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152 Cards in this Set
- Front
- Back
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401 K
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Tax-sheltered retirement plan offered by some employers
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Accounting
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The business function responsible for creating the historical financial statements
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Asset Manager
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A professional who makes her living managing a portfolio of assets
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Asset Pricing
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process of valuing assets
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Business Finance
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another word for corporate finance
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Capital Budgeting Analysis
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process of deciding what assets to buy
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Cash Management
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managing day-to-day finance operations of a firm
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CFP
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Certified Financial Planner
- professional who has passed the CFP examination |
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CFO
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Chief Financial Officer
- the highest ranking corporate finance officer in a firm |
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Commerical Bank
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bank that focuses mostly o mid to large sized companies
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Company/Industry Analyst
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professionals who produce reports on specific firms and industry
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Consumer Bank
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A bank that focuses mostly on individuals, families, and small business
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Consumer Insurance
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life and property insurance
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Corporate Finance
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-one of three main areas of finance
-the finance function within a business |
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Corporate Insurance
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insurance sold to businesses
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Cost of Capital
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all interest-bearing debt plus all equity
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CPA
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Certified Public Accountant
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Credit Analyst
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a bank position which involves deciding who qualifies for a loan and who doesn't
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Current Market Value
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what someone would pay right now for an asset
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Debt
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money lent by a creditor to provide financing for the borrower
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Discounted Cash Flow
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process of using time value of money skills and forecasting to value assets
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Dollar-Cost-Averaging
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Automatically investing a fixed percentage or amount every certain period, such as a month
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Equity
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ownership in an asset such as a company
- another name for stock |
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Estates
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legal structures used in estate planning
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Fair Return
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an acceptable return for a passive investor
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Fields
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specific areas within finance such as insurance, personal finance, financial planning, asset management, etc
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Financial Derivatives
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financial assets that derive their value based on an underlying asset. examples are options, futures, and forwards
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Finance (verb)
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to pay for something
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Financial Management
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another word for corporate finance
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Financial Policy Implementation
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incorporating new finance ideas within a firm
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Free Cash Flows
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cash that is left over after business operations and taxes are paid
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Hedge Funds
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lightly regulated investment funds that have fewer restrictions than mutual funds pertaining to investment choices
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Index Fund
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a mutual fund that tracks an already established index such as the S&P500
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IPO
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-initial public offering
-first time a company sells stock to the public |
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Institutions
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one of the three main areas of finance which deals with banks, insurance companies, pension funds, and the like
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Insurance Company
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a firm that offers life, health, auto, etc. insurance services
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Invest
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to exchange something in hope of a return
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Investment Banking
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Professional banking services not regulated by federal banking regulations
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Investments
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One of the three main areas of finance. As its name implies, it involves choosing which assets to invest in
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Longing
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Buying an asset
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Managerial Finance
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Another word for corporate finance
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Marketing
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The business function responsible for generating sales
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Mergers and Acquisitions (M&As)
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The market for firms that buy and sell each other
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Money Manager
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Old term for an Asset Manager
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Mutual Funds
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Portfolios of assets professionally managed for others to invest in
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New Issues
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The market for firms issuing equity or debt for the first time
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No-Load Mutual Fund
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A mutual fund that does not charge a fee to get into it or to leave it
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Operations
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The business function responsible for the production of the good or service being sold
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OPM
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Other people's money
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Organizational behavior/Human Relations
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The business function responsible for the people-stuff in the organization
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Passive Investing Strategy
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Investing without active management
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Pension Company
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A firm that provides retirement investment plans
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Private Placements
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Company financing without having to file the necessary public regulatory documents
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Property/Casualty Auto Insurance
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Insurance required if you own a car
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Real Estate Investment Trust (REIT)
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Portfolios that won real estate assets such as buildings and mortgages
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Reinsurance
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Insurance sold to insurance companies
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Risk Management
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The area in finace that deals with insurance
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Roth IRA
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A tax-sheltered retirement plan individuals can use to avoid taxes on portfolio returns
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Seasoned Equity Offering (SEO)
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Any public equity offering after the IPO
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Shorting
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Selling an asset
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Specialties
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Another word for fields
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Strategic Management
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The business function of managing the strategies and tactics of business operations
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Supply Chain Management
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A subset of operations responsible for managing the value chain
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Tax Strategies
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Minimizing the taxes a business pays
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Tax-Sheltered Plan
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An investment plan that either defers or eliminates income tax
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Teller
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An entry level bank position
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Trusts
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Legal structures used in estate planning
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Value Chain
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The chain of suppliers and customers the business relies on
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Vault.com
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A website with valuable career information
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Venture Capital
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Professionally managed investment capital that typically invests in very young new ventures
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Wills
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legal documents used in estate planning
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Accounts Payable
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A current liability that represents money the firm owes suppliers and other firms. Typically the firm does not pay interest on accounts payable
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Accounts Receivable
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A type of current asset which represents money owed to the firm for services rendered
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Accrual Accounting
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Accounting system based on recording accounts based on historical prices and the matching principle
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Accruals
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Non-cash accounting accounts representing money either owed or due, typically in the short term
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Accrued Wages
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Wages that the company owes to employees, but has not paid yet
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Additional PIC
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A type of equity on the balance sheet which equals the proceeds from a stock offering minus the common stock (par) portion
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Balance Sheet
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One of the three main financial statements. It is a snapshot of the firm's assets, liabilities, and equity at a point in time
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Balance Sheet Equation
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Assets = Liabilities + Equity
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Book Value
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The accounting value recorded on the balance sheet
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Cash
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Most liquid current asset on the balance sheet
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Cash Flow from Financing
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One of the three parts of the cash flow statement
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Cash Flow from Investing
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One of the three parts of the cash flow statement
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Cash Flow from Operations
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One of the three parts of the cash flow statement
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Common Stock
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A type of equity on the balance sheet which represents ownership sold to common share holders at par value and which usually has voting rights
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Contra-Asset Account
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An account on the asset side of the balance sheet that reduces the value of the asset, such as accumulated depreciation
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Cost of Good Sold
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The cost of raw materials for operations, typically the second line of the income statement
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Cost of Services
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Similar to cost of goods sold, but applies to service companies
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Current Assets
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Assets that are expected to be liquidated within a year
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Current Liabilities
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Liabilities on the balance sheet with a short life span, typically less than 5 years as in notes payable, certainly less than one year
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Depreciation
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A non-cash expense used to approximate the decrease in value of an asset
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Earnings Management
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Using accrual accounting to make earnings look better or worse than they should
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EBIT
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Earnings before interest and taxes on the income statement
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FASB
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Federal Accounting Standards Board
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FIFO
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First In, First Out inventory system
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Financial Statement Analysis
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The process of examining the three financial statements using financial skills
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Fixed Assets
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Assets on the balance sheet with a lifespan greater than a year
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GAAP
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Generally Accepted Accounting Principles
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Gross Profit
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Typically the third line of the income statement which equals Sales - COGS
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Historical Cost Principle
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Accural accounting principle to recorded assets, liabilities, and equity at historical levels
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Income Statement
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-one of three financial statements
-covers period of time and starts with Sales-Expenses=Net Income |
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Interest Expense
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amount owed to creditors that appears on the income statement between EBIT and EBT
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Interest Tax Shield
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savings a firm gets by using debt to write off the interest expense
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Inventories
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current asset that is typically viewed as the least-liquid current asset
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Investing Activities
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what type of projects a firm decides to take
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LIFO
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last in first out inventory system
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Liquidity
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ability to convert an asset to cash quickly without losing significant value
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Marketable Securities
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very liquid current asset on the balance sheet such as money markets, t-bills, etc
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Matching Principle
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accural accounting principle to match revenues and expenses in the same period
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Net Income
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last line of income statement
-a.k.a earnings |
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Non-Cash Expense
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any expense like depreciation that is not an actual cash flow but is recorded in the financial statements
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Notes Payable
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current liability that represents money borrowed for the short term, typically under 5 years
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Operating Expenses
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expenses on an income statement that fit between gross profit and EBIT
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Operating Accounts
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financial statement accounts which generate operating expenses
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Percentage of Completion Method
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type of revenue recognition system where the firm books sales as they complete certain milestones of the service rendered
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PP&E
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property plant and equipment, part of the fixed assets on balance sheet
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Retained Earnings
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money plowed back into the company from prior earnings (N.I)
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Retained Earnings Forecasting
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predicting the amount of retained earnings that will carry from the income statement to the balance sheet in the future
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Revenue Recognition
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accural accounting permits firms to time the recognition of sales based on certain rules
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Revenues, Sales
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top of the line in income statement
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Sale-leaseback
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a technique used to reduce the amount of assets and especially debt on a firm's books
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source of cash
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decrease of an asset (including cash) or the increase in a liability
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statement of cash flows
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one of three main financial statements.
- includes cash flow from operating, investing, and financing |
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tax expense
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typically second to the last line of the income statement right before net income, represents income taxes paid by firm
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tax strategies
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minimizing the taxes a business pays
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use of cash
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increase of an asset (including cash) or decrease of a liability
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Gross Margin
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-profitability ratio
- gross profit/sales |
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High-Growth Firms
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firms expected to grow a lot
-typically with a market-to-book equity ratio greater than one |
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Industry Analysis
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type of cross-sectional analysis
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Inventory Turnover
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-liquidity ratio
-COGS/Inventory |
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JIT Inventory
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system of inventory where the needed inventory shows up just in time
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LBO
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-leveraged buy out
-when firm is purchased with a ton of debt |
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Liquid Asset
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asset that can be converted into cash quickly without loss of significant value
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Liquidity Ratios
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one of four classifications of rations designed to measure the ability of a firm to pay its near short term obligations
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Net Margin
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-profitability ratio
- NI/Sales |
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NWC
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-Net Working Capital
-Current Assets/ Current Liabilities |
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OIROI
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- efficiency ratio
-Operating Income/Total Assets |
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Operating Margin
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-profitability ratio
- EBIT/Sales |
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Opportunity Costs
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non-cash costs from asking
-what could the firm have done with the money instead? |
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Optimal Debt Ratio
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-amount of debt that minimizes the firm's cost of capital
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Principle-Agent Problem
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what the agent (worker or manager) doesn't act in the best interest of the principle (owner)
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Profitability Ratios
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one of four classifications of ratios designed to measure the profitability of the firm
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Quick Ratio
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-liquidity ratio
- (Current Assets-Inventory)/Current Liabilities |
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Ratio Analysis
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Process of using financial analysis to determine the health of a firm
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ROA
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-profitability ratio
-return on assets= NI/A |
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ROE
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- profitability ratio
- NI/E |
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Seasonal Firms
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firms whose performance varies according to the season
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Time Series Analysis
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same as trend analysis
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Times Interest Earned
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-financing ratio
-EBIT/Interest Expense |
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Total Asset Turnover
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-efficiency ratio
-Sales/Total Assets |
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Trend Analysis
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one of three ways to use ratios by comparing a firm's ratios across time
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WACC
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-Weighted Average Cost of Capital
- average cost of financing a firm in percentage terms |
