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Financial Terms Main Page

This site contains comprehensive definitions for a wide range of terms that cover topics such as financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit...

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Monthly Financial Term Picks:

Clearing House Interbank Payments System (CHIPS)

An international wire transfer system for high-value
payments operated by a group of major banks.


Comanger

A bank that ranks just below a lead manager in a syndicated Eurocredit or international bond
issue. Comanagers may assist the lead manger bank in the pricing and issue of the instrument.


Dedicating a portfolio

Related: cash flow matching.


Deep-discount bond

A bond issued with a very low coupon or no coupon and selling at a price far below par
value. When the bond has no coupon, it's called a zero coupon bond.


Effective date

In an interest rate swap, the date the swap begins accruing interest.


Floor planning

Arrangement used to finance inventory. A finance company buys the inventory, which is then
held in trust by the user.



Marketability

A negotiable security is said to have good marketability if there is an active secondary market
in which it can easily be resold.


accounting equation

An equation that reflects the two-sided nature of a
business entity, assets on the one side and the sources of assets on the
other side (assets = liabilities + owners’ equity). The assets of a business
entity are subject to two types of claims that arise from its two basic
sources of capital—liabilities and owners’ equity. The accounting equation
is the foundation for double-entry bookkeeping, which uses a
scheme for recording changes in these basic types of accounts as either
debits or credits such that the total of accounts with debit balances
equals the total of accounts with credit balances. The accounting equation
also serves as the framework for the statement of financial condition,
or balance sheet, which is one of the three fundamental financial
statements reported by a business.


Quick Ratio

A measure of how easily a company can use its most liquid current
assets to meet its current liabilities. It is calculated by subtracting
the book value of the inventories from the total book value of
current assets and dividing the result by the total book value of
current liabilities. Also known as acid-test ratio.


ABC

see activity-based costing


compensation strategy

a foundation for the compensation plan that addresses the role compensation should play in the organization


Quick asset

Any asset that can be converted into cash on short notice. This is a subset
of a current asset, for it does not include inventory. Its most common components
are the cash, marketable securities, and accounts receivable accounts.


Revenue

An inflow of cash, accounts receivable, or barter from a customer in exchange
for the provision of a service or product to that customer by a company.


preferred stock

Stock that takes priority over common stock in regard to dividends.


Disability Insurance

Insurance that pays you an ongoing income if you become disabled and are unable to pursue employment or business activities. There are limits to how much you can receive based on your pre-disability earnings. Rates will vary based on occupational duties and length of time in a particular industry. This kind of coverage has a waiting period before you can begin collecting benefits, usually 30, 60 or 90 days. The benefit paying period also varies from 2 years to age 65. A short waiting period will cost more that a longer waiting period. As well, a long benefit paying period will cost more than a short benefit paying period.


 

 

 

 

 



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