Economy and Business Terms - Charlie, your teacher of English
watched, especially when the company incurs little depreciation or amortization. It is also called
operating profit.///////////////////////////////////
Economic Growth: It's an increase in the capacity of an economy to produce goods and services,
compared from one period of time to another. Economic growth can be measured in nominal terms,
which include inflation, or in real terms, which are adjusted for inflation. For comparing one country's
economic growth to another, GDP or GNP per capita should be used as these take into account
population differences between countries.
Economic growth is usually associated with technological changes. An example is the large growth
in the U.S. economy during the introduction of the Internet and the technology that it brought to U.S.
industry as a whole. The growth of an economy is thought of not only as an increase in productive
capacity but also as an improvement in the quality of life to the people of that economy.
Elasticity: It's the responsiveness of the quantity purchased of an item to changes in the item's
price. If the quantity purchased changes proportionately more than the price, the demand is elastic.
If the quantity purchased changes proportionately less than the price, the demand is inelastic. For
example, price increases by cigarette manufacturers have a relatively small effect on cigarette
consumption, thus, the demand for cigarettes is inelastic.
Environmental Scan: It is one of the essential components of the global environmental analysis.
Environmental monitoring, environmental forecasting and environmental assessment complete the
global environmental analysis. The global environment refers to the macro environment which
comprises industries, markets, companies, clients and competitors. Consequently, there exist
corresponding analyses on the micro-level. Suppliers, customers and competitors representing the
micro environment of a company are analyzed within the industry analysis.
Equity: In the broadest sense, equity gives you ownership. If you own stock, you have equity in, or
own a portion -- however small -- of the company that issued the stock. Having equity is the
opposite of owning a bond or commercial paper, which is a debt the company must repay to you.
Equity also refers to the difference between an asset's current market value -- the amount it could
be sold for -- and any debt or claim against it. For example, if you own a home currently valued at
$300,000 but still owe $200,000 on your mortgage, your equity in the home is $100,000.
The same is true if you own stock in a margin account. The stock may be worth $50,000 in the
marketplace, but if you have a loan balance of $20,000 in your margin account because you
financed the purchase, your equity in the stock is $30,000.
Earnings per share (EPS): It's a measure of how much profit a company is making for its
shareholders. Changes in EPS are tracked carefully by analysts in order to assess performance of
companies. If EPS is growing, this is a good thing.
Why not just look at profits? Because a company can increase its profits by buying another
company and adding both sets of profits. A company may double its profits through a merger, yet its
EPS can remain unchanged.

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