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:

Average collection period, or days' receivables

The ratio of accounts receivables to sales, or the total
amount of credit extended per dollar of daily sales (average AR/sales * 365).

Letter stock

Privately placed common stock, so-called because the SEC requires a letter from the purchaser
stating that the stock is not intended for resale.

Limited partner

A partner who has limited legal liability for the obligations of the partnership.

Outstanding share capital

Issued share capital less the par value of shares that are held in the company's treasury.

Registration statement

A legal document that is filed with the SEC to register securities for public offering.

Unbundling

When a multinational firm unbundles its transfer of funds into separate flows for specific purposes.
See: bundling.

Allowance for doubtful accounts

A contra account related to accounts receivable that represents the amounts that the company expects will not be collected.

Journal entry

The formal accounting entry used to identify a business transaction. The
entry itemizes accounts that are debited and credited, and should include some
description of the reason for the entry.

Moving average inventory method

An inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase.
Therefore, the moving average is the cost of all units subsequent to the latest purchase,
divided by their total cost.

Net National Product

GNP minus depreciation.

Loan Covenants

Express stipulations included in loan agreements that are designed to monitor
corporate performance and restrict corporate acts, affording added protection to the lender.

Discrete order picking

A picking method requiring the sequential completion of
each order before one begins picking the next order.

Inventory receipt

The arrival of an inventory delivery from a supplier or other
company location.

credit card

A revolving source of credit with a pre-established limit. You have to pay interest on a credit card if you have an outstanding balance.

Interac system

Canada's bank machine and electronic debit system. If you use your bank card at a bank machine which displays the Interac symbol (and that bank machine is not your bank's machine), you will be charged a fee.