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152 Cards in this Set

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