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Coursera - Financial Analysis > Financial Vocabulary > Flashcards

Financial Vocabulary Flashcards

1
Q

Accounting

A

Fundamentally about measurement; analyzing and reporting financial accounts.

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2
Q

Accounts payable

A

money that is owed by a company to creditors or suppliers.

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3
Q

Accounts receivable

A

money that is owed to a company by its customers who purchased goods or services, but have not paid for them.

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4
Q

Accrued liabilities

A

Expenses that the company has already incurred but has not yet paid.

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5
Q

Accumulated depreciation

A

The estimated amount of the fixed asset the company has used up since it was acquired.

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6
Q

Allowance for doubtful accounts

A

The amount the company is owed by customers that it estimates it will not receive.

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7
Q

Agency bonds

A

A category of bonds that encompass federal government agency bonds and government sponsored enterprise bonds.

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8
Q

Annual percentage rate

A

the interest rate banks are required to quote on loans.

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9
Q

Annuity

A

a stream of cash flows where there is a fixed maturity.

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10
Q

Appreciation

A

an increase in the value of an asset with prolonged ownership.

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11
Q

Arithmetic average return

A

A form of measuring average return by adding up all returns from each period and dividing by the total number of periods.

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12
Q

Attribute

A

Represents a characteristic of the phenomenon.

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13
Q

Average cost assumption

A

Cost flow assumption where all inventory costs are added together and then divided by the total number of inventory units to find the average inventory price used to calculate cost of goods sold.

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14
Q

Balance sheet

A

a snapshot of a firm’s assets, liabilities, and shareholders’ equity at a certain point in time; a substitute attribute for the company’s position that presents an organized list of the company’s assets, liabilities, and equity at a point in time.

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15
Q

Bankruptcy

A

The legal processes to seek relief that individuals or companies go through when debts cannot be repaid.

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16
Q

Beta coefficient

A

The percentage change in an individual stock return for each 1% change in the overall market’s return.

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17
Q

Board of Directors

A

The highest governing body of a corporation; responsible for selecting and appointing senior executives, as well as supervising performance and determining executive pay.

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18
Q

Bond

A

A type of loan the bond issuer owes to the bondholders, typically investors.

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19
Q

Bondholder

A

The investor who owns the bond.

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20
Q

Bond valuation

A

The principle where the value of a bond is equal to the present value of all the cash flows it generates.

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21
Q

Book value of equity

A

A firm’s equity that is available for distribution to shareholders.

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22
Q

Business

A

An entity that provides goods and services to earn a profit.

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23
Q

Capital asset pricing model (CAPM)

A

The relationship between the expected return of an asset and the systematic risk of an asset.

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24
Q

Capital budgeting

A

The process used by firms to decide whether to initiate a new project or not.

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25
Q

Capital gain

A

The difference between the selling price and the initial purchase price of an investor’s shares.

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26
Q

Capital gains yield

A

The return of a stock based on the appreciation of the stock.

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27
Q

Cash cow

A

A term used when a company does not retain any earnings, yet generates a constant stream of dividend

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28
Q

Cash flows

A

the amount of money transferred in and out of a business.

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29
Q

Cash ratio

A

a ratio of cash and equivalents to the current liabilities.

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30
Q

CEO

A

chief executive officer is the most senior executive within the corporation, responsible for managing the corporation.

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31
Q

CFO

A

chief financial officer is the authority for the financial side of a company.

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32
Q

Common-size balance sheet

A

a balance sheet in which each line item is expressed as a percentage of total assets.

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33
Q

Common-size income statement

A

an income statement in which each line item is expressed as a percentage of total revenue.

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34
Q

Common stock

A

Common shares that allow shareholders to have voting rights and participate in major decisions, as well as receive dividends if the company chooses to pay them.

35
Q

Compensation Committee

A

determines the pay package for top executives.

36
Q

Compounding

A

the process of interest being earned on previously earned interest.

37
Q

Constant growth model

A

The value of a constant growth stock is the present value of growing perpetuity.

38
Q

Contingency note

A

Disclosing a potential liability whose classification as a liability depends on the outcome of some future event.

39
Q

COO

A

chief operating officer is responsible for the daily operations of a corporation and reports to the CEO.

40
Q

Corporation

A

A legal entity separated from its owners and owned by its shareholders.

41
Q

Corporate bonds

A

Bonds issued by corporations.

42
Q

Cost of goods sold (COGS)

A

refers to the direct costs that are needed to manufacture goods.

43
Q

Coupons

A

The annual interest payments a bondholder receives.

44
Q

Coupon bond

A

a type of bond that makes coupon payments.

45
Q

Creditor

A

A person or company that is owed money.

46
Q

Credit rating agencies

A

Agencies whose responsibilities are to provide investors with reliable information about the risks associated with certain types of bonds.

47
Q

Current assets

A

Assets expected to be converted to cash or used up within one year.

48
Q

Current liabilities

A

Obligations that are expected to use up current assets and usually require payment to be made within a year.

49
Q

Current ratio

A

A ratio of current assets to current liabilities.

50
Q

Current value

A

The value of a cash flow or the worth of an asset in present-time.

51
Q

Days’ sales in inventory

A

A ratio calculated as the inverse of the inventory turnover ratio multiplied by the 365-calendar days.

52
Q

Debtor

A

A person or company that needs to pay money out.

53
Q

Depreciation

A

A reduction in the value of an asset with prolonged ownership; represents the costs of the company’s property, plant, and equipment that have been allocated to that period.

54
Q

Direct agency costs

A

Monitoring costs or expenditures that benefit the company’s management, but costs the shareholders.

55
Q

Discount rate

A

A rate that is used in computing discounted cash flow value.

56
Q

Dividend discount model

A

The price of a share in a particular stock is equal to the present value of all future dividend payments.

57
Q

Dividend yield

A

A yield found taking the dividend payout of next year divided by its current share price.

58
Q

Dollar return

A

Dividend received over a period of time, plus the ending market value, minus the beginning market value.

59
Q

DuPont identity

A

Shows a company’s return on equity (ROE), expressed as the product of the net profit margin, the total asset turnover, and the equity multiplier.

60
Q

Earnings before interest and taxes (EBIT)

A

A company’s net income before income tax expense and interest expense are deducted.

61
Q

Earnings before tax

A

A firm’s earnings before taxes have been subtracted.

62
Q

Earnings per share (EPS)

A

A profitability ratio that is calculated as net income divided by the average shares of common stock outstanding.

63
Q

Effective annual rate

A

A real rate of the loan’s interest accounting for compounding.

64
Q

Equity

A

The shareholders’ stake in a corporation; two parts: (1) the value that owners contributed to the company and (2) the accumulation of what the company has earned since it began doing business. Mathematically, the difference between assets and liabilities, which can represent the net worth of the company.

65
Q

Equity multiplier

A

A ratio of total assets to shareholders’ equity.

66
Q

Executive Committee

A

In charge of setting the priority for the whole board of directors, and sometimes acts on behalf of the board.

67
Q

Expected return of an investment

A

The anticipated return based on historical rates of return.

68
Q

Expenses

A

Outlays of resources as part of the normal operating activities.

69
Q

Extraordinary gain/loss

A

Gain or loss that arises from events that are both unusual and infrequent, where unusual means that the event could be judged as unforeseen.

70
Q

Face value

A

Also known as the par value, which is the principal repaid at the end of a loan.

71
Q

Federal government agency bonds

A

Bonds issued by federal agencies that are backed by the full faith and credit of the U.S. government.

72
Q

Financial ratios

A

Ratios of financial statement line items that allow users to compare companies of different sizes or industries.

73
Q

First-in-first-out (FIFO) cost assumption

A

The first inventory units added are presumed to be the first units sold when calculating cost of goods sold.

74
Q

Fiscal year

A

A one-year period used for calculating annual financial statements in businesses and other organizations.

75
Q

Future value

A

The value of a cash flow or the worth of an asset at some future time.

76
Q

Generally Accepted Accounting Principles (GAAP)

A

The accounting rules and procedures used to prepare financial statements and reports in the U.S.

77
Q

Geometric average return

A

A method to derive the average rate of return on an investment that is compounded over multiple periods.

78
Q

Goods

A

Assets either manufactured or purchased with the intent to be sold to customers; inventory.

79
Q

Government bonds

A

Bonds or loans a government issues, typically with large face values, and used to fund projects and pay obligations.

80
Q

Government sponsored enterprise bonds

A

Bonds issued by government-sponsored enterprises (GSEs) created by Congress to promote a public purpose, such as affordable housing.

81
Q

Gross profit margin

A

A ratio of gross profit divided by total revenues.

82
Q

Growing perpetuity

A

Cash flow expected or received each year, but grows at the same, constant growth rate forever.

83
Q

Growth stocks

A

Stocks whose potential for future growth is high.

Coursera - Financial Analysis (1 decks)

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