deca marketing FI

financial analysis

corporate bonds

bonds issued by corporations to fund operating expenses

brokerage bills

feels charged by brokers to execute transactions or to provide specialized financial services

sales tax

taxes on purchases collected by the government

excise tax

sales taxes on specific goods like gasoline, cigarettes, and alcohol

income tax

taxes collected from money that people earn

property tax

taxes that local governments collect from homeowners based on the value of the home and property

accounting activities

involves creating invoices, recording customer payments, tracking payroll, summarizing accounts payable, and organizing tax records

balance sheet

financial statement that captures financial condition of business at a particular moment

• compares how much a company owns vs how much they owe

• demonstrates assets = liabilities + equities

equity

= assets - liabilities

represents amt that owner has invested in the business ± profits and losses

• includes retained earnings

future value of money

= present value * [1+(i/n)]^(nt)

• where i = interest rate

• n = # of compounding periods per year

• t = number of years

determines how much a current amt of money will grow over a certain period of time

net worth

difference between assets - liabilities (equity)

• indicator of financial health

credit score

number that estimates how likely you are to pay a loan back on time (higher is better)

• assessed based on payment history, total debt, credit types, etc

cash inflow

measure of how much money will flow into a business

cash outflow

measure of how much money flows out of a business

current assets

assets intended to be converted into cash within a year

• inventory

fixed assets

assets not intended to be converted into cash within a year

• building and facilities

budget variance

difference between budgeted amount and actual amount

tax deductions

expenses that can be subtracted from gross income

• charitable donations, college tuition, home mortgage interest, child care

discretionary income

amt of money left over after paying taxes and essential living expenses

adjusted balance method

used to charge interest only based on the principal balance that remains each month

absolute advantage

advantage achieved when a nation can produce a good or service for less than another nation

capital gains

earns from appreciation of a stock investment

finance company

business that purchases borrowers' contracts from sellers and receives the borrowers' payments

credit union

financial cooperative set up to provide savings and credit services to its members

savings and loan association

a financial institution that offers savings accounts and makes loans to borrowers

commercial banks

full-service banks offering a variety of banking services, including checking and savings accounts, secured and unsecured loans, installment credit, and bank credit cards

certified public account firm

perform independent financial audits for different types of businesses (e.g., public corporations).

asset-management firm

help people invest their money

• beneficial for ppl who don’t have sufficient financial knowledge or resources to invest themselves

investment bank

financial intermediary that underwrites securities and facilitates mergers

• more for companies

mortgage companies

process loans specifically designed for the purchase of real estate—land, residences, and other types of buildings

accrual accounting

journalize income and expenditures at the time they occur even if no money changes hands

cash accounting

record income and expenditures at the time the money changes hands

liquid asset

asset that can be easily converted to cash within a short amount of time

• cash, bank accounts, certain investments

annual percentage rate (APR)

rate of interested expressed as a yearly percentage. tells you how much it will cost to take out a specific loan (indicates TOTAL cost of loan, including origination fees)

origination fee

fees charged by lenders for approved loans

credit score

rating assigned to borrower based on previous loans

cash flow

calculated by: cash coming in - cash going out

interest income

money earned from lending capital to a person, business, or financial institution (considered unearned income)

wage garnishment

legal procedure in which a person’s earnings are required by court order to be withheld by an employer for the payment of a debt

repossession

action of retaking possession of something when a buyer defaults (fails to payback) on payments

foreclosure

repossession of a mortgaged property when a tenant fails to keep up on their mortgage payments

angel investors

provide startup money for new businesses

certificate of deposit

lending investment in which you lend money to a bank at a set interest rate for a particular period of time
- guaranteed a certain rate of return, but you can’t access your money before the end of the time period without paying a penalty

savings account

lend money to a bank for the benefit of being able to access it at pretty much any time

bond

lend money to a government, municipality, or corporation to earn a set rate of interest for a specified time period
- no penalty if you withdraw the invested amount from a bond before the end of the time frame

money market account

lend money to a bank to earn interest but includes key rules and restrictions

disability insurance

provides % of worker’s normal wages to worker when they cannot work bc of illness or injury (usually covered by businesses)

health insurance

covers medican expenses like hospital bills, doctors’ fees, lab charges, etc.

liability insurance

protects against lawsuits resulting from injuries to others

term-life insurance

provides insurance coverage @ fixed rate for limited amt of time, received by beneficiary upon death

holding cost

money it takes to keep inventory in stock

good faith money

deposited by a buyer into an account to indicate their intention of completing a business deal (showing “good faith”)