DECA Finance Cluster - Vocabulary (DETAILED)

Case Law

Primary source of law that is based on previous court decisions

Constitutional Law

The supreme law of the land and is based upon the US constitution

Uniform Laws

These laws address issues such astrade and commerce. These laws provide legal consistency among the states that adopt them

Statutory Laws

The US Congress enacts these laws

Product trade-name franchise

An independent sales relationship between a supplier and a dealer to stock and sell a specific or exclusive line of products

Temporal Reasoning

Reasoning which involves considering the timing of a financial transaction or process.

Collection Letter

A type of persuasive message that many businesses write to customers who are delinquent in making payments on their accounts (Purpose: persuade customers to send payment or to contact the business to make some type of arrangement)

Unity of Command

An organizational principle that states that no employee should answer to more than one manager at a time

Scalar Principle

A principle that states authority should flow in a clear, unbroken line from the top to the bottom

Hedge Fund

A pooled investment fund that uses many types of aggressive investment strategies to maximize returns

Transference

A risk-response strategy that involves moving the impact of a risk to someone or something else

Data Mining

The process of searching computer databases to look for patterns of information and correlations among information (use info obtained from data mining to make business decisions)

Structured Query Language

Used for building queries and performing database administration tasks. Made up of clauses with each clause beginning with a keyword that is typically written in all caps

Profitability Ratios

Ratios that measure the business's ability to generate profit

Economizing

The process of deciding how scarce resources will be used or which goods and services will be purchased or provided so that the most satisfaction can be obtained

Controlling

The management function that monitors the work effort

Organizing

The management function of setting up the way the business's work will be done

Directing

The management function of providing guidance to workers and work projects

Rationing

Occurs when there are limited resources, goods, and services --> those who are willing and have the ability to pay are able to purchase them

Comparative Reasoning

Used to identify financial system transactions that are very similar to each other but not exactly alike

Contextual Reasoning

Used to consider each financial transaction's circumstances and how it compares to historical patterns in the system

Query

The mechanism used to obtain the desired information from the financial databases

Bylaws

The provisions of corporate policies

Hedging

The strategy focused upon reducing exposure to risk of loss resulting from fluctuations in exchange rates, commodity prices, interest rates, etc.

Hedge Fund

A special type of investment fund with fewer restrictions on the types of investments it can make (more exclusive, fewer people can invest)

Hedge

In securities, is a transaction that reduces the risk of an investment

Cost-Plus Pricing

All costs and expenses are calculated, and then the desired profit is added to arrive at a price

Credit Union

A cooperative association formed by labor unions or groups of employees for the benefit of its members

Limited Liability

The personal assets of the owners cannot be taken if the company does not meet its financial obligations

Revolving Accounts

Charge accounts where the retailer determines the credit limit and payment terms

Opportunity Costs

Trade-offs that occur when you choose one alternative over another; they are impossible to avoid

Money Markets

These markets facilitate the buying and selling of low-risk, short-selling of land and buildings

Variance

A measure of how data points differ from the mean

Exploratory Interview

A meeting in which the purpose is to gather information about a specific topic

Break Even Formula

BEP=FC/SP-VC

Corporation

Owned by the people who have purchased shares of stock in the business

Consolidation

The joining of two or more companies to form a new company

Fiduciary Responsibility

Making wise financial decisions and obtaining financial products that will help the client achieve his/her financial goals.

Fiduciary

A financial professional who has been given legal authority to make financial transactions on behalf of an individual or business

Capital Gain

The difference between the purchase price and the sales price of an asset

Gift Tax

Tax on something of value given to another person

Cross-Source Reasoning

Reasoning that is used to compare financial transactions and processes across multiple financial systems and determine inconsistencies and errors

Clustering

Involves selecting various characteristics of a market that the business wants to explore-->selects the data that meets the criteria and clusters the data into appropriate categories

Law of Demand

An economic principle that states that the quantity of a good or service that people will buy varies inversely with the price of the good or service

Trade Deficit

An unfavorable balance of trade in which a nation's imports are greater than its imports

Prosperity Phase

Expansion (Boom) phase

Recession Phase

From prosperity to recession

Depression Phase

Contraction of economy

Recovery Phase

From depression to prosperity

Human Risks

The chances of loss caused by human weakness and unpredictability

Bonding Employees

This tactic reduces human risks by providing reimbursement for employee theft

Depreciation

The reduction in value of goods or assets occurring over a period of time

Cost Analysis

Used to determine the costs associated with a variety of business functions and activities

Accrual Accounting System

Records a business's financial transactions at the time they occur, even if the money is not exchanged at the time

Manual Accounting System

System which processes financial information by hand

External Audience

Consists of businesses or individuals who are not involved in the day to day operations of the business

Bear Market

When stock prices decrease over time, it may indicate a downturn in the market

Bull Market

When stock prices increase over time

Compensation

Pay for work completed (includes commission)

Teller

A person employed to deal with customers' transactions in a bank (most basic banking job)

Transmittal Letter

A business letter whose purpose is to accompany other written material (sent along with other documents/reports)

Decision Tree

An approach in which the data received through data mining is categorized into meaningful groups based on a set of established criteria

Dividends

Income earned on stock investment

Asset Utilization Ratios

These ratios help businesses determine if they are using their assets in the most effective ways

Liquidity Ratios

Ratios used to determine a business's ability to pay its short term debts

Extension

This indicates the total cost of each quantity of products purchased by the price per unit

Gramm-Leach-Biley Act

Repeals part of the Glass-Stegall Act by allowing financial institutions to form mergers or consolidate

Securities Exchange Act of 1934

Law which requires the disclosure of certain financial information, regulates the issuance of securities, and and outlaws insider-trading practices

Sarbanes-Oxley Act

Law which regulates corporations and public accounting firm activities

Enrichment

Involves adding interest and satisfaction to a task

Job Analysis

A detailed study of a job

Enlargement

Involves adding more tasks to a worker's present job

Line of Credit

A type of Loan

Checking account

Used to manage current income and expenses

Commodities

Resources that are often used to create other goods

Macro

A customized keystroke or shortcut that commands the database program to perform certain tasks automatically

Action plan

A specific series of steps taken to accomplish a specified goal.

Automation

Any technology, machine, or device linked to a control system such as computers to control machinery and processes; it may reduce human resources requirements to perform the same process.

Brand

The perception that comes to mind when people think of an individual, business, program, and organization.

Break-even analysis

An analysis that reveals the break-even sales, or point where the total revenue (TR) received equals the total costs (TC) associated with the sale of services or products (TR = TC). It is typically conducted to determine if it would be profitable to sell a proposed product or to provide insight into profit planning.

Business Plan

A formal document containing background information about the intended business and key business members as well as detailing business goals, supporting beliefs concerning attaining goals, and describing plans for achieving these goals.

Competitive analysis

Analysis that identifies an organization's competitors and evaluates their strengths and weaknesses relative to those of the organization's own ser

Flat organization

An organizational structure with few or no levels of intervening management between staff and managers; also called a "horizontal organization."

full-time equivalent

A measure of employment status; a FTE of 1.0 means the employee is equivalent to a full-time worker, while a FTE of 0.5 means the worker is half-time (50%).

Gantt Chart

A bar chart that illustrates a project schedule. It illustrates the start and finish dates of goals for a project.

hierarchical organization

An organizational structure where every entity in the organization, with few exceptions, is subordinate to at least one other entity. Most large companies have hierarchical organizations.

job analysis

The process used to collect information about the duties, responsibilities, necessary skills, outcomes, and work environment of a particular job.

market penetration

The extent to which a product is adopted/bought by consumers in a particular market.

matrix organization

An organizational structure in which employees with diverse skills are pooled for work assignments.

organizational chart

A diagram that illustrates formal lines of authority as well as relationships between positions within the organization.

pro forma

Presentation of data based on hypothetical situations or conditions.

risk tolerance

The extent to which an investor will accept risk in the pursuit of a reward. The greater an investor's tolerance, the more risk he or she will accept to reach the goal, and the more willing he or she will be to invest in higher-risk assets with correspondingly higher returns.

sensitivity analysis

A type of analysis that examines how different values of an independent variable may affect a dependent variable based on changes in the assumptions upon which projections are determined.

skills inventory

A listing of abilities, qualifications, and competencies usually created through an evaluative process.

start up costs

The costs or expenses involved in setting up a business.

supply chain management

Management of the interrelated businesses involved in the production of a product or service.

join commission

An independent, not-for-profit organization that accredits and certifies more than 15,000 health care organizations and programs in the United States. Its mission is to continuously improve the safety and quality of care provided to the public through the provision of health care accreditation and related services that support performance improvement in health care organizations.

virtual organization

An organization that outsources its major functions to decrease its costs and increase its flexibility, often operating via electronic means such as through the Internet.

working capital

Assets that can be applied to the daily operations of a business; current assets minus current liabilities.

Accountability Measures

Performance measures that are most effective for comparing organizations and focusing improvement because of the high likelihood that a good score on these measures is highly correlated with improved outcomes.