Financial Terms and Definitions Flashcards
(52 cards)
Assets = Liabilities + Owner’s Equity
Accounting Equation
Debts of a company for goods and services purchased that must be paid within one year. These debts are listed as a current liability on the company’s balance sheet.
Accounts Payable
Money owed to a company for goods and services it has sold. Payment is expected within one year. This money is listed as a current asset on the company’s balance sheet.
Accounts Receivable
A method of accounting in which expenses and revenue are recorded in the time period during which they occur. This differs from “cash accounting,” which records transactions only when money changes hands.
Accrual Investors
An investor who invests in a company in order to influence a company’s decisions or change its direction.
Activity Investors
Electronic stock trading that occurs after the regular market has closed.
After Hours Trading
A securities purchase that must be completed exactly as specified. If the conditions cannot be met, the order is cancelled. For example, if you place an AON order for 1,000 shares of XYZ Corp. at $10 per share your order can be completed only when the broker has assembled 1,000 shares of XYZ at $10 per share. If he or she secures 900 shares at $10 and 100 shares at $10.10, the order will not be filled. Brokers generally give preference to filling orders without such conditions.
All or Nothing (AON)
Speculative investors who make substantial investments in Ricky businesses - frequently before they have generated any revenue or sold any products. As a rule, these business are start-ups or small companies that don’t have access to regular capital markets.
Anti-Takeover Measure
Exploring differences in the price of an asset bu simultaneously buying and selling it. In the process the arbitrageur pockets a risk-free return
Arbitrage
The lowest price an owner of a security will accept for it. When the bid price and ask price coincide, the transaction is completed.
Ask Price
Everything a company or person owns or is owed, such as money, securities, equipment and buildings. Assets are listed on a company’s balance sheet.
Assets
Verification of the accuracy of accounting and finical records by a member of the Chartered Professional Accountants of Canada. In some provinces, Certified General Accountants and Certified Management Accountants may also act as company auditors.
Audit
Statistical tools that measure the state of the stock market or the economy, based on the performance of stocks, bonds or other components. The Dow Jones Industrial Average and the S&P?TSX Composite Index.
Averages, Indexes or Indices
A financial statement showing a company’s assets, liabilities and shareholders’ equity on a given date. It shows what the company owns, the debts it owes and what belongs to the shareholders.
Balance Sheet
The central bank of Canada, founded in the 1930’s to facilitate the functioning of the financial system. The Bank of Canada issues and removes bank notes, acts as the federal government’s financial advisor on debt management and foreign exchange and conducts monetary policy to regulate the growth of the country’s money supply and influence interest rates.
Bank of Canada
A market in which prices are declining. A “bear” is a person who expects that the market or the price of a particular security will decline.
Bear Market
The highest amount a purchaser of a security is willing to pay for it. When the bid price and ask price coincide, the transaction is completed.
Bid Price
Bonds are debt instruments. When you buy a bond you essentially loam money to a government or corporation for a fixed term at a pre-set interest rate.
Bonds
A market in which prices are rising. A “bull” is a person who expects that the market or the price of a particular security will rise.
Bull Market
Although not strictly a financial term, cap and trade has a significant impact on the financial performance of businesses and the overall health of the environment. Simply defined, cap and trade uses market forces to regulate environmental pollution caused by the industry. “Cap” refers to a limit on the amount of pollutant(s) a company may issue. Companies purchase permits (sometimes called credits or allowances) giving them the right to discharges specific amounts of particular pollutants. If they choose to, or are forced to, exceed their limits they must purchase unused capacity held by other companies.
Cap and Trade
A method of accounting in which transactions are recorded only when money changes hands. This differs from “accrual accounting” which records both revenue and expenses during the time period in which they occur.
Cash Accounting
A company’s net income for a stated period plus any deductions that are not paid out in actual cash, such as depreciation, amortization, deferred income taxes and minority interest. Cash flow can provide a broader picture if a company’s earning power than the net earnings alone. Cash flow is important to investors as it shows the company’s ability to pay dividends and finance expansion.
Cash Flow
A body established by a national government to regulate currency and monetary policy on a national and international level. In Canada, it is the Bank of Canada. In the United States, it is the Federal Reserve Board and in the United Kingdom, it is the Bank of England.
Central Bank
Securities, which represent ownership in a company and carry voting privileges. Common shareholders may be paid dividends but only after preferred shareholders arepaid. Common shareholders are last in line after creditors, debt holders and preferred shareholders to claim any of a company’s assets in the event of liquidation.
Common Shares
