FBLA Intro to FInancial Math

1 byte

1 byte

8 bits

1 gallon

128 fl. Oz.

1 liter

33.814 us fluid ounces

1 mile

1.609 kilometers

1 quart

2 pints(pt)

1cup

8 fluid ounces

1pint

2 cups(c)

3/10 net 30

3% discount if paid in 10 days, due in 30 days

5 Cs of Credit

Capacity- Borrowers ability to pay back loan

Capital- Amount of money a borrower puts down. For example, if a borrower puts down a large down payment, more likely to get mortgage

Collateral- Helps get a loan, incentive. If loan is not paid, lender can repossess collateral

Conditions- conditions of the loan, such as APR or principal amount

Character- borrowers reputation of paying back debts

52

approx how many weeks in a year

a time and a half

1.5 times the normal wage rate

ABA Number

9 digit code that appears at the bottom of a check to identify the specific financial institution (helps identify the bank); also called a routing number.

ABA numer

An ABA number (also known as routing number or routing transfer number) is a sequence of nine numeric characters used by banks to identify specific financial institutions within the United States.

Annual Yield (bond)

Bond Cost: Face Value x Percent (quoted price) Annual Interest: Face Value x Interest Rate Annual Yield: Annual Interest/Bond Cost

Annual Yield (Stock)

Annual dividend per share / cost per share

APR

annual percentage rate

Assets

Property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies

Auto insurance

Factors that affect cost of this: Gender and age Marital Status: married/unmarried, etc. Where you live - more uninsured drivers/more cars cause higher premiums Credit Score Profession Safety Rating Vehicle Size Age of Car Likelihood of theft Driving History Driving Activity

Bank Fractional Number

The first part of the hyphenated numerator in a bank fractional routing number stands for the city/state, notes BankersOnline.com. The second part of the numerator represents the American Bankers Association institution identifier, and the denominator is the Federal Reserve routing symbol

Bank statement

A record that summarizes all the transactions with an account over a certain time period (typically sent/produced once every month)

Bodily Injure Liability Coverage

Helps pay for another person's physical injury as a result of an accident for which you are liable. It can cover physical injury, pain and suffering, and losses incurred by third parties due to the accident.

Bonds

Written pledge that you will be repaid your specified amount of money plus interest, no ownership in corporation. One form is royalty. You get your money back when the bond reaches its maturity date. Interest is paid every 6 months.

Bounce check

When there are insufficient funds in an account, the bank will "bounce the check" (refuse to honor it). Banks and vendors frequently charge fees for bounced checks, sometimes exceeding the amount for which the check was written.

Business checks are valid for how long?

6 months

Cancelled Check

A check that has cleared the depositor's account and has been marked by the bank. It is a proof of payment. If check is lost, check cannot be used.

Capital

The excess of a company's assets over its liabilities

Capital Gain

Appreciation of investments. Applies to houses, stocks, collection of coins, cars. Ex: Buy a stock at $10 and sell at $12. Capital gain is $2, the difference

Capital Loss

Opposite of capital gain. Loss can offset gain. Ex: Stock A, one share goes from 10 to 15, and Stock B goes from 12 to 9. The net gain is $2, if I sell both of them. Tax is charged on the net gain ($2 in this case). If net gain is negative, $3000 from the loss can be used to offset other incomes in the same year. If more than $3000, then the extra loss can be carried forward to next year.

Cash advance

From using credit card, go to ATM and use code and to get cash. High interest is charged though

cash value

whole-life insurance builds up this money used to pay retirement benefits to be insured - can be borrowed at favorable interest rates

Cashiers check

Because the funds are drawn out of the banks account and guaranteed to be cleared by the bank, usually cashiers checks are very safe. To use a cashiers check, you must have enough money in your account, as you prepay.

Celsius to Fahrenheit

F = (9/5)C + 32

Certified Check

Here, the banks are drawn out of a individuals account, but the bank will confirm that the pay or has enough funds for this check to clear, and that the check is genuine. Check is signed by both Bank and individual.

Character

A symbol representing a letter or number

claim

formal request to an insurance company asking for a payment based on the terms of the insurance policy

Collateral

Something pledged as security for repayment of a loan, a to be forfeited in the event of a default

Collision insurance

Pays for damage to the insured vehicle caused by a collision with another motor vehicle or an object such as a telephone pole

compound interest

interest also earns interest

Compound Interest

Interest that keeps growing depending upon the frequency of compounding. Equation: A= P (1 + r/n)^(nt)

A= future value of investment/loan (interested is included) P= principle amount (initial value) r= annual interest rate (decimal) n= the number of times that interest is compounded per year t= the number of years the money is invested or borrow for

Compound interest/Computation

Interest earned not only on the original principal but also on the interest earned during previous interest periods, earning interest on interest. Use equation A=P(1 + r/(number of periods per year) )^(# of years x # of periods per year) Example: Principal=$1000, Interest Rate=6%, Compounded quarterly, amount after one year? 1)1000x.06x.25=15 1000 + 15 = 1015 2)1015x.06x.25=15.225 1015 + 15.225 = 1030.225 3)1030.225x.06x.25=15.453 1030.225 + 15.453 = 1045.68 4)1045.68x.06x.25=15.685 1045.68 + 15.685 = 1061.364 Amount at end of year = $1061.36 $61.36 is the compound interest

Comprehensive insurance

Pays for damage to the insured vehicle from losses due to fire, vandalism, theft, and just about any cause other than a collision

Conversion of euro to dollar

1 euro = 1.07 dollar

cost + markup = selling price

markup formula

Cost of Goods Sold

cost of the materials used to create goods, labor charges, distribution costs, etc. Also referred to as "cost of sales"

Cost of goods sold

The value of the beginning inventory plus the cost of any goods received, minus the value of the ending inventory. The accumulated total of all costs used to create a product or service, which has been sold. These costs fall into the general sub-categories of direct labor, materials, and overhead.

Credit cash

All incomes and gains. An entry which is passed when there is a decrease in assets or an increase in liabilities and owners equity. If referring to a personal account credit is the giver. In the real account it's what goes out. In a nominal account it is all incomes and gains. (Right) increase in credit is due to rise in share holders fund, membership fees, rental income, retained earnings, account payable, etc.

Current Assets

Assets that can quickly be turned into cash (within a year or so). Examples: inventory, accounts receivables, cash

Current assets

cash and other assets that are expected to be converted to cash within a year.

Current liabilities

amounts due to be paid to creditors within a year

Current Ratio

Formula: Divide current assets by current liabilities

Debit Card

Directly linked to your bank account. No credit line. Passcode protected. Different from gift card in that it cannot be replenished.

Debit cash

All expenses and losses. An entry which is passed when there is an increase in asset or decrease in liabilities and owners equity. (Left) if on personal account it's the receiver. On a real account it's what comes in. On a nominal account it's all expenses and losses. It's increase in debit is due to rise in cash, inventory, plant and machinery, land and building,expenses like salary, insurance, tax,dividend,etc.

Declining balance depreciation

Depreciation rate is multiple of straight line methos

deductible

amount you need to pay before the insurance overs it

deductibles

amount of $ that must be paid before an insurance company will pay a claim

def and calculate straight line depreciation

spread cost over life of fixed asset deduct salvage value SL = Cost/Life

Demand Deposit

A certain amount of funds deposited that can be withdrawn at any point in time (from a savings or checking account) without prior notice

depreciation

a reduction in the value of an asset with the passage of time, due in particular to wear and tear.

disposable personal income

amount of money that households have available for spending and saving after income taxes have been accounted for

Dividend

Money you earn as a shareholder of the company

down payment

an initial payment made when something is bought on credit

Drafts

(bank draft) A bank draft is a payment on behalf that is guaranteed by the issuing bank. Used for large purchases or when seller has no relationship with buyer. Payee wants a highly secure form of payment.

Earned income

Income generated by actually going to work

Employee Benefits

Examples: Health Care insurance Paid Leave Retirement Plans Social Security Workers Compensation

Endorsement

a clause in an insurance policy detailing an exemption from or change in coverage.

Endorsements

(For checks)

1. Blank Endorsement - signing your name on the back, anyone can deposit this check, even if it isn't theirs, used to cash a check at a bank

2. Restrictive Endorsement - by writing "For Deposit only and signing your name, the check can only be deposited into your account.

3. Special Endorsement - Used when giving check to another person. Usually, you write "Pay to the order of (name)" and sign your name.

Endorser

A person who is authorized to sign a negotiable security in order to transfer ownership from one party to another, or to approve the terms and conditions of a contract.

Executer

a person or institution appointed by a testator to carry out the terms of their will.

Federal income tax return/ 1040

Reconcile/calculate your income tax and compare with the taxes were already withheld. Overpaid, gov pays/refunds you back. Underpaid, you pay the gov, make up additional tax to gov, penalty may be assessed

FIFO (First in First Out)

The first you purchased is the first out. Example: I buy three books: Book 1 = $1, Book 2 = $2, Book 3 = $3. I resell them. Book 1 is the first to leave. The ending inventory is the sum of Book 2 and Book 3

finances

provide/ pay for something

Financial statements

Examples: Income statement - revenues and expenses are reported, shows how much a business made or lost in a time period

Balance sheet (also called a Statement of Financial Position) - assets and liabilities are reported, shows how much someone or something is worth at a certain point in time

Cash flow statement - A statement that shows the movement of cash and bank balances over a period of time. Operating activities, investing activities, and financing activities are reported. Statement of Changes in Equity

Flat

Tax rate that does not change with respect to an employee's income level

Floating a check

Writing a check knowing your account won't have sufficient funds to covering it, and hoping within a few days that your account will have enough funds.

Gross Profit

Also called: Gross margin, sales profit, gross income Formula: Revenue - Cost of goods sold

Heir

a person legally entitled to the property or rank of another on that person's death.

Income statement

A statement that shows in detail a business's income and operating expenses, also called a profit-and -loss statement. Shows gross profit, net sales, cost of goods sold, net income...,

Installation Loan

Loan paid off in monthly equal payments. Formula for monthly equal payments: pr(1+r)^n/(1+r)^n-1 p = principal, loan, amount that needs to be financed r = APR/paid months per year n = total number of months loan needs to be paid

Installment Loans

A loan that is repaid over time with a set number of payments (usually scheduled by month)

international system of units

metric system

Legacies

An amount of money or property left to someone in a will

Liabilities

Financial debt or financial obligations that arise during business. Ex: mortgages, accounts payable, etc.

LIFO (Last in First Out)

The last you purchased is the first out. Example: I buy three books: Book 1 = $1, Book 2 = $2, Book 3 = $3. I resell them. Book 3 is the first to leave. The ending inventory is the sum of Book 1 and Book 2

Liquidation

In finance and economics, liquidation is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations as and when they come due. Liquidation is the process of bringing a business to an end and distributing its assets to claimants.

Liquidity

How easy it is to turn assets in cash; these type of assets can be used immediately after being quickly converted to cash.

Loading charge

A fee paid to an investment company either when purchasing shares of a mutual fund or when selling shares, based on a percent of the amount invested. Type "A" mutual funds are front-loaded and make the charge when you buy the fund. Type "B" mutual funds are back-loaded and make charge when you sell

Maintained Markup

(Original retail - reductions) - Cost of Goods sold

Maker

a person or thing that makes or produces something.

markup

% increase when a store increases price of product from what they bought it for to make a profit

Mills

1/1000 US Dollar

minuend

from which another # will be subtracted

Money Order

A paper document similar to a check, but is prepaid. Since they are prepaid, they will most likely not bounce, and contain less personal information than a normal check.

Mutual fund

A kind of investment offered by an investment company, which accumulates the saving of many individuals and invests them in a portfolio of stocks, bonds, or both. A fund manager (or "portfolio manager") decides how to invest the money, and for this he is paid a fee, which comes from the money in the fund.

Net amount of sale (Net proceeds)

On the day of sale, how much cash is generated by sales. Do not regard how much it costs

Net Asset Value

Worth of a share of a mutual fund, total market value/number of shares outstanding

Net income

In business, net income (total comprehensive income, net earnings, net profit, informally, bottom line) is an entity's income minus cost of goods sold, expenses and taxes for an accounting period.

Net worth

Net worth (sometimes called net or wealth) is the total assets minus total outside liabilities of an individual or a company. Net worth is used when talking about the value of a company or in personal finance for an individual's net economic position. Put another way, net worth is any asset owned minus any debt owed.

Nominal account

The balance in a nominal account is closed at the end of the accounting year. As a result a nominal account begins each accounting year with a zero balance. Since the balance does not carry forward to the next accounting year, a nominal account is also referred to as a temporary account.

NSF

NSF International is an accredited, independent third-party certification body that tests and certifies products to verify they meet these public health and safety standards. Products that meet these standards bear the NSF mark. NATIONAL SANITATION FOUNDATION