Financial Vocabulary Flashcards
AMORTIZATION
The practice of spreading an intangible asset’s cost over that asset’s useful life.
EBITDA
Earnings before interest, taxes, depreciation, and amortization, is a measure of a company’s overall financial performance and is used as an alternative to net income in some circumstances.
AMORTIZATION
The practice of spreading an intangible asset’s cost over that asset’s useful life.
ASSETS
An item of value owned by a company.
CURRENT ASSETS
All the assets of a company that are expected to be sold or used as a result of standard business operations over the next year.
FIXED ASSETS
Tangible assets that a business expects to own for more than a year.
ASSET ALLOCATION
Involves dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash.
BONDS
A fixed-income investment that represents a loan made by an investor to a borrower, usually corporate or governmental.
STOCKS
A security that represents the ownership of a fraction of a corporation.
BALANCE SHEET
A financial statement that reports a company’s assets, liabilities, and shareholder equity.
BALANCE SHEET EQUATION
An accounting equation that seeks to ensure the sum of a company’s or business assets is equal to the sum of liabilities and capital invested.
CAPITAL GAIN
An increase in a capital asset’s value and is considered to be realized when the asset is sold.
CAPITAL MARKET
Where savings and investments are channeled between suppliers—people or institutions with capital to lend or invest—and those in need.
COMPANIES
A legal entity formed by a group of individuals to engage in and operate a business—commercial or industrial—enterprise.
INSTITUTIONAL INVESTOR
A company or organization that invests money on behalf of clients or members.
MUTUAL FUNDS
A company that brings together money from many people and invests it in stocks, bonds or other assets.
HEDGE FUNDS
An investment vehicle that caters to high-net-worth individuals, institutional investors, and other accredited investors.
CASH FLOW
To the net balance of cash moving into and out of a business at a specific point in time.
OPERATING CASH FLOW
The net cash generated from a company’s normal business operations.
INVESTING CASH FLOW
The net cash generated from a company’s investment-related activities, such as investments in securities, the purchase of physical assets like equipment or property, or the sale of assets.
FINANCING CASH FLOW
Shows the net flows of cash that are used to fund the company and its capital.
CASH FLOW STATEMENT
A financial statement that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources.
COMPOUND INTEREST
The interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.
EQUITY
Represents the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debts were paid off.
