FBLA Financial Math

Annual Interest Rate

The percent of the principal in a bank account earned as interest based on one year.

Annual Percentage Rate (APR)

An index showing the cost of borrowing money on a yearly basis, expressed as a percent.

Annuity

An equal amount of money deposited into an account at equal periods of time.

Base Figure

When comparing income statements, the dollar amounts the earlier income statement.

Base Price

The price of a vehicle's engine, chassis, and any other standard equipment for a particular model.

Budget

A plan for using money in a way that best meets your wants and needs.

Capital

The amount of your owner's equity.

Commission

An amount of money paid to an employee for selling a product or service.

Cost

The actual amount paid for a product, as opposed to its selling price, and which can include expenses such as freight charged and taxes.

Deductible

An amount of money someone with insurance must pay before the insurance company pays anything.

Discount

The difference between the face value and the maturity value of a bond or Treasury bill.

Down Payment

A portion of the cash price of an item that has to be paid before financing the rest on credit.

Face Value

The amount of money printed on a bond or Treasury bill that you receive on its maturity date.

Factor

A company's present share of the market for a product or service.

Fixed Costs

Production or vehicle costs that remain the same no matter how much you produce or drive, such as building rent or vehicle registration.

Fixed Expenses

Regular expenses that do not vary from month to month, such as rent and car payments.

Gross Domestic Product (GDP)

The total value of the goods and services produced in a country in a given year.

Gross Profit

The amount of money a supplier makes on a product when it sells it for more than it costs.

Inflation

A general increase in the cost of goods and services.

Interest

The amount of money paid for the use of a lender's money.

Inventory

The number of each item that a business has in stock.

Invoice

A bill listing the quantities and costs of items purchased.

Lease

An agreement for the use of property, such as a building or a vehicle, usually on an annual basis.

Living Expenses

Routine expenses, such as food, utilities, and clothing, that vary from month to month.

Loss

The amount of money lost on an investment, such as stocks.

Markdown

The difference between the regular selling price of an item and its sale price, also called the amount of the discount.

Market

The total number of people who might purchase a type of product.

Markup

The difference between the cost of a product and the selling price when the selling price is higher.

Maturity Value

The total amount that must be repaid on a loan, including the principal borrowed and the interest owed.

Merge

To combine one business with another business to form a new business.

Net Income

Any money left over after expenses have been deducted from gross profits, also called net profit.

Net Price

The price actually paid for a discount item.

Net Profit

Any money left after expenses have been deducted from gross profits, also called net income.

Net Worth

The amount by which your assets exceed your liabilities.

Ordinary Annuity

An account in which equal deposits are made at the end of each interest period and start earning interest at the beginning of the next interest period.

Owner's Equity

The difference between your assets and your liabilities.

Per Capita GDP

The gross domestic product of a country distributed over the population, or the GDP per person.

Personal Identification Number (PIN)

A personal number on a bankcard that gives you access to your bank account electronically.

Premium

The amount paid to an insurance company for insurance.

Prime Cost

The total of the direct material cost and the direct labor cost used to make a product, often expressed on a per-unit basis.

Principal

The amount borrowed on a loan or put into an account, on which interest is based.

Profit

Money made on a product or an investment over and above the amount spent on it.

Quality Control

Inspecting mass-produced items for defects.

Real GDP

The gross domestic product adjusted to include the effects of inflation.

Salary

A fixed amount of money earned on a regular basis, received weekly, bi-weekly, semimonthly, or monthly.

Sale Price

The regular selling price of an item minus the discount or markdown on the price.

Sales Tax

A tax charged by most states on the selling price of a good or service, usually expressed as a percent.

Selling Price

What a product actually sells for in the store, also called retail price.

Stocks

Shares of ownership in a corporation.

Tax Rate

The percent of income, sales, or property value collected in taxes. The tax rate on property is sometimes expressed in mills per dollar.

Utility Costs

The costs of public services such as electricity, water, and gas.

Variable Costs

The costs of producing a product that vary directly with the number of units produced, such as raw materials and packaging. Also, vehicle costs that increase the more you drive, such as gasoline and tires.

Yield

Rate of return on a stock, a bond or Treasury Bill, or savings account earned by an investor after a certain period of time.