Finance Core Terms
Terms in this set (70)
The practice and body of knowledge concerned with recording transactions, keeping financial records, performing audits, advising on taxation issues, and reporting financial information.
Process that occurs in order to verify that a company is in fact in compliance with the applicable rules and regulations. This involves the sometimes uncomfortable scrutinization of a company's documents and operations.
Break Even Point
Occurs when the inputs and outputs of a business are equal and a profit is being neither made nor lost.
Capital Gain or Loss
The difference between the sales price and the purchase price of an asset; this could be either positive or negative.
Conforming to a rule, policy, standard, or law.
Requirements imposed to ensure that a company is acting responsibly and ethically.
Helps advise managers on the best course of action based on cost efficiency and capability.
The automatic or semi-automatic computational process of discovering patterns in large data sets.
Dodd-Frank Reform Act
Legislation which brought the most significant changes to financial regulation since the regulatory reform during the Great Depression.
Relates more to whether a company has a code of conduct or a code of values that describe the way in which the company and its employees are expected to act and behave.
Federal Trade Commission
An agency of the United States government that focuses on promoting a competitive market and protecting consumers from false advertising and unfair business practices.
Documentation that provides information about the performance and changes in the fiscal position of an enterprise.
Gramm-Leach Bliley Act
This legislation requires financial-service providers to explain their information-sharing practices and to safeguard sensitive data.
Traditional risk-financing tool used to transfer the financial hazard of risk.
The possibility that an event will occur and positively affect the achievement of objectives.
Has the same force of law as a traditional piece of legislation; they are rules that an authoritative body, such as a federal agency, created. Failure to comply will result in facing penalties or other consequences.
A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action.
Policies, procedures, and practices involved in the identification, analysis, assessment, and control of any negative occurrence in an effort to mitigate or eliminate such hazards.
Risk Management Policy
An organization's written statement that sets out its approach to an appetite for any hazard or negative occurrence.
Legislation passed in 2002 by Congress that requires significantly tighter responsibilities for corporations when reporting financial statements, and it also requires a company's CEO or CFO to certify all external financial reports.
A type of record keeping that recognizes incomes when they are earned and expenses when they are incurred, rather than when they are received or paid.
Activity Based Costing (ABC)
An accounting method that identifies the activities which a firm performs and then assigns indirect costs to products. This system recognizes the relationship between costs, activities and products, and through this relationship, it assigns indirect costs to products less arbitrarily than traditional methods.
The proceeds from an investment or business activity after all assessments are subtracted.
Something of value
A declining stock market
Blue Chip Stock
Ownership shares of a company that has a history of being profitable and providing consistent dividend payments.
Computer programs for creating both business and personal spending plans.
An upwardly-advancing stock market.
A process of negotiating contracts, wages, hours, with an employer.
The reasoning behind an idea, strategy, or proposal with particular emphasis placed on the benefits brought on by that idea.
Consumer Price Index
The government's main way to measure inflation.
Found by dividing the current assets by current liabilities.
An expandable and powerful classification, organization, and collection system.
Computer operations , such as Microsoft Access or Excel, are used to store financial and customer information.
Found by dividing total liabilities by total assets.This ratio shows the proportion of assets financed with debt.
The amount subtracted from a total.
A share of a company's profit distributed to its shareholders according to the number and type of shares held.
Ownership interest in a company.
A federal law covering all aspects of employee retirement plans.
The money spent on something.
The science of money management.
Auditory field concerned with the preparation of all monetary statements for external audiences, including investors, creditors, regulators, and tax authorities.
Financial Analysis Applications
Computer or tablet programs that can provide insight into virtually any area of a financial statement.
A firm that provides any type of monetary services to clients or members. Ex: banks, credit unions, insurance companies, brokerage firms.
Where an enterprise stands from an overall economic standpoint conveyed on a firm's fiscal statements.
Generally Accepted Accounting Principles (GAAP)
Rules and practices that provide guidelines and detailed procedures for handling specific accounting situations.
Specific document which provides information about the performance and changes in the overall fiscal position of an enterprise.
The most significant and prolonged time of economic hardship in the United States.
Money that an individual or business receives in exchange for providing a good or service.
The general rise in prices over time.
The determination of the appropriate mix of assets.
Approach to running an organization that supports the concept of continuous improvement, a long-term approach to work that systematically seeks to achieve small, incremental changes in processes in order to improve efficiency and quality.
The amount of debt that has been used to finance activities, and in order to expand operations.
A claim against assets.
The degree to which an asset or security can be bought or sold in the market without affecting the asset's price.
Process concerned with providing accounting information to internal audiences. The goal is to provide information that will equip company personnel with information to allow them to make well-informed decisions.
Marginal Tax Rate
The amount of tax paid on an additional dollar of income.
The length of time it takes for a business to recover an expense.
All the investments a certain individual or mutual fund hold.
Rate of Return on Net Sales
Calculated by dividing net income by net sales. This shows the portion of each dollar of net sales that a firm is able to turn into income.
Rate of Return on Total Assets
Calculated by adding net income and interest expense and then dividing that number by average total assets. This measures a firm's effectiveness in using assets to generate earning.
A form of financial statement analysis in which items on the financial statements are expressed as ratios of one another.
Set of tools and techniques which concentrates on the "Process" step of manufacturing. It is a disciplined, data driven approach and methodology for the elimination of the defects in any process.
Anyone affected by the decision of some entity.
Principle of engaging in practices that will not deplete a resource; engaging in practices that allow a business to measure and assess the environmental impact of its activities.
The method of fiscal record keeping that focuses on relevant issues including all activities related to filing tax returns and planning for future tax obligations.
The sum of all earnings from a given investment.
A general direction in which something is developing or changing.
The practice of collecting information and attempting to spot a pattern in the information.
An organized association of workers formed to protect and further their rights and interests.
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