Definitions Flashcards
Incoterms
Three letter-terms/set of 11 rules published by the International Chamber of Commerce in order to define the responsabilities of sellers and buyers in international trade - they determine who is responsible for paying and managing various aspects of the shipment (such as transportation, insurance, documentation, customs clearence and other logistical activities.)
Rules for any mode of transport
- EXW
- FCA
- CPT
- CIP
- DPU
- DAP
- DDP
- Ex Works: The buyer takes full responsibility and bears all costs after loading the cargo at the seller’s premises.
- Free Carrier: The goods are delivered at a specified location and have already been cleared for export.
- Carriage paid to: The goods are considered delivered when they are handed over to the first or main carrier. The seller takes care of export clearance and covers the freight cost to the specified destination.
- Carriage and insurance paid to: Similar to CPT, but the seller is also required to obtain insurance for the goods during transit.
- Delivered at place unloaded: The seller unloads the goods at the specified destination, but the buyer bears the unloading costs.
- Delivered at place: The goods are handed over to the carrier, and the buyer takes care of customs clearance.
- Delivered duty paid: The seller has the maximum obligation, and the buyer is free from any risk or cost until the goods are unloaded at the specified destination, usually the buyer’s place of business.
Rules fors sea and inland waterway transport
- FAS
- FOB
- CFR
- CIF
- Free alongside ship (FAS): The seller clears the goods for export and places them next to the vessel at the specified port of departure.
- Free on board (FOB): The seller clears the goods for export and ensures their delivery and loading onto the vessel at the specified port of departure.
- Cost and freight (CFR): The seller is responsible for clearing the goods for export, delivering them onboard the ship at the port of departure, and paying for their transport to the specified port of destination.
- Cost, insurance, and freight (CIF): The seller delivers the goods, cleared for export, onboard the vessel at the port of shipment. They also pay for the transport of the goods to the port of destination and obtain minimum insurance coverage for the goods throughout the journey. The buyer assumes all risk once the goods are onboard the vessel for the main carriage.
ACCOUNTING PERIOD
The time over which financial statements and accounts are prepared, usually measured over months, quarters or years.
ACQUISITION
The purchase of one company or resources by another.
ACTUARY
A person employed by pension providers and insurance companies to calculate accident rates, life expectancy and relevant payouts.
ASSETS
Property owned by a business that has value or a future benefit.
AUDIT
An official inspection of a company’s, or individual’s, accounts.
BALANCE SHEET
A ‘snapshot’ of a company’s assets, liabilities and capital at a particular point in time.
BENCHMARKING
Checking your company’s standards by comparing them with certain criteria, e.g. the activities of a competitor.
BID-OFFER SPREAD
The buying (offer) and selling (bid) price of shares, bonds or currency. The ‘spread’ is the difference between those two prices.
BLACK SWAN
Financial events that are difficult to predict. So called because before people ventured to Australia, all swans were assumed to be white. No one had seen a black swan until then.
BLUE CHIP
A large company considered safe or prestigious. A term originating from poker, where the highest-value chips are blue.
BOND
An agreement made when money is borrowed from an investor at a set rate of interest. It is repaid over a set period of time. Bonds are rated from the safest (AAA) to the riskiest (D), also known as ‘junk bonds’.
BREAK-EVEN POINT
The point in time when you will have paid back all your debts, or when revenues exactly match expenses.
