Glossary for Financial Management

A set of vocabulary flashcards derived from the glossary for financial management, covering key terms and their definitions.

10-K

Annual audited financials filed with the SEC.

10-Q

Quarterly audited financials filed with the SEC.

Accounts Payable

Current liability - money owed to suppliers.

Accounts Receivable

Current asset - money owed to the firm.

Accredited Investor

Permitted by SEC to purchase non-public securities.

Accrual Accounting

Accounting based on historical prices and the matching principle.

Amortizing Loan

Loan whose monthly payments include principal payback.

Annuity

Series of payments over time.

Beta

Measure of individual stock's risk compared to the market.

Bond Rating

Credit rating provided by S&P and Moodys.

Callable bond

Bond that may be redeemed before maturity at corporation's discretion.

CAPM

Capital asset pricing model: required return on a specific stock.

Cash Cycle

Cycle from buying raw materials to receiving cash from sales.

Collateralized bond

Bond that is secured by some asset of the corporation.

Corporate Governance

Management control issues involved in corporate operations.

Current Assets

Assets expected to be liquidated within 1 year.

Debenture

A general obligation bond of a corporation.

Discount Price

Market price is less than face value; coupon rate is less than market yield.

Diversification

A collection of assets to reduce the risk exposure from individual assets.

Dividend Yield

Dividend divided by share price.

EBIT

Earnings before interest and taxes.

Exchange

An organized market such as the New York Stock Exchange.

Expected Return

Probability weighted average of possible returns.

Financial Risk

Same as Financial Leverage.

Float

Time from billing to receipt of cash.

Hybrid Security

Has characteristics of both stock and bonds, e.g. preferred stock.

Initial Cash Flow

Cash outlay to implement an investment project.

Junk bond

Bond rated below BBB by credit rating agencies.

Market Return

Average expected return of all stocks in the market.

Net Present Value

Sum of future cash flow PVs minus initial cash outflow.

Operating Margin

Ratio of EBIT to sales.

Private Equity Fund

Fund providing equity to support growth in new firms.

Public Corporation

Firm regulated by SEC; stock trades in public financial markets.

Risk-Free Rate

Interest rate on risk-free assets such as U.S. Treasury securities.

Return on Assets (ROA)

Ratio of net income to assets.

Time Value of Money

Value of money depends upon the timing of its receipt.

Weighted Average Cost of Capital (WACC)

Weighted average cost of funds for a corporation.

Yield to Maturity (YTM)

Yield earned if asset held to maturity.

Zero Bond

Bond whose coupon rate is zero.