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ILC Glossary of Financial Terms: G
- General Mortgage Bond:
A bond which is secured by a blanket mortgage on the company's property, but which is usually subordinated to one or more other mortgage bonds.
Goodwill is an intangible asset of a company. The buyer of a business is often willing to pay for the "good name" of the business in addition to the value of its assets. Goodwill appears on the balance sheet as the excess of the amount paid for the shares over their net asset value.
- Gross Profit Margin:
A company's gross profit (net sales minus cost of goods sold) divided by net sales, expressed as a percentage. If a company has $10 million in net sales and its cost of goods sold is $8 million, its gross profit would be $2 million. Its gross profit margin would be $2 million divided by $10 million X 100 = 20%. Gross profit margin indicates how efficiently management turns over the company's goods at a profit.
- Gross-up and Credit System:
A procedure to encourage Canadians to invest in preferred and common shares of taxable, dividend-paying Canadian corporations by giving a tax break to such investors. The taxpayer pays tax based on grossing-up i.e. adding 25% to the amount of dividends actually received and then obtaining a credit against federal and provincial tax based on the grossed-up amount. This system is not available on interest from bonds.
- Growth Stock:
Usually a non-dividend paying common stock of a company with expansion potential. The corporate funds that would normally be paid to shareholders as dividends are put back into the company to pay for expansion. Growth stocks have the potential for capital gains rather than income.
- GTC Order:
This stands for a "good till cancelled" order. This is an order to buy or sell a security at a specified price, which is valid until executed or cancelled. This is the same as an open order.
- Guaranteed Investment Certificates (GICs):
A deposit instrument most commonly available from trust companies or banks requiring a minimum investment at a predetermined rate of interest for a stated term, i.e. one year, five years, etc. Generally non-redeemable and non-transferable prior to maturity, but there can be exceptions.