The Finance Dictionary

This information provides users with thorough and reliable meanings to all the most common, and even uncommon, financial terms

Financial Terms Beginning With The Letter E

Earnings per share (EPS)

Net earnings of the company divided by the total number of common shares outstanding.

Note that beginning in 2002, corporations are no longer required to amortize the cost of their intangible assets such as goodwill every year. Intangible assets are recorded at cost on the balance sheet. That cost must be reviewed annually to determine if its current value is less than cost, in which case the value would be written down on the balance sheet. Due to this change in accounting rules, corporate net earnings will be increased over prior years, as will earnings per share.
It is best to look at the history of a corporation's earnings per share for the past decade, which can usually be found in their annual report. Most annual reports are available on the company's web site.
Analysts also predict the future earnings per share for corporations.

Earnings per share fully diluted

Net income of the company divided by the total number of common shares that would be outstanding if all convertible financial instruments (convertible debentures, convertible preferred shares, stock options, etc.) were converted into common shares.


Earnings before interest, taxes, depreciation and amortization.

Educational assistance payment (EAP)

An educational assistance payment (EAP) is a payment from a Registered Education Savings Plan (RESP) to a beneficiary of the plan, and is made from the earnings and Canada Education Savings Grant (CESG) portion of the RESP. This payment is taxable in the hands of the beneficiary of the RESP.

Effective interest rate

See interest rates.

Employment Income

Employment income, which is usually reported on a T4 slip, includes:
  • salary
  • wages
  • tips
  • bonuses
  • commissions
  • honoraria (generally paid in relation to an academic activity)

Other types of employment income, which may not be on a T4 slip, include:

  • tips or occasional employment earnings not included on a T4
  • employment income from another country
  • net research grants
  • cleric's housing allowance
  • income from wage-loss replacement insurance plans
  • GST/HST and QST rebates received regarding employment expenses
  • royalties from a work or invention, if there are no associated expenses. If there are associated expenses, the net income is reported as self-employment income
  • amounts received under a guaranteed annual wage plan
  • taxable benefit for group life insurance premiums paid by your former employer
  • amounts received from an employee profit-sharing plan

Self-employment income is not included in employment income.

Employers are required to withhold income tax, Employment Insurance and Canada Pension Plan premiums, and remit them to Canada Revenue Agency.

An employment tax credit is available on up to $250 of employment income for 2006 (x 15.25%), and up to $1,000 for 2007 (x 15.5%) and later years.

Enterprise value

The enterprise value of a corporation is calculated as its market cap plus debt and preferred shares, less cash and short term investments. This value is also referred to as a theoretical takeover value.

Consider a corporation with a market cap, or market value, of $100 million, which has no debt, but has $10 million in cash and short term investments. In a takeover, the buyer would pay $100 million, but would then have the $10 million in cash, for a net cost of only $90 million.

Consider the same corporation, but this time it has $20 million in debt as well as the $10 million in cash. The buyer would need an additional $20 million to pay off the debt, or else would have to pay interest on the debt. Thus, the net cost would be $100 million, less $10 million, plus $20 million, or $110 million.


When a stock is sold ex-dividend, this means the purchaser is not entitled to the most recently announced dividend.

Ex-dividend date

The ex-dividend date is the first trading day on which the seller of the stock, not the purchaser, is entitled to the most recently announced dividend. When the trade date is before the ex-dividend date, the purchaser is entitled to the dividend. The ex-dividend date is two business days prior to the record date. See also settlement date.

Exchange traded funds (ETFs)

ETFs are funds which hold shares of individual companies. The index-linked ETFs that we recommend have the goal of achieving the same return as a stock index, and they will diversify your investments among many different countries and industries.

The MER, or management expense ratio for ETFs is usually much lower than for mutual funds, and there are no front end or back end loads (fees) for ETFs. They are traded like a stock, with brokerage commissions paid on the purchase and sale. There are many types of exchange traded funds available, such as SPDRs (Standard & Poor Depositary Receipts, also know as Spiders), iShares (Canadian and US), Diamonds, and others.