helpful to the reader, you could explain the difference between basic and diluted (or primary and fully diluted as it used to be). Let's see how close the Washington Post glossary came: Earnings Per Share (EPS) EPS, as it is called, is a company's profit divided by its number of shares. If a company earned $2 million in one year had 2 million shares of stock outstanding, its EPS would be $1 per share. The company often uses a weighted average of shares outstanding over the reporting term. ¸ Copyright The Washington Post They missed the net income for common shareholders, calling it "profit", which is ambiguous. A reminder about the treatment of preferred dividends would have been nice. "Number of shares" is too vague. Number authorized? Issued? Outstanding? They don't say. Then the best part. "the company often uses..." No, the accountants don't give them THAT much latitude. There are some specific definitions about the use and calculation of average shares outstanding. I shudder to think how the Washington Post glossary would handle something complicated. Here's one: Sharpe Index A measure of a portfolio's excess return relative to the total variability of the portfolio. Related: treynor index ¸ Copyright The Washington Post No, it is return divided by volatility. Nothing to do with excess return. Back to something simple: Stockholder Equity Balance sheet item that includes the book value of ownership in the corporation. It includes capital stock; paid in surplus and related earnings. ¸ Copyright The Washington Post This would be an opportune time to introduce the accounting equation of assets = liabilities + equity. But they blew it. I think they were trying to say "retained earnings" when they said "related earnings". It "includes" the book value of ownership? Sounds circular. And what else does it include? These examples of what is in Internet investment term glossaries are not isolated instances. In my experience, virtually every glossary on the web has some serious errors. Why do they bother?

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