Definitions Flashcards
Finance
the management of large amounts of money, especially by governments or large companies.
Financial services
broad ranges of services provided by the financial institutions to people, businesses, and governments to help them manage and grow their wealth, invest, and protect themselves from financial risks
Managerial finance
a branch of finance that focuses on the financial management within the corporations. Primary goal is to maximize shareholder value, apply financial principles to decision-making to achieve the financial goals of the company.
Financial manager
a person responsible for the financial health of an organization.
Commercial bank
financial institution that provides banking services to business, government, and individuals. It accepts deposits from the public, issues loans, and facilitates various financial transactions. Mobilize savings and channel them into productive investments.
Investment bank
financial institution that provides services related to capital markets, corporate finance, and advisory for mergers and acquisitions (M&A). Specialize in helping companies, governments, and other large institutions raise capital and manage large-scale financial transactions.
Credit union
a non-profit money cooperative whose members can borrow from pooled deposits at low interest rates.
Primary market
segment of financial market where new securities are issued and sold to investors for the first time.
Secondary market
segment of financial market where previously issued securities are bought and sold among investors.
Money market
sector of financial market where short-term borrowing and lending of securities occurs (with maturities of one year or less). Involves highly liquid and low-risk financial instruments.
Capital market
sector of the financial market where long-term debt and equity securities are bought and sold.
Bond
a fixed-income financial instrument that represents a loan made by an investor
Commercial paper
short-term, unsecured debt instrument issued by corporations to finance their short-term liabilities.
Preferred stock (including differences from common stock)
an equity security, represents ownership in the company but generally provides fixed dividends and has a priority over common stock in receiving dividends and in the event of a liquidation (in case of bankruptcy). The holders have no voting rights.
Common stock (including differences common stock)
type of equity security that represents ownership in a corporation. These stockholders are entitled to a share of the company’s profits, though dividends are variable and not guaranteed. Stockholders have the worst protection in a case of bankruptcy because they are paid last. Have voting rights (number of votes = number of stocks)
Current assets
short-term assets that a company expects to convert into cash, sell or use-up in one year or one operating cycle. They show a company’s liquidity, their ability to meet short-term obligations. BALANCE SHEET
Current liabilities
debts a company must pay within a normal operating cycle, usually less than 12 months BALANCE SHEET
Account receivable
refers to the money a company is owed by its customers for goods or services delivered but not yet paid for (expected to be collected within a short period). BALANCE SHEET
Balance sheet
presents all the assets that the company owns and explains how these assets are financed at the given period of time
Inventories
goods and materials that a business holds for the purpose of resale production (expected to be sold or used within a year). Considered a current asset on the BALANCE SHEET
pre-paid expenses
Account payable
represents the amount of money a company owes to its suppliers or vendors for goods and services it has received but not yet paid for. A type of current liability on the BALANCE SHEET (meaning it’s an obligation that the company need to settle within one year)
Notes payable
A written promise to pay a specific amount of money at a specified date in the future. BALANCE SHEET
Accumulated depreciation
total amount of depreciation expense that has been recorded for an asset since it was acquired. Reflects the asset’s usage and wear. BALANCE SHEET
Book value
Net value of an asset or company. BALANCE SHEET
