FINANCIAL
GLOSSARY : G
Gearing
Gearing is the
ratio of a company's debt to its assets and measures the financial
risk of a company's capital structure. Due to the financial risk
associated with gearing, higher gearing will increase the rate of
return required by investors. Gearing is called leverage in the
U.S.
Goodwill
Goodwill is
an intangible asset which appears on the balance sheet of newly
purchased companies. It is the difference between the amount that
a company pays for an investment and its book value. Goodwill payments
may be due to the business being in a favorable location, its reputation
in the community, or the quality of its employer and employees.
The evidence that goodwill exists is the proven ability to earn
excess profits.
Gilt
Secure bonds
issued by the UK government also known as 'gilt edged securities'
or 'fixed interest securities'. Gilts are bought at their par value
or at face value. Most gilts are 'dated' which means that at a fixed
date in the future, the par value will be repaid to the investor.
The categories or time frames for gilts tend to be:
Short dated
gilts ('shorts') - these have a life of up to 5 years.
Medium dated
('mediums') - these have a life of 5 - 15 years.
and Long dated
('longs') - have a life of 15 years or more.
Gross
The gross amount
is the amount before the deduction of tax.
Grossing
up
The process
of calculating the before tax value of an interest or dividend payment
(figures that are required when completing your self assessment
forms).
Gross
redemption yield
The return on
a fixed interest security expressed as an annual percentage. The
redemption yield consists of the capital and income return on the
investment.
Gross
yield
The gross yield
on an investment is the annual gross dividend or income received
expressed as a percentage. The gross yield is used in preference
to the net yield, becauce investors can make a direct comparison
with (gross) interest yields from other loanstocks and gilts.
Guaranteed
income bond
A single premium
insurance bond which pays out a fixed amount of annual income and
returns the original sum invested at maturity.
