114 terms

Business Terms

For use in CBS's pre-MBA program.

Terms in this set (...)

Adjustable Rate Mortgage
A mortgage loan that allows the interest rate to be charged at specific intervals
over the maturity of the loan
Corporate Social Responsibility
A concept that corporations have an obligation to consider the interests of
customers, employees, shareholders, communities, and ecological
considerations in all aspects of their operations
Discounted Cash Flow
A technique used to estimate the present value of future expected cash receipts
and expenditures; it is a factor analysis of both capital investments and securities
A payment by a corporation to shareholders
Earnings Before Interest & Taxes
Financial measure defined as revenues less cost of goods sold and selling,
general, and administrative expenses
Earnings Before Interest, Taxes, Depreciation & Amortization
Pre-tax earnings before interest, depreciation and amortization
Earnings Before Taxes
Sales revenue less cost of sales, operating expenses, and interest, before taxes
have been paid
Earnings per Share
The portion of a company's profit allocated to each outstanding share of common stock
Financial Accounts Standards Board
The non-governmental body which sets the accounting rules for US companies
Free Cash Flow
The amount of cash a company has after expenses, debt service, capital expenditues and dividends
Federal Deposit Insurance Corporation
A U.S. government corporation that provides deposit insurance, which guarantees the safety of deposits in member banks up to $250,000 per depositor
Generally Accepted Accounting Practices
Rules for accounting standards
International Monetary Fund
An international organization that oversees the global financial system by following the macroeconomic policies of member countries, in particular those with an impact on exchange rates and the balance of payments; it also offers financial and technical assistance to its members, making it an international lender of last resort
Leveraged Buyout
The takeover of a company, using borrowed funds
London Inter-Bank Offer Rate
The interest rate that the banks charge each other for loans (usually in Eurodollars). This rate is applicable to the short-term international interbank market, and applies to very large loans borrowed for anywhere from one day to five years. This market allows banks with liquidity requirements to borrow quickly from other banks with surpluses, enabling banks to avoid holding excessively large amounts of their asset base as liquid assets. The LIBOR is officially fixed once per day by a small group of large London banks, but the rate changes throughout the day.
Net Fixed Assets
Also known as the book value of an asset, this is calculated as the purchase price of the asset (gross fixed asset) less the accumulated depreciation (the sum of the annual amounts charged for the "wearing out" of the asset).
Net Operating Profit After Tax
In corporate finance, a company's after-tax operating profit for all investors, including shareholders and debt holders. NOPAT is an operating performance measure after taking account of taxation but before financing cost (i.e., interest is excluded).
PPE (Net)
Property, Plant & Equipment
less Accumulated Depreciation
Research & Development
The scientific and marketing evolution of a new product or service
Return on Assets
Indicator of profitability determined by dividing net income for the past 12 months by total average assets
Return on Equity
Indicator of profitability determined by dividing net income for the past 12 months by common shareholder equity
Return on Investment
Book income as a proportion of net book value
Securities & Exchange Commission
A federal agency that regulates the U.S. financial markets
Selling, General and Administrative
Strengths, Weaknesses, Opportunities, Threats
Components of a situation analysis in marketing and business strategy
Troubled Assets Relief Program
A U.S. government program to purchase assets and equity from financial institutions in order to strengthen the financial sector
Terminal Value
The remaining or expected remaining value of a property at the end of a certain period
Working Capital
Current assets minus current liabilities
A financial measure giving the difference between a fund's actual return and its expected level of performance
Paying off debt over time
Any terminating stream of fixed payments over a specified period of time
Balance Sheet
A financial statement that gives an accounting picture of a business at a particular date
The measure of a stock's volatility relative to the market
A form of interest-bearing security issued by governments, companies, banks and other institutions
Breakeven Analysis
A financial analysis that identifies the point at which expenses equal gross revenue for a zero net difference
Budget Deficit
Excess of spending over income for a government, corporation or individual over a particular period of time
Business Cycle
Recurrent periods during which the nation's economy moves in and out of recession and recovery phases
Right to buy a specific number of shares at a specified price by a fixed date
Money and other property of a corporation or other enterprise used in transacting business
Central Bank
The governmental institution that issues currency, administers financial policy and holds deposits representing the reserves of other banks
Collateralized Debt Obligation (CDO)
A security backed by a pool of bonds, loans, and other assets
Common Stock
Securities that represent an equity ownership interest in a company
Core Competency
Distinctive employee, product, or capacity leading to a long-term advantage
Corporate Governance
The monitoring systems of a corporation consisting of incentives, safeguards, and dispute resolution processes
Corporate Social Responsibility (CSR)
A concept that corporations have an obligation to consider the interests of customers, employees, shareholders, communities, and ecological considerations in all aspects of their operations
The interest payment thata must be made on a note or bond until it matures
Credit Default Swap (CDS)
A contract between the buyer, who receives protection, and the seller, who provides protection, under which the seller agrees to make specified payment to the buyer in the event of a negative credit event (e.g., a default) on the underlying fixed income product(s) specified in the contract
Current Assets
Assets that could be converted to cash, sold, exchanged, or expensed in the normal course of business, usually within one year
Current Liabilities
Debt incurred as part of normal operations that is due within one year
An obligation to pay
Economic expression of desire, and ability to pay, for goods and services
The reduction in value of an asset through wear and tear, obsolescence or other factors
A generic term for futures, options, and swaps, i.e. instruments derived from conventional direct dealings in securities, currencies, and commodities
Enterprise Value
A measure of what the market believes a company's ongoing operations are worth
Equilibrium (economic)
A situation in which market forces do not set in motion a change in the quantities demanded or the current prevailing price
The residual value of a company's assets after all liabilities have been allowed for
Exponential Equation
An equation in which a term is raised to a power
Fixed Pie
A situation in which resources to be divided are fixed
Free Cash Flows
The amount of cash that a company has left over after it has paid all of its expenses, including capital expenditures, debt service, and dividends
Fund of Funds
A mutual fund that invests in other mutual funds
Increase in value
Gross Domestic Product
The total market value of all final goods and services provided in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports
Gross Income
The total income from all sources
Gross National Product
The total value of all goods and servies produced within a nation in a particular year, plus income earned by its citizens located abroad minus income in non-residents located in that country
The condition where desire for consensus within a group overrides the realistic appraisal of alternative courses of action and downplays risks
The process through which people adjust to a change in circumstances, coming to accept something new as standard
Hedge Fund
Private investment partnership which takes both long and short positions, uses leverage and derivatives and invests in many markets
Illiquid Securities
An asset that cannot easily be sold without a substantial loss in value because of a lack of buyers
Income Statement
A financial statement giving operating results, such as net income and loss, for a specific period
A rise in the price of goods and services
Interest Rate
The rate of return over a period of time promised by a borrower to a lender
Just-in-Time Inventory
A method of coordination with suppliers maximizing the relationship between production and sales with inventory to minimize the carrying cost of supplies
Leveraged Buyout (LBO)
The takeover of a company, using borrowed funds
Linear Equation
An equation in which all terms are of the power 1
Expenses exceeding sales or revenue
The study of which economic systems
Managing Upwards
Efforts to influence one's manager or superior, over whom one does not have organizational authority
Management Fee
The charge against assets for managing the portfolio of a mutual fund or other investment entity, as well as for such services as shareholder relations or administration
Margin (finance)
The difference between the price at which something is bought and the price at which it is sold
An accounting rule of assigning a value to a financial instrument based on the current market price for the instrument or similar instruments
Market Segmentation
The process of dividing the market according to similarities that exist among the various subgroups within the market
The study of economics at the level of individual consumers, groups of consumers or firms
Monetary Policy
Policies determining the level and rate of growth of the nation's money supply, which are under the control of a government institution
Mortgage-Backed Security (MBS)
A security that is secured by a collection of mortgages
In stock-index futures, the number multiplied by the futures price to determine the value of the contract
Mutual Fund
An investment company that pools the money raised from shareholders for investment
Net Income
The company's total earnings, reflecting revenues, adjusted for expenses
Net Worth
The amount by which the fair market value of all assets exceeds liabilities
Contracts giving the right to buy or sell a financial instrument or commodity at a specified price within a specified period, with no obligation to do so
Preferred Stock
A stock which precedes the remaining stock in the payment of dividends and the return of capital if the issuing company is liquidated
Price to Earnings Ratio (P/E Ratio)
A measure of the price paid for a share relative to the annual net income or profit earned by the firm per share
The difference between the price at which products are sold and the cost of producing them
Private Equity
Institutional investment in unlisted companies
An option granting the right to sell a specified number of shares at certain price by a specified date
Quadratic Equation
An equation in which the highest power of an unknown quantity is a square
A statistic that shows the amount of variability in a dependent variable explained by the regression model's independent variable(s)
Amount earned, generally denoting a gross figure
Risk Free Rate
The theoretical rate of return of an investment with zero risk
Distribution of risk by aggregating debt instruments in a pool, then issuing new securities backed by the pool
Signifying an ownership position, i.e. bonds or shares, as distinct from money market assets
The financing of government deficits by printing money instead of borrowing from the public
Short Selling ("Shorting")
The selling of a security that the seller does not own at the time of sale with the intention of later purchasing the security at a lower price and returning it to the security's lender, thereby generating a profit if the security has declined in value. (This reverses the adage of "buy low, sell high" to "sell high, buy low.")
Social Intelligence
A set of skills and abilities revolving around one's abiltiy to understand and manage oneself and relationships with others
An economic environment in which unemployment and inflation coexist
Ownership of a corporation which is represented by shares which represent a piece of the corporation's equity
Stock Exchange
An organized marketplace in which stocks and bonds are traded by members of the exchange, acting both as agents and as principals
The quantity of a good or service available for sale at any specified price
To exchange one investment for another
Time Value of Money
A concept that money available now is worth more than the same amount in the future because of its potential earning capacity
The number of people who are available for work and actively seeking work, but cannot find jobs
Value Investment
The practice of purchasing stock that is perceived to be under priced
Venture Capital
An investment in a start-up business
Yield Curve
The relation between the interest rate and the time of maturity of the debt for a given borrower in a given currency
Zero Sum Game
A game in which the sum of the amounts won and lost by all parties is always zero, i.e. gain is always achieved at the expense of other participants