Finance Jargon Flashcards
assets
the property and effects of a business, including premises, machinery, vehicles and cash (tangible assets) and patents, trade marks and goodwill (intangible assets)
business objectives
these are established by breaking operations into achievable and manageable outcomes that can be measured and evaluated
efficiency
the ability of a business to
use its resources effectively
in ensuring financial
stability and profitability
financial management
the planning and monitoring
of the financial resources of a
business to enable it to
achieve its financial goals
financial resources
those aspects of a
business that have a
monetary or money
value
growth
the ability of a business
to increase its size in
the longer term
liquidity
the extent to which a
business can meet its
financial commitments
in the short term
profitability
the ability of a
business to maximise
its profits
solvency
the extent to which a
business can meet its
financial commitments
in the longer term
strategic plan
a statement of objectives
encompassing the
strategies that a business
will use to achieve its goals
strategy
the major tool adopted by a business to achieve its goals
Australian Securities
Exchange (ASX)
the primary stock
exchange group in
Australia
availability of funds
the ease with which a
business can access funds (for borrowing) on the
international financial
markets
bank overdraft
a facility that allows a business or individual to overdraw their account up to an agreed limit for a specified time
bill of exchange
a document ordering
payment of a certain
amount of money at
some fixed future date
commercial bills
a type of bill of exchange
(loan) issued by nonbank
institutions
debentures
financial products issued
by a company for a fixed
rate of interest for a
fixed period of time
dividend
a distribution of the
profits of a company
to shareholders
equity
the finance (cash) raised by a company by issuing shares
external finance
funds provided by sources outside the business, including banks, government, suppliers or financial intermediaries
factoring
the selling of accounts
receivable for a
discounted price to a
finance company
financial decision
making
a process that requires relevant information to be identified, collected and analysed to determine an appropriate course of action
global economic
outlook
the projected changes to
the level of economic
growth throughout the
world
interest rates
the cost of
borrowing money
internal finance
funds provided by the owners of the business (finance) or from the outcomes of business activities (retained earnings)
leasing
a long-term source of borrowing for businesses involving the payment of money for the use of equipment that is owned by another party
mortgage
a loan secured by
the property of the
borrower
owners’ equity
funds contributed by
owners or partners to
establish and build the
business
primary markets
markets that deal with
the issue of debt
instruments by the
borrower of funds
secondary markets
markets that deal with
the purchase and sale of
existing securities
unsecured note
a loan for a set period of
time that is not backed
by any collateral or
assets
accounting equation
a calculation which forms the accounting process, showing the relationship between assets, liabilities and owners' equity
analysis
the process of working the financial information into significant and acceptable forms that make it more meaningful, and highlighting relationships between different aspects of a business
assets
items of value owned
by a business
audit
an independent check of
the accuracy of financial
records and accounting
procedures
balance sheet
a financial document that represents the assets and liabilities of a business, reflecting the net worth of the business at a particular point in time
budgets
quantitative information
(facts and figures) provided
about requirements to
achieve a particular purpose
business activity
statement (BAS)
a statement that records
the claim for input tax
credits and accounts for
GST payable for a business
capital expenditure
what is spent on the
non-current or fixed
assets of a business
cash flow statement
a financial document that
indicates the movement of cash receipts and cash payments resulting from transactions over a period of time
current assets
assets that can be
turned into cash
within 12 months
current liabilities
debts that must be
repaid within 12
months
debt finance
the short-term and longterm
borrowing from
external sources by a
business
debt repayments
money owed either to
the business or by the
business
equity finance
the internal sources of
finance in the
business
financial budgets
relating to financial data of a
business, including the
budgeted income statement,
balance sheet and cash flows
financial controls
the policies and procedures
that ensure that the plans of
a business will be achieved in
the most efficient way
financial risk
the risk to a business of
being unable to cover
its financial obligations
gearing
the proportion of debt (external finance) and the proportion of equity (internal finance) used to finance a business
income statement
a financial document that shows the operating results for a period, including revenue earned and expenses incurred with the resultant profit or loss
interpretation
the making of
judgements and
decisions using the data
gathered from analysis
liabilities
claims by people against
the assets (items of
debt), representing what
is owed by the business
non-current assets
assets that are not
expected to be turned
into cash within 12
months
non-current liabilities
debts that must be
met some time after
the next 12 months
operating budgets
budgets relating to the main
activities of a business such as sales, production, raw materials, labour, expenses
and costs
owners’ equity
the owners’ financial interest
in the business or net worth
of the business (also referred
to as “capital”)
planning process
the setting of goals, determining strategies, identifying and evaluating alternative courses of action and choosing the best
alternative for the business
project budgets
budgets relating to
capital expenditure and
research and
development
record systems
the mechanisms employed by a business to ensure that data is kept and the information provided is accurate, reliable, efficient and accessible
appreciation
an upward movement of
a currency against
another currency
cash flow
the movement of cash in
and out of a business
over a period of time
clean payment
a situation in which payment
is sent to, but not received
by, the exporter before the
goods are transported
cost centres
the particular areas,
departments or sections of
a business to which costs
can be directly attributed
credit risk
the risk of another party
failing to complete a
transaction as agreed
currency swap
an agreement to exchange one currency in the spot market with an agreement to reverse the transaction in the future
current assets
assets that can be
turned into cash
within 12 months
current liabilities
debts that must be repaid
within 12 months, usually
including overdraft and
accounts payable
derivatives
simple financial instruments
that may be used to lessen
exporting risks associated
with currency fluctuations
direct costs
costs that can be
allocated to a particular
product (also known as
variable costs)
foreign exchange
market (forex)
a market that
determines the price of
one currency relative to
another
foreign exchange
rate
the ratio of one
currency to another
forward exchange
contract
an agreement to exchange one currency for another at a certain exchange rate on a future date, usually after 30, 60, 90 or 180 days
hedging
the process of
minimising the risk of
currency fluctuations
indirect costs
costs that are shared
by more than one
product
letter of credit
a commitment by the importer’s bank, which promises to pay a specified amount when the documents proving shipment of the goods are presented
net working capital
the difference between current assets and current liabilities, representing funds needed for the day-to-day operations of a business
option
a financial instrument that gives the buyer the right, but not the obligation, to buy or sell foreign currency some time in the future
payables
sums of money owed by the
business to other businesses
from whom it has purchased
goods or services
payment in advance
a method that allows the
exporter to receive
payment and then arrange
for the goods to be sent
profitability
management
the control of both the
costs and revenues of a
business
receivables
sums of money due to a
business from customers to
whom it has supplied goods
or services
sale and lease-back
the selling of an owned
asset to a lessor and
leasing the asset back
through fixed payments
spot exchange rate
the value of one
currency in terms of
another currency on a
particular day
working capital
the funds available for
the short-term
commitments of a
business
working capital
management
the process of determining the best mix of current assets and current liabilities needed to achieve the objectives of the business
