Deca+ Finance Cluster

Financial Ratio

Financial ratios provide a comparison between financial statement items to determine the strength or weakness of a company. The most common ratios are: net sales to net worth and net income to net sales

Transaction

An agreement or contract that occurs between two or more parties and establishes a legal obligation. This can also be defined as an exchange of goods or services between a buyer and seller.

Time Value of Money

The increase of an amount of money due to interest earned over time or dividends paid

Invest

Any activity where money is put at risk in the short term for the purpose of creating a profit in the long term. Most investment activities include conducting research and developing a long term plan for any assets that will be put at risk. Investment activities want to create and/or increase a positive outcome for the benefactor.

Inflation

Refers to rising prices and is an indicator of the stability of an economy.

Client

A customer of a professional service provider or the primary contractor.

Financial Globalization

The worldwide development of economic, financial, trade and communication integration. This pushes business executives to consider broad views in the global marketplace as countries and their economies become interconnected and interdependent

Sustainability Reporting

Reporting by an entity that outlines its' economic, environmental and social performance.

Expenditure

The payment of cash for goods or services to settle an obligation; usually seen as an invoice or a receipt

Costing

A process to determine the cost of production or operation of a business by assigning expenses to various stages of production or operations of a firm.

Client

A customer of a professional service provider or the primary contractor.

Classification

A data-mining technique that uses a decision tree that requires a series of decisions

Cost of Goods Sold

This line on an income statement shows the cost of raw materials and labor to produce a finished product or service that is available to a consumer

Economies of Scale

An internal or external reduction in long term costs when production or operation increases in size

Convergence

The joining of two or more unique factors or phenomena, such as technologies. For example, the development of a smartphone was the convergence of telecommunications and internet technologies.

BUSINESS LAW

Laws that govern businesses and transactions between businesses.

Reporting

Used in finance to disclose an organization's financial standing.

Sales Tax

Charged to customers as a percentage of the price of the item being purchased.

Cost Allocation

Refers to the method in which indirect costs are assigned to a product.

Client Services

Any activity provided by a vendor on behalf of a client. Depending on the business this can include customer service, financial management, information technology, social media support, database management, etc. The services provided to a client are agreed on by both parties and detailed in a contract unless otherwise specified.

Debtor

A person or business that owes money, goods or services to another.

Regression

A data-mining technique that takes a numerical dataset and develops a mathematical formula that fits the data

Bank Statement

A document showing activity on your account over the previous month, including a beginning and ending balance and all inflows and outflows during that time

Financial Markets

A market for the sale or purchase of stocks, bonds, bills of exchange, commodities, fortunes and options, foreign currency which work as an exchange for capital and credit. In the United States, well recognized markets include the New York Stock Exchange (NYSE), the S&P 500, and the Chicago Mercantile Exchange (CME or Merc).

Estate Tax

A tax paid on wealth, collected after a person has died

capital expenditures

The amount spent to acquire or upgrade an asset that will increase the efficiency of the production or operations of a business for the long term.

financial position

The status of the assets, liabilities and owner's equity of an individual, business or other organization as shown in its financial statements

Solvency

Refers to the ability of an organization to meet its financial obligations.

Price

The value, in terms of money, placed on a good or service.

Currency

Money

Transparency

Fully and accurately disclosing of financial information to the public.

Financial Institutions

Organizations that are public or private whom act as a channel between savers and borrowers of funds. There are two types of institutions: depository and non-depository. Depository organizations are usually banks or credit unions. Non-depository organizations are often recognized as insurance companies or mutual funds

Securities

An investment tool such as bonds, debentures, notes, options, and shares

Financial Information Management

Managing data such as credit card numbers, accounting balances or other monetary facts about an individual, business or other organization that are used when evaluating credit, loans or other financial activities

Risk Transfer

A strategy in which an insurance risk is shifted to another party (the insurer) by means of an insurance policy.

Accounting

A system that monitors an individual, business or other organizations financial standing. This includes recording and verifying financial information to determine a profit or loss for a given time period as well as the value of assets, liabilities and owners' equity

Variance Analysis

Refers to the difference between a planned and actual budget.

financial resources

Funds available to a business or person for spending in the form of cash, credit or securities.

internal audit

An examination of an organization's financial statements that is conducted by an employee of the organization

customer

An individual, business or other organization that receives products or services for their own use.

just in time inventory

An inventory management method that coordinates the demand and supply for goods, delivering them just before they are needed.

Data

Information in an unorganized form (alphabets, numbers or symbols) that have a relationship with current conditions, ideas or knowledge.

Insurance Market

Composed of the companies involved in buying and selling of insurance

Managerial Accounting

Accounting that focuses on revenues and expenses of a business, reporting variances to management.

Sunk Cost

A cost that a business has incurred, but cannot recover.

Compliance

Verification that a vendor meets the requirements of accepted practices, regulations, legislation, rules, standards and/or the terms of a contract

External Audit

An examination of an organization's financial statements by an independent accountant, not affiliated with the organization

Differential Cost

The difference in cost between two or more business decisions.

Corporate Governance

Refers to the rules and practices that direct and control an organization.

Inventory Management

The process of buying and storing materials and products while controlling costs

Consolidation

Combining assets, equity, liabilities and operating accounts of a business and its subsidiaries into one financial statement OR combining two or more businesses through the purchase, merger or ownership transfer to create a new business

Customer Relations

The way a business interacts with its customers in order to obtain new customers while maintaining the current customer base

Money Market

A network of banks, discount houses, institutional vendors, and money dealers who borrow and lend among themselves for the short term (90 days). Any investment has risk, but a money market account is considered a safe place to invest due to its short term nature

Voluntary Compliance

The assumption that taxpayers will stay in compliance with tax laws and accurately report their income amounts and tax deductions fairly and honestly

Tax

Payment made to the government for services they provide.

Board of Directors

A group of individuals elected by stakeholders of an organization to govern the organization.

Professional relationship

Contacts made through business connections and interactions.

managment functions

The four functions of management include: planning, organizing, leading and controlling

Securities and Exchange Commission (SEC)

Government agency created in 1934 that is responsible for enforcing securities-related laws and setting standards for financial information about businesses that are traded on a stock exchange. The SEC has five commissions who are appointed by the President and confirmed by the Senate who serve five year terms.

External Risk

The possibility of loss, damage or injury outside of a business or other organization.

Information Managment

The process of collecting and analyzing data that be used in the strategic decision making process for a business

Risk Management

Monitoring the opportunity for loss for a business

Accounting System

The (often) computerized system of collecting, processing, analyzing and presenting accurate financial data to support management decisions

Financial Goal

Monetary objectives of an individual, business or other organization that are decided by future needs of those entities.

Financial Globalization

The worldwide development of economic, financial, trade and communication integration. This pushes business executives to consider broad views in the global marketplace as countries and their economies become interconnected and interdependent

Risk Avoidance

Used when a business anticipates risk and refrains from certain business activities in order to avoid the risk.

Property Tax

The main source of money for many local governments. This tax is based on the value of property such as land and buildings.

Internal Risk

The possibility of loss, damage or injury within a business or other organization.

profesional development

Process of improving capabilities of staff through access to education and training opportunities in the workplace, through outside organizations, or observing others perform the job

Compliance Officer

An employee of a business or other organization whose task is to ensure that regulations imposed by a government agency are being met as well as internal policies and procedures

perpetual inventory system

An inventory system that continually keeps track of the number of items in inventory, and can be done manually or by computer

inventory system

An inventory system allows a business to maintain the optimum number of each item. In doing so, a business can operate production of a good or service, sales or customer service at a lower cost

Insurance

A contract between a business and the insurer that covers a specific business risk.

commodities exchange

An open and organized marketplace where ownership titles or standard units of commodities are traded by its members.

Tax Law

The area of law that governs taxation. A tax is a fee charged by the government on a product, service, income or activity. The Internal Revenue Code is the name for all federal laws, which was first written in 1939 and has been revised multiple times to present day. Each state that collects a tax has their own department of taxation as well as local municipalities.

financial records

The financial documentation for an individual, business or other organization. The most common records are a Cash Flow Statement, Income Statement, Balance Sheet and Tax Returns

Capital Market

A market for demand and supply of debt and equity capital. This is a highly decentralized system made up of three major parts: the stock market, bond market and money market.

Creditor

The entity that provides available capital resources to debtors, in exchange for compensation

Customer Relationship Management (CRM)

At a minimum, this is a database of customer contacts, purchase history and technical support. Additional elements can include profiles of potential clients, understanding and leveraging the needs of current customers, and enhanced customer service based on data analysis.

Sustainability Reporting

Reporting by an entity that outlines its' economic, environmental and social performance.

Compliance program

The systematic process of a business or other organization to ensure that regulations imposed by a government agency are being met.

Securities Information

Information provided regarding an investment instrument issued by a corporation, government or other organization that demonstrates whether it is debt or equity

periodic inventory system

An inventory method in which items are counted only occasionally, by visual inspection - and can be completed manually, or through the use of technology, such as barcode scanners.

Income Tax

Calculated as a percentage of the taxable income workers earn while on the job.

Gross Revenue

Amount of money that the purchasers of a company's products or services actually pay for those items

Financial Analysis

Evaluating an organization's financial statements to determine the profitability of the organization, a division within the organization or a specific event or project

Savings

The portion of disposable income that is not spent on essential expenses in a household or business. A variety of savings vehicles are available to increase the value of savings including a bank savings account, stocks, bonds, etc.

Direct Cost

Those goods which can be directly tied to a good, service or project

Social Security(Fica)

A tax paid by workers so that they may receive benefits upon retirement.

Database

The systematic organization of information that allows easy updating and analysis of data.

Exchange Rate

The value of one currency in terms of another, established on the foreign exchange market.

Risk Management

The process of controlling an individual, business or other organizations opportunity for damage, loss or injury to ensure the safety of the community, environment and legal responsibilities

marginal analysis

A decision making tool that compares the cost of an activity versus the benefits of the activity

Credit

A way to receive cash or goods, while paying later.

Budgeting

The process of determining a time specific financial plan for an individual, business or other organization to achieve a monetary goal.

Activity Based Costing

A method used by businesses to accurately allocate overhead costs to specific products

Risk Retention

A strategy in which an entity sets aside a sum as a protection against a probable loss, instead of transferring the risk by purchasing an insurance policy

Data Mining

Reviewing very large amounts of data for useful information. This activity often uses advanced statistical tools to determine trends, patterns and relationships. Data mining can also be referred to as data surfing.

Equity

Includes earnings that a company has retained and the amount of funds invested in that company by its owners.

Finance

The process of managing money for an individual, business or other organization