Common FP&A terms

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  • Absorption Costing

    Accounting method that includes all manufacturing costs in the cost of a product.

  • Accounts Payable

    Liabilities of a business, representing its obligations to pay off a short-term debt to its creditors. It reflects the amounts owed to suppliers or vendors for goods or services received that are not yet paid.

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  • Accounts Receivable

    Amounts due to a firm for goods or services that have been delivered but not yet paid for. This is a key component of a company's working capital and liquidity analysis.

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  • Accruals

    Recording revenues and expenses when they are incurred, regardless of when cash transactions occur. This accounting method provides a more accurate picture of financial performance by matching revenues with related expenses.


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  • Activity-Based Costing

    Costing method that assigns overhead and indirect costs to related products and services.

  • Amortization

    Gradual reduction of a debt or the spreading out of capital expenses over a period of time. It allocates the cost of intangible assets over their useful life, impacting a company’s long-term financial health.

  • Annual Recurring Revenue (ARR)

    Predictable revenue that a business expects to receive from its customers annually. This metric is especially important for businesses with subscription-based models.

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  • Asset

    Resource with economic value owned by a corporation, expected to provide future benefit. Assets are critical to a company's operations and future earnings.

  • Asset Management

    Systematic process of operating, maintaining, and upgrading assets cost-effectively. Effective asset management maximizes value and ensures optimal utilization of resources.

  • Asset Turnover

    Financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue. A higher ratio indicates better performance in using assets to generate sales.

  • Bad Debt

    Amount owed to a company that is unlikely to be paid and, therefore, written off as a loss. It represents a financial loss for the company and affects the net income.

  • Balance Sheet

    Financial statement showing a company's assets, liabilities, and shareholders' equity. It provides a snapshot of a company’s financial position at a given point in time.

  • Balance Sheet Analysis

    Study of the assets, liabilities, and equity of a company as presented in its balance sheet. This analysis helps in understanding the company’s financial strength and capabilities.

  • Balanced Scorecard

    Performance management tool that measures financial and non-financial performance aspects.

  • Benchmarking

    Process of comparing a company's performance metrics to industry bests or best practices. It helps in identifying areas of improvement and strategic planning.

  • Beta (Finance)

    Measurement of the volatility of a stock or portfolio compared to the market as a whole. It is a key component in the Capital Asset Pricing Model (CAPM) to calculate investment risk.

  • Break-even Analysis

    Calculation to determine the number of units or revenue needed to cover total costs. It identifies the point at which a business neither makes a profit nor a loss.

  • Breakeven Point

    Production level at which total revenues equals total expenses. Achieving the breakeven point is crucial for a business to start generating profit.

  • Budget

    Estimation of revenue and expenses over a specified future period, often compiled and re-evaluated periodically. It's a fundamental tool for financial planning and control.

  • Business Intelligence

    Technologies, applications and practices for the collection, integration, analysis, and presentation of business information. It helps in making informed business decisions based on data.

  • Business Valuation

    Process and set of procedures used to estimate the economic value of an owner’s interest in a business. It is critical for financial reporting, business sales, and mergers.

  • Capital Allocation

    Process of assigning financial resources to different areas of a business or investment portfolio. Effective capital allocation is key to maximizing returns and growth.

  • Capital Budgeting

    Process by which a business determines and evaluates potential large expenses or investments. It involves the assessment of investment proposals and their long-term benefits.

  • Capital Efficiency

    Measure of how effectively a company uses its capital to generate profits. Higher capital efficiency indicates a more profitable and sustainable business.

  • Capital Expenditure (CapEx)

    Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment. CapEx is essential for a company’s growth and maintaining competitive advantage.

  • Capital Gain

    Increase in the value of a capital asset that gives it a higher worth than the purchase price.

  • Capital Markets

    Financial markets for buying and selling equity and debt instruments. They play a crucial role in helping companies raise capital and investors make informed decisions.

  • Capital Structure

    How a firm finances its overall operations and growth by using different sources of funds. It involves the balance between debt and equity financing.

  • Cash Conversion Cycle

    Time it takes for a company to convert its investments in inventory into cash flows from sales. This cycle plays a crucial role in managing a company's working capital and liquidity.

  • Cash Earnings

    Company's cash revenues minus cash expenses, an indicator of financial performance.

  • Cash Flow

    Total amount of money being transferred into and out of a business, especially as affecting liquidity. It's a key indicator of a company's financial health, showing the net amount of cash and cash-equivalents moving in and out.

  • Cash Flow Forecasting

    Process of estimating a company's future financial liquidity over a specific time frame. It helps businesses plan for future financial obligations and investment opportunities.

  • Cash Flow Margin

    Measure of how efficiently a company converts its sales to cash.

  • Cash Flow Return on Investment (CFROI)

    Financial metric that measures the cash profitability of a company.

  • Cash Flow Statement

    Financial statement that shows how changes in balance sheet accounts affect cash and cash equivalents. It provides insights into a company’s operational, investment, and financing cash flows.

  • Cash Management

    Process of managing a company's cash inflows and outflows, often through budgeting. Effective cash management ensures that a company has enough liquidity to meet its obligations.

  • Cash Operating Cycle

    Time between the initial outlay of cash to produce goods and the collection of cash from customers. It is a key measure of a company's efficiency in managing its cash cycle.

  • Cash Ratio

    Liquidity ratio that measures a company's ability to pay off short-term liabilities with cash and cash equivalents.

  • Consolidation

    Process of combining financial statements of different subsidiaries within a single parent company. This creates a clearer overall financial picture of a corporate group.

  • Contribution Margin

    Revenue remaining after deducting variable costs, contributing to covering fixed costs and profit. It's vital for understanding the profitability of individual products or services.

  • Corporate Finance

    Area of finance focusing on the financial decisions that businesses make and the tools and analysis used to make these decisions. It encompasses capital structure, funding strategies, and financial risk management.

  • Cost Accounting

    Accounting method that captures a company's costs of production by assessing input costs of each step of production. It's essential for budgeting and setting product prices.

  • Cost of Capital

    The cost of funds used for financing a business, often used in evaluating new projects of a company. It represents the return rate that could have been achieved if the funds were invested elsewhere.

  • Cost of Equity

    Return that a company requires to decide if an investment meets capital return requirements.

  • Cost of Goods Manufactured (COGM)

    Total production cost of goods completed during a specific period.

  • Cost of Goods Sold (COGS)

    Direct costs attributable to the production of the goods sold in a company. It includes material and labor costs and is key to determining gross profit.

  • Cost of Labor

    Total sum of all wages paid to employees.

  • Cost of Sales

    Direct costs attributable to the production of the goods sold in a company. It’s similar to COGS but may include additional costs like distribution and sales force expenses.

  • Cost Volume Profit Analysis

    Method used to determine how changes in costs and volume affect a company's operating income and net income. It's crucial for break-even analysis and pricing strategies.

  • Cost-Benefit Analysis

    Process used to measure the benefits of a decision or taking action minus the costs associated with taking that action. It aids in evaluating the feasibility and profitability of a project.

  • Cost-Volume-Profit (CVP) Analysis

    Method to analyze the impact of varying levels of sales and product costs on operating profit.

  • Coverage Ratios

    Financial metrics used to assess a company's ability to pay its financial obligations.

  • Credit Analysis

    Evaluation of the ability of a company or individual to repay their debts. It involves assessing the creditworthiness of potential borrowers.

  • Credit Management

    Process of granting credit, managing the credit that is extended, and collecting payments on credit accounts. It’s crucial for maintaining a company’s cash flow and reducing bad debts.

  • Credit Rating

    Evaluation of a potential borrower's ability to repay debt, prepared by a credit bureau at the request of the lender. It affects a company’s ability to borrow and the interest rates it pays.

  • Credit Risk

    Risk of loss due to a borrower's failure to make payments on any type of debt.

  • Currency Risk

    Risk of value change of foreign currencies that a company holds, due to changes in currency exchange rates. It's significant for companies involved in international trade.

  • Current Assets

    Assets that are expected to be converted into cash, sold or consumed within a year. They include cash, inventory, and receivables and are essential for liquidity management.

  • Current Cost Accounting

    Accounting method where assets are valued at current replacement cost, not historical cost.

  • Current Liabilities

    Obligations a company is expected to pay within one year or within its normal operating cycle. They are crucial for assessing a company’s short-term financial health.

  • Current Ratio

    Liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. It's a key indicator of a company’s financial stability.

  • Total value of all assets used by a company to generate profits.

    Accounts Payable

  • Accounts Payable

    Accounts Payable

  • Accounts Payable

    Accounts Payable

  • Debt

    Amount of money borrowed by one party from another, used to make large purchases. It is a crucial part of a company's capital structure and affects its risk profile.

  • Debt Covenant

    Agreement between a borrower and a lender that requires certain thresholds to be maintained.

  • Debt Financing

    Funds raised through various forms of borrowing that must be repaid with interest. It’s a common way for businesses to raise capital for growth or operations.

  • Debt Service

    Cash required over a given period for the repayment of interest and principal on a debt.

  • Debt Service Coverage Ratio

    Measure of the cash flow available to pay current debt obligations. It’s important for lenders and investors to assess a company's ability to service its debt.

  • Debt-to-Equity Ratio

    Measure of a company's financial leverage, calculated by dividing its total liabilities by stockholders' equity.

  • Deferred Revenue

    Payments received by a company for goods or services yet to be delivered or provided.

  • Deferred Tax

    Tax liability that a company owes but does not have to pay until a later date.

  • Depreciation

    Accounting method of allocating the cost of a tangible asset over its useful life.

  • Depreciation Methods

    Various methods a company uses to account for the wearing out or obsolescence of its assets.

  • Direct Costs

    Costs that can be directly tied to the production of specific goods or services, such as labor and materials.

  • Discount Rate

    Interest rate used to discount future cash flows to their present value.

  • Discounted Cash Flow (DCF)

    Valuation method used to estimate the value of an investment based on its expected future cash flows.

  • Discounting

    Process of determining the present value of a payment or a stream of payments that is to be received in the future.

  • Dividend

    Share of profits distributed to shareholders, typically on a regular basis.

  • Dividend Policy

    Company's strategy or policy regarding the distribution of profits to shareholders in the form of dividends.

  • Due Diligence

    Investigation or exercise of care that a reasonable business or person is expected to take before entering into an agreement.

  • DuPont Analysis

    Financial analysis framework for analyzing a company's return on equity.

  • Accounts Payable

    Accounts Payable

  • Earnings Before Interest and Taxes (EBIT)

    Indicator of a company's profitability, calculated as revenue minus expenses, excluding tax and interest.

  • Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

    Measure of a company's overall financial performance, excluding interest, taxes, depreciation, and amortization.

  • Earnings Growth

    Measure of a company's annual growth rate in its earnings per share.

  • Earnings Per Share (EPS)

    Portion of a company's profit allocated to each outstanding share of common stock.

  • Earnings Yield

    The earnings of a company expressed as a percentage of the market price of its stock.

  • Economic Capital

    Amount of capital that a company needs to ensure that it stays solvent given its risk profile.

  • Economic Order Quantity (EOQ)

    Ideal order quantity a company should purchase to minimize its total costs related to inventory.

  • Economic Profit

    Company's total revenue minus its explicit and implicit costs.

  • Economic Value Added (EVA)

    Measure of a company's financial performance based on the residual wealth calculated from invested capital.

  • Efficiency Ratios

    Financial metrics that measure a company's ability to use its assets and manage its liabilities effectively.

  • Efficient Market Hypothesis

    Theory that all available information is already reflected in a security's price.

  • Enterprise Resource Planning (ERP)

    Integrated management of main business processes, often in real-time and mediated by software.

  • Enterprise Value (EV)

    Total value of a company, including market capitalization, short-term and long-term debt, and any cash on the company's balance sheet.

  • Equity

    Value of the shares issued by a company, representing ownership interest.

  • Equity Financing

    Process of raising capital through the sale of shares.

  • Equity Method

    Accounting technique used when a company owns a significant but not majority interest in another company.

  • Equity Multiplier

    Financial leverage ratio that measures the portion of company’s assets financed by stockholders.

  • Equity Valuation

    Process of determining the fair market value of a company's equity.

  • Expense

    Money spent or costs incurred in an organization's efforts to generate revenue.

  • Accounts Payable

    Accounts Payable

  • Accounts Payable

    Accounts Payable

  • Accounts Payable

    Accounts Payable

  • Financial Analysis

    Assessment of the viability, stability, and profitability of a business, sub-business, or project.

  • Financial Control

    Process and procedures used to manage and monitor financial resources of a company.

  • Financial Engineering

    Application of mathematical methods to the solution of financial problems.

  • Financial Forecasting

    Process of estimating or predicting how a business will perform in the future.

  • Financial Leverage

    Use of borrowed funds (debt) to finance the acquisition of assets, with the expectation that the income or capital gains will exceed the borrowing cost.

  • Financial Modeling

    Process of creating a summary of a company's expenses and earnings in the form of a spreadsheet.

  • Financial Planning

    Process of determining how a business will afford to achieve its strategic goals and objectives.

  • Financial Planning & Analysis (FP&A)

    This is a corporate function focused on financial forecasting, budgeting, and comprehensive analysis to support strategic decision-making.

  • Financial Risk Management

    Practice of protecting economic value in a firm by managing exposure to risk, particularly credit and market risk.

  • Financial Statement Analysis

    Process of reviewing and analyzing a company's financial statements to make better economic decisions.

  • Fiscal Year

    One-year period that companies and governments use for financial reporting and budgeting.

  • Fixed Asset Turnover

    Efficiency ratio that indicates how well or efficiently a business uses fixed assets to generate sales.

  • Fixed Assets

    Long-term tangible assets used in a company's operations with a useful life of more than one year.

  • Fixed Charge

    Any type of fixed expense that recurs on a regular basis.

  • Fixed Charge Coverage

    Ratio that indicates a firm's ability to meet fixed financing expenses such as interest and leases.

  • Fixed Costs

    Business expenses that are not dependent on the level of goods or services produced.

  • Forecasting

    Process of making predictions about the future based on past and present data.

  • Foreign Exchange Exposure

    Risk of a firm's financial position changing due to changes in exchange rates.

  • Foreign Exchange Rate (FX)

    The fluctuating rate at which one currency can be exchanged for another.

  • Foreign Exchange Risk

    Risk of financial loss due to fluctuations in foreign exchange rates.

  • Free Cash Flow (FCF)

    Amount of cash a company generates after accounting for capital expenditures.

  • Fundamental Analysis

    Process of measuring a security's intrinsic value by examining related economic and financial factors.

  • Funding

    Financial support or resources provided for activities, programs, or projects.

  • Futures and Options

    Financial instruments giving the buyer the right, but not the obligation, to buy or sell an asset at a set price on a future date.

  • GAAP (Generally Accepted Accounting Principles)

    Collection of commonly-followed accounting rules and standards for financial reporting.

  • Gearing Ratio

    Financial ratio that compares owner's equity to borrowed funds.

  • Going Concern

    Accounting principle that a company will continue to operate in the foreseeable future.

  • Goodwill

    Intangible asset that arises when one company purchases another for a premium value.

  • Gross Income

    Total income from all sources before deductions or taxes.

  • Gross Margin

    Difference between revenue and cost of goods sold divided by revenue, expressed as a percentage.

  • Gross Profit

    Company's total revenue minus its cost of goods sold, representing the profit made before deducting operating expenses.

  • Growth Rate

    Measure of a company's or industry's financial performance over a specific period, typically annually.

  • Headcount or Workforce planning

    An assessment of current business conditions to plan for future staffing needs.

  • Hedging

    Use of financial instruments or market strategies to offset the risk of any adverse price movements.

  • Horizontal Analysis

    Financial analysis technique that shows changes in the amounts of corresponding financial statement items over a period.

  • IFRS (International Financial Reporting Standards)

    Global accounting standards for preparing financial statements.

  • Impairment

    Accounting principle describing a permanent reduction in the value of a company's asset.

  • Income Recognition

    Accounting principle that dictates the process and timing by which revenue is recorded and recognized as income.

  • Income Statement

    Financial statement showing a company's revenues and expenses over a specific period.

  • Income Tax

    Tax levied by a government directly on income, especially an annual tax on personal income.

  • Indirect Costs

    Costs not directly traceable to a specific project or activity, such as overhead costs.

  • Inflation Accounting

    Accounting practice that factors in the impact of inflation on recorded financial statements.

  • Initial Public Offering (IPO)

    The first time that the stock of a private company is offered to the public.

  • Interest Coverage Ratio

    Measure of a company's ability to meet its interest payments.

  • Internal Rate of Return (IRR)

    Discount rate that makes the net present value (NPV) of all cash flows equal to zero.

  • Inventory

    Company's raw materials, work-in-progress goods, and completely finished goods.

  • Inventory Costing

    Method of assigning costs to inventory and cost of goods sold.

  • Inventory Management

    Supervision of non-capitalized assets (inventory) and stock items.

  • Inventory Turnover

    Ratio showing how many times a company's inventory is sold and replaced over a given period.

  • Investment

    Purchase of goods that are not consumed today but used for future wealth generation.

  • Investment Appraisal

    Collection of techniques used to identify the attractiveness of an investment.

  • Investment Banking

    Division of banking that deals with capital creation for other companies, governments, and other entities.

  • Joint Venture

    Business arrangement where two or more parties agree to pool their resources for a specific task or business activity.

  • Key Performance Indicator (KPI)

    Quantifiable measure used to evaluate the success of an organization.

  • Leverage

    Use of borrowed capital for investment, expecting the profits made to be greater than the interest payable.

  • Leverage Ratios

    Financial ratios that measure the degree of a company's use of borrowed funds.

  • Leveraged Buyout (LBO)

    Acquisition of another company using a significant amount of borrowed money.

  • Liquidity

    Availability of liquid assets to a company and the ability to convert an asset to cash quickly.

  • Liquidity Analysis

    Assessment of a company's ability to meet its short-term obligations.

  • Liquidity Management

    Process of managing the liquidity of a firm to ensure it has the necessary cash flow.

  • Liquidity Premium

    Extra amount of return that investors demand for investing in non-liquid assets.

  • Liquidity Ratio

    Type of financial ratio used to determine a company's ability to pay off its short-terms debts obligations.

  • Loan Covenant

    Conditions in a loan agreement that the borrower must comply with.

  • Management Accounting

    Process of preparing management reports and accounts that provide accurate financial and statistical information.

  • Management Reporting

    Provision of financial information and business metrics to managers within organizations.

  • Marginal Benefit

    Additional satisfaction or utility that a person receives from consuming an additional unit of a good or service.

  • Marginal Cost

    Cost added by producing one additional unit of a product or service.

  • Market Analysis

    Study of the attractiveness and the dynamics of a special market within a special industry.

  • Market Capitalization

    Total market value of a company's outstanding shares of stock.

  • Market Risk

    Risk of losses in investments due to movements in market factors like interest rates, stock prices, or currencies.

  • Market Value Added (MVA)

    Difference between the market value of a company and the capital contributed by investors.

  • Materiality (Accounting)

    The importance of financial information in influencing the decision of an investor or creditor.

  • Maturity (Finance)

    The final payment date of a loan or other financial instrument.

  • Mergers & Acquisitions (M&A)

    Aspects of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies.

  • Month-end close

    The process of reviewing and reconciling financial activities for the previous month.

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  • Accounts Payable

    Accounts Payable

  • Net Asset Value (NAV)

    Value of a fund's assets minus the value of its liabilities.

  • Net Income

    Company's total earnings, reflecting the amount of profit it has made.

  • Net Operating Income (NOI)

    Total income from property operations minus the total operating expenses.

  • Net Present Value (NPV)

    Difference between the present value of cash inflows and the present value of cash outflows.

  • Operating Cash Flow

    Amount of cash generated by a company's normal business operations.

  • Operating Cycle

    Average period of time required for a business to make an initial outlay of cash to produce goods, sell the goods, and receive cash from customers.

  • Operating Expense Ratio (OER)

    A measure of what it costs to operate a piece of property compared to the income that the property brings in.

  • Operating Expenses

    Expenses that are not directly tied to the production of goods or services.

  • Operating Income

    Amount of profit realized from a business's operations after deducting operating expenses.

  • Operating Leverage

    Degree to which a firm or project can increase operating income by increasing revenue.

  • Operating Margin

    Ratio used to measure a company's pricing strategy and operating efficiency.

  • Opportunity Cost

    Cost of an alternative that must be forgone in order to pursue a certain action.

  • Overhead Costs

    Ongoing business expenses not directly attributed to creating a product or service.

  • P/E Growth Ratio (PEG)

    Valuation metric for determining the relative trade-off between the price of a stock, its earnings per share, and the company's expected growth.

  • Payback Period

    Time required for the return on an investment to repay the original cost.

  • Payroll Accounting

    Management of a company's employee compensation and related taxes, benefits, and other payments.

  • Performance Budgeting

    Budgeting method that focuses on the outcomes and results of the activities.

  • Performance Metrics

    Measurements that evaluate the effectiveness of a company or its investments.

  • Portfolio Management

    Process of making decisions about investment mix and policy, aligning investments to objectives, and balancing risk against performance.

  • Prepaid Expenses

    Future expenses that have been paid in advance.

  • Price Earnings Ratio (P/E)

    Valuation ratio of a company's current share price compared to its per-share earnings.

  • Price to Book Ratio (P/B Ratio)

    Valuation ratio comparing a firm's market value to its book value.

  • Prime Cost

    Total cost of direct materials and direct labor for manufacturing.

  • Pro Forma Financial Statements

    Financial statements based on hypothetical scenarios or assumptions.

  • Profit and Loss Statement (P&L)

    Financial statement that summarizes revenues, costs, and expenses incurred during a specific period.

  • Profit Margin

    Financial metric used to assess a company's financial health by revealing the proportion of money left over from revenues after accounting for certain costs.

  • Profitability Ratios

    Financial metrics used to assess a business's ability to generate earnings.

  • Project Finance

    Long-term financing of infrastructure and industrial projects based on the projected cash flows.

  • Quick Assets

    Assets that can be quickly converted into cash.

  • Quick Ratio

    Indicator of a company's short-term liquidity position, measuring its ability to meet short-term obligations.

  • Real Options Valuation

    Method of valuing the choices that managers will have in the future.

  • Regulatory Compliance

    Adherence to laws, regulations, guidelines, and specifications relevant to business processes.

  • Retained Earnings

    Portion of net earnings not paid out as dividends but reinvested in the business.

  • Return on Assets (ROA)

    Indicator of how profitable a company is relative to its total assets.

  • Return on Capital Employed (ROCE)

    Financial ratio that measures a company’s profitability and the efficiency with which its capital is employed.

  • Return on Equity (ROE)

    Measure of the profitability of a business in relation to the equity.

  • Return on Investment (ROI)

    Performance measure used to evaluate the efficiency of an investment.

  • Return on Net Assets (RONA):

    A financial ratio that measures a company's efficiency in generating profit from its net assets.

  • Revenue

    Income that a business has from its normal business activities, usually from sales of goods and services.

  • Revenue per Employee

    Measure of how efficiently a company is utilizing its employees.

  • Revenue Recognition

    Principle that revenue should be recognized and recorded when it is earned, not necessarily when it is received.

  • Risk Assessment

    Identification and analysis of relevant risks to achievement of an organization's objectives, forming a basis for determining how the risks should be managed.

  • Risk Management

    Process of identification, analysis, and acceptance or mitigation of uncertainty in investment decisions.

  • Risk-Adjusted Return

    Investment's return analyzed in the context of the risk involved in producing that return.

  • Rolling forecast

    An alternative planning cycle using a continuous period that allows companies to respond to changes in market or economic conditions quickly.

  • Sales Forecasting

    Process of estimating future sales, crucial for making informed business decisions and predicting short-term and long-term performance.

  • Sarbanes-Oxley Act (SOX)

    U.S. law aimed at protecting investors from fraudulent financial reporting by corporations.

  • Scenario Analysis

    Process of analyzing possible future events by considering alternative possible outcomes.

  • Securitization

    Process of converting an illiquid asset into a security.

  • Segment Margin

    Measure of the profitability of different segments of a company.

  • Segment Reporting

    The practice of dividing a company's financial data into discrete operating segments for reporting purposes.

  • Sensitivity Analysis

    Technique used to determine how different values of an independent variable will impact a particular dependent variable under a given set of assumptions.

  • Share Buyback

    The repurchase of shares by the company that issued them, a way of returning money to investors.

  • Shareholder

    An individual, company, or institution that holds shares in a company.

  • Shareholder Equity

    The amount that would be returned to shareholders if all the company's assets were liquidated and all its debts repaid.

  • Solvency

    Ability of a company to meet its long-term debts and financial obligations.

  • Standard Costing

    Accounting technique that uses standard costs for direct material, labor, and overhead.

  • Stock Options

    Contracts which give the holder the right, but not the obligation, to buy or sell stocks at a specific price.

  • Strategic Analysis

    Process of conducting research on a company and its operating environment to formulate a strategy.

  • Strategic Financial Management

    Managing a company's finances with a strategy to achieve its business objectives.

  • Strategic Planning

    Organizational management activity used to set priorities, focus energy and resources, and strengthen operations.

  • Sunk Cost

    Cost that has already been incurred and cannot be recovered.

  • Sustainable Growth Rate

    Maximum rate at which a company can grow its sales, earnings, and dividends without increasing its leverage.

  • Tax Planning

    Analysis and arrangement of a person's financial situation to maximize tax breaks and minimize tax liabilities.

  • Time Value of Money

    Concept that money available now is worth more than the same amount in the future due to its earning potential.

  • Total Cost of Ownership (TCO)

    Financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system.

  • Trade Credit

    The credit extended to a buyer by a supplier who allows them to purchase goods or services and pay for them later.

  • Treasury Management

    The administration of a company's liquidity, investments, and risk management.

  • Trial Balance

    A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns.

  • Value at Risk (VaR)

    Statistical technique used to measure and quantify the level of financial risk within a firm over a specific time frame.

  • Variable Costs

    Corporate expenses that vary in direct proportion to the quantity of output.

  • Variable Interest Entities (VIE)

    An entity in which the investor holds a controlling interest that is not based on a majority of voting rights.

  • Variance Analysis

    Quantitative investigation of the difference between actual and planned behavior.

  • Venture Capital

    Financing that investors provide to startup companies and small businesses believed to have long-term growth potential.

  • Vertical Analysis

    Method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities and equities) in a balance sheet is represented as a proportion of the total account.

  • Working Capital

    Measure of a company's operational efficiency and short-term financial health.

  • Working Capital Management

    Management of a firm's current assets and liabilities to ensure it has sufficient cash flow.

  • Working Capital Ratio

    Indicator of whether a company has enough short-term assets to cover its short-term debt.

  • Yield Curve

    Graph showing the relationship between bond yields and maturities.

  • Z-Score (Finance)

    Statistical measure that quantifies the distance (in standard deviations) a data point is from the mean of a data set.

  • Zero-Based Budgeting

    Method of budgeting where all expenses must be justified and approved for each new period.