Definitions

Question 1

Finance

Answer 1

the management of large amounts of money, especially by governments or large companies.

Question 2

Financial services

Answer 2

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

Question 3

Managerial finance

Answer 3

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.

Question 4

Financial manager

Answer 4

a person responsible for the financial health of an organization.

Question 5

Commercial bank

Answer 5

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.

Question 6

Investment bank

Answer 6

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.

Question 7

Credit union

Answer 7

a non-profit money cooperative whose members can borrow from pooled deposits at low interest rates.

Question 8

Primary market

Answer 8

segment of financial market where new securities are issued and sold to investors for the first time.

Question 9

Secondary market

Answer 9

segment of financial market where previously issued securities are bought and sold among investors.

Question 10

Money market

Answer 10

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.

Question 11

Capital market

Answer 11

sector of the financial market where long-term debt and equity securities are bought and sold.

Question 12

Bond

Answer 12

a fixed-income financial instrument that represents a loan made by an investor

Question 13

Commercial paper

Answer 13

short-term, unsecured debt instrument issued by corporations to finance their short-term liabilities.

Question 14

Preferred stock (including differences from common stock)

Answer 14

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.

Question 15

Common stock (including differences common stock)

Answer 15

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)

Question 16

Current assets

Answer 16

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

Question 17

Current liabilities

Answer 17

debts a company must pay within a normal operating cycle, usually less than 12 months BALANCE SHEET

Question 18

Account receivable

Answer 18

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

Question 19

Balance sheet

Answer 19

presents all the assets that the company owns and explains how these assets are financed at the given period of time

Question 20

Inventories

Answer 20

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

Question 21

Account payable

Answer 21

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)

Question 22

Notes payable

Answer 22

A written promise to pay a specific amount of money at a specified date in the future. BALANCE SHEET

Question 23

Accumulated depreciation

Answer 23

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

Question 24

Book value

Answer 24

Net value of an asset or company. BALANCE SHEET

Question 25

Stockholders’ equity

Answer 25

Assets remaining in a business once all liabilities have been paid out.

Question 26

paid-in-capital in excess of par

Answer 26

The amount of money that shareholders have invested in a company beyond the par value of its stock. BALANCE SHEET

Question 27

Retained earnings

Answer 27

the amount of profit a company has left over after paying all its direct costs, indirect costs, income taxes and its dividends to shareholders. BALANCE SHEET

Question 28

Income tax payable

Answer 28

indicates the amount that an organization expects to pay in income taxes within 12 months. INCOME STATEMENT

Question 29

Plant property and equipment

Answer 29

Tangible assets that a company uses in its operations to produce goods and services, they are not intended for resale and are expected to provide economic benefits to the company over a long period. BALANCE SHEET

Question 30

Gross profit

Answer 30

a company’s profit after deducting the costs associated with producing and selling its products or services. INCOME STATEMENT

Question 31

Operating profit

Answer 31

Gross profit- operating expenses. INCOME STATEMENT

Question 32

Pre-tax profit

Answer 32

indicates a company’s profitability before accounting for income taxes. INCOME STATEMENT

Question 33

After-tax profit

Answer 33

amount of money that the company has earned after deducting all expenses, reflects the profit available to shareholders. INCOME STATEMENT