Business Finance – Modules 1-4 Vocabulary

Vocabulary flashcards cover core terms from Business Finance Modules 1–4, including finance areas, institutions, instruments, markets, managerial roles and planning concepts.

Science and art of managing, allocating and utilizing money and other assets for business or personal purposes.

Finance

Field focused on efficiently allocating scarce resources to satisfy human needs and wants.

Economics

The ‘language of business’; art of recording transactions and preparing financial statements.

Accounting

Management of financial resources of private individuals, organizations or NGOs according to their own policies.

Private Finance

Allocation of government income from taxes or borrowings and its expenditures; also called fiscal administration.

Public Finance

Sub-category of private finance dealing with an individual’s income allocation for household, education, health and property needs.

Personal Finance

Management of a firm’s financial resources; subdivided into financial management, capital market and financial investment.

Business Finance

Business finance division focused on capital budgeting and choosing financing schemes for asset acquisition.

Financial Management

Area of business finance that studies financial institutions assisting private and public borrowers of funds.

Capital Market (field)

Business decisions concerning valuation and pricing of stocks, bonds, and investor behavior.

Financial Investment

Governing body elected by shareholders to oversee corporate policy and major decisions.

Board of Directors

Top corporate officer responsible for overall management and strategy implementation.

Chief Executive Officer (CEO)

Senior executive heading the finance division and overseeing accounting and treasury functions.

Chief Financial Officer (CFO)

Financial institution that accepts deposits, extends loans, transfers funds and invests deposits.

Depository Institution

Depository institution that receives deposits, provides loans and facilitates fund transfers domestically and internationally.

Bank

Philippine bank classification authorized to perform commercial banking plus expanded activities such as investment services.

Universal Bank

Bank type engaged in deposit-taking and lending to individuals and businesses.

Commercial Bank

Philippine savings-oriented bank catering to consumers and small enterprises.

Thrift Bank

Bank serving the financial needs of rural communities and agriculture.

Rural Bank

Bank owned and operated by cooperatives to serve member financing needs.

Cooperative Bank

Bank operating under Shari’ah principles prohibiting interest and promoting profit-sharing.

Islamic Bank

Member-owned institution pooling savings to provide mortgage and other loans; depositors are also borrowers.

Savings and Loan Association

Institution acting as fiduciary custodian, managing and distributing assets for beneficiaries.

Trust Company

Member-controlled depository institution that pools funds to extend credit at competitive rates.

Credit Union

Institution that channels funds from savers to borrowers without taking deposits.

Financial Intermediary

Investment vehicle that pools money to buy diversified portfolios of stocks or bonds.

Mutual Fund

Fund established to pay retirement benefits to private-sector employees.

Pension Fund

Institution selling policies that transfer risk in exchange for premium payments.

Insurance Company

Company that purchases financial securities of other firms purely for investment income.

Investment Institution

Contract creating a financial asset for one party and a liability for another.

Financial Instrument

Legal tender; financial asset to holder, liability of issuing government.

Cash

Written order instructing a bank to pay a specific amount; asset to payee, liability to drawer.

Check

Agreement in which a lender provides funds that the borrower must repay with interest.

Loan

Long-term debt instrument; asset to investor, liability to issuer (government or corporation).

Bond

Equity security representing ownership in a corporation.

Stock

Equity with priority over common stock in dividends and asset claims; usually pays fixed dividend.

Preferred Stock

Basic ownership share of a company; receives residual dividends and voting rights.

Common Stock

Organized forum where suppliers and users of funds trade financial securities.

Financial Market

Market where corporations issue new securities directly to investors to raise capital.

Primary Market

Market where previously issued securities are traded among investors.

Secondary Market

Segment where medium- and long-term securities such as stocks and bonds are traded.

Capital Market (market)

Market for short-term (≤1 year) debt instruments like treasury bills and commercial paper.

Money Market

Movement of household or business savings through financial institutions to borrowers needing capital.

Flow of Funds

Analysis used to evaluate long-term investment projects and their profitability.

Capital Budgeting

Professional responsible for managing a firm’s finances and making operating, investing and financing decisions.

Financial Manager

Finance choice related to day-to-day working capital accounts such as inventory and receivables.

Operating Decision

Selection and evaluation of projects, non-current assets, and investment portfolios for return potential.

Investing Decision

Determination of how to raise funds externally and establish an optimal mix of debt and equity.

Financing Decision

Proportion of a company’s assets financed by debt versus equity.

Capital Structure

Process of setting financial goals and outlining actions to achieve them via long-term and short-term plans.

Financial Planning

Integrated strategy (2–10 years) addressing fixed asset outlays, R&D, capital structure and major financing sources.

Long-Term Financial Plan

Plan (≤1 year) specifying immediate financial actions, budgets, cash forecasts and pro forma statements.

Short-Term Financial Plan

Declaration of where a company aspires to be in the future.

Vision Statement

Description of how a company intends to achieve its vision through day-to-day operations.

Mission Statement

Alternative course of action prepared to minimize adverse effects when assumptions do not materialize.

Contingency Plan