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:

CARs

Certificates of Automobile Receivables. Pass-through securities backed by automobile receivables.

Commodities Exchange Center (CEC)

The location of five New York futures exchanges: Commodity
Exchange, Inc. (COMEX), the New York Mercantile exchange (NYMEX), the New York Cotton Exchange,
the Coffee, Sugar and Cocoa exchange (CSC), and the New York futures exchange (NYFE). common size
statement A statement in which all items are expressed as a percentage of a base figure, useful for purposes of
analyzing trends and the changing relationship between financial statement items. For example, all items in
each year's income statement could be presented as a percentage of net sales.

Compounding frequency

The number of compounding periods in a year. For example, quarterly
compounding has a compounding frequency of 4.

Information costs

Transaction costs that include the assessment of the investment merits of a financial asset.
Related: search costs.

Cash receipts journal

A journal used to record the transactions that result in a debit to cash.

Weighted Average Cost of Capital (WACC)

The weighted average of the costs of the capital components
(debt, preferred stock, and common stock)

outsourcing decision

see make-or-buy decision

processing time

the actual time consumed performing the
functions necessary to manufacture a product

variance analysis

the process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences

average tax rate

Total taxes owed divided by total income.

semi-strong-form efficiency

Market prices reflect all publicly available information.

Policy Rule

A formula for determining policy. Contrast with discretionary policy.

Consignment

A shipment of goods to a party who agrees to try to sell them to third parties. A
sale is not considered to have taken place until the goods are sold to a third party.

Re-entry

This is a provision in some term insurance policies that allow the insured the right to renew the policy at a more favourable rate by providing updated evidence of insurability.

Commercial Business Loan (Credit Insurance)

An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for business purposes.