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World Of Business > WoB Final > Flashcards

WoB Final Flashcards

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1
Q

What is accounts payable?

A

Purchases for which a buyer has not yet paid the seller.

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2
Q

What is accounts receivable?

A

Sales for which a firm has not yet been paid.

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3
Q

What are bond ratings?

A

Letter grades assigned to bond issues to indicate their quality or level of risk; assigned by rating agencies such as Moody’s and Standard & Poor’s (S&P).

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4
Q

What are bonds?

A

Long-term debt obligations (liabilities) issued by corporations and governments.

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5
Q

What are broker markets?

A

National and regional securities exchanges that bring buyers and sellers together through brokers on a centralized trading floor.

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6
Q

What is capital budgeting?

A

The process of analyzing long-term projects and selecting those that offer the best returns while maximizing the firm’s value.

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7
Q

What are capital expenditures?

A

Investments in long-lived assets, such as land, buildings, machinery, equipment, and information services, that are expected to provide benefits over a period longer than one year.

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8
Q

What are cash flows?

A

The inflow and outflow of cash for a firm.

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9
Q

What is cash management?

A

The process of making sure that a firm has enough cash on hand to pay bills as they come due and to meet unexpected expenses.

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10
Q

What are circuit breakers?

A

Corrective measures that, under certain conditions, stop trading in the securities markets for a short cooling-off period to limit the amount the market can drop in one day.

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11
Q

What is commercial paper?

A

Unsecured short-term debt—an IOU—issued by a financially strong corporation.

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12
Q

What is common stock?

A

A security that represents an ownership interest in a corporation.

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13
Q

What are dealer markets?

A

Securities markets where buy and sell orders are executed through dealers, or ‘market makers,’ linked by telecommunications networks.

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14
Q

What are dividends?

A

Payments to stockholders from a corporation’s profits.

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15
Q

What are electronic communications networks (ECNs)?

A

Private trading networks that allow institutional traders and some individuals to make direct transactions in the fourth market.

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16
Q

What is an exchange traded fund (ETF)?

A

A security similar to a mutual fund; holds a broad basket of stocks with a common theme but trades on a stock exchange so that its price changes throughout the day.

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17
Q

What is factoring?

A

A form of short-term financing in which a firm sells its accounts receivable outright at a discount to a factor.

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18
Q

What is financial management?

A

The art and science of managing a firm’s money so that it can meet its goals.

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19
Q

What is financial risk?

A

The chance that a firm will be unable to make scheduled interest and principal payments on its debt.

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20
Q

What are futures contracts?

A

Legally binding obligations to buy or sell specified quantities of commodities or financial instruments at an agreed-on price at a future date.

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21
Q

What is insider trading?

A

The use of information that is not available to the general public to make profits on securities transactions.

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22
Q

Who are institutional investors?

A

Investment professionals who are paid to manage other people’s money.

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23
Q

What is interest?

A

A fixed amount of money paid by the issuer of a bond to the bondholder on a regular schedule, typically every six months; stated as the coupon rate.

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24
Q

What are investment bankers?

A

Firms that act as intermediaries, buying securities from corporations and governments and reselling them to the public.

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25
What is a line of credit?
An agreement between a bank and a business that specifies the maximum amount of unsecured short-term borrowing the bank will allow the firm over a given period, typically one year.
26
What are marketable securities?
Short-term investments that are easily converted into cash.
27
What is a mortgage loan?
A long-term loan made against real estate as collateral.
28
What are municipal bonds?
Bonds issued by states, cities, counties, and other state and local government agencies.
29
What is a mutual fund?
A financial-service company that pools investors’ funds to buy a selection of securities that meet its stated investment goals.
30
What is the National Association of Securities Dealers Automated Quotation (NASDAQ) system?
The first and largest electronic stock market, which is a sophisticated telecommunications network that links dealers throughout the United States.
31
What are options?
Contracts that entitle holders to buy or sell specified quantities of common stocks or other financial instruments at a set price during a specified time.
32
What is the over-the-counter (OTC) market?
Markets, other than the exchanges, on which small companies trade; includes the Over-the-Counter Bulletin Board (OTCBB) and the Pink Sheets.
33
What is preferred stock?
An equity security for which the dividend amount is set at the time the stock is issued and the dividend must be paid before the company can pay dividends to common stockholders.
34
What is the primary market?
The securities market where new securities are sold to the public.
35
36
What is principal?
The amount borrowed by the issuer of a bond; also called par value.
37
What are retained earnings?
Profits that have been reinvested in a firm.
38
What is return?
The opportunity for profit.
39
What is a revolving credit agreement?
A guaranteed line of credit whereby a bank agrees that a certain amount of funds will be available for a business to borrow over a given period, typically two to five years.
40
What is risk?
The potential for loss or the chance that an investment will not achieve the expected level of return.
41
What is the risk-return trade-off?
A basic principle in finance that holds that the higher the risk, the greater the return that is required.
42
What is the secondary market?
The securities market where old (already issued) securities are bought and sold, or traded, among investors; includes broker markets, dealer markets, the over-the-counter market, and the commodities exchanges.
43
What are secured loans?
Loans for which the borrower is required to pledge specific assets as collateral, or security.
44
What are securities?
Investment certificates issued by corporations or governments that represent either equity or debt.
45
What are stock dividends?
Payments to stockholders in the form of more stock; may replace or supplement cash dividends.
46
What is a stockbroker?
A person who is licensed to buy and sell securities on behalf of clients.
47
What is a term loan?
A business loan with a maturity of more than one year; can be unsecured or secured.
48
What is trade credit?
The extension of credit by the seller to the buyer between the time the buyer receives the goods or services and when it pays for them.
49
What is underwriting?
The process of buying securities from corporations and governments and reselling them to the public; the main activity of investment bankers.
50
What are unsecured loans?
Loans for which the borrower does not have to pledge specific assets as security.
51
What is accounting?
The process of collecting, recording, classifying, summarizing, reporting, and analyzing financial activities.
52
What is the acid-test (quick) ratio?
The ratio of total current assets excluding inventory to total current liabilities; used to measure a firm’s liquidity.
53
What are activity ratios?
Ratios that measure how well a firm uses its assets.
54
What is an annual report?
A yearly document that describes a firm’s financial status and usually discusses the firm’s activities during the past year and its prospects for the future.
55
What are assets?
Things of value owned by a firm.
56
What is auditing?
The process of reviewing the records used to prepare financial statements and issuing a formal auditor’s opinion indicating whether the statements have been prepared in accordance with accepted accounting rules.
57
What is a balance sheet?
A financial statement that summarizes a firm’s financial position at a specific point in time.
58
What is a certified management accountant (CMA)?
A managerial accountant who has completed a professional certification program, including passing an examination.
59
What is a certified public accountant (CPA)?
An accountant who has completed an approved bachelor’s degree program, passed a test prepared by the American Institute of CPAs, and met state requirements. Only a CPA can issue an auditor’s opinion on a firm’s financial statements.
60
What is the cost of goods sold?
The total expense of buying or producing a firm’s goods or services.
61
What are current assets?
Assets that can or will be converted to cash within the next 12 months.
62
What are current liabilities?
Short-term claims that are due within a year of the date of the balance sheet.
63
What is the current ratio?
The ratio of total current assets to total current liabilities; used to measure a firm’s liquidity.
64
What are debt ratios?
Ratios that measure the degree and effect of a firm’s use of borrowed funds (debt) to finance its operations.
65
What is the debt-to-equity ratio?
The ratio of total liabilities to owners’ equity; measures the relationship between the amount of debt financing (borrowing) and the amount of equity financing (owner’s funds).
66
What is depreciation?
The allocation of an asset’s original cost to the years in which it is expected to produce revenues.
67
What is double-entry bookkeeping?
A method of accounting in which each transaction is recorded as two entries so that two accounts or records are changed.
68
What is earnings per share (EPS)?
The ratio of net profit to the number of shares of common stock outstanding; measures the number of dollars earned by each share of stock.
69
What are expenses?
The costs of generating revenues.
70
What is financial accounting?
Accounting that focuses on preparing external financial reports used by outsiders such as lenders, suppliers, investors, and government agencies to assess the financial strength of a business.
71
What does the Financial Accounting Standards Board (FASB) do?
The private organization responsible for establishing financial accounting standards in the United States.
72
What are fixed assets?
Long-term assets used by a firm for more than a year such as land, buildings, and machinery.
73
What are generally accepted accounting principles (GAAP)?
The financial accounting standards followed by accountants in the United States when preparing financial statements.
74
What is gross profit?
The amount a company earns after paying to produce or buy its products but before deducting operating expenses.
75
What are gross sales?
The total dollar amount of a company’s sales.
76
What is an income statement?
A financial statement that summarizes a firm’s revenues and expenses and shows its total profit or loss over a period of time.
77
What are intangible assets?
Long-term assets with no physical existence, such as patents, copyrights, trademarks, and goodwill.
78
What is the inventory turnover ratio?
The ratio of cost of goods sold to average inventory; measures the speed with which inventory moves through a firm and is turned into sales.
79
What are liabilities?
What a firm owes to its creditors; also called debts.
80
What is liquidity?
The speed with which an asset can be converted to cash.
81
What are liquidity ratios?
Ratios that measure a firm’s ability to pay its short-term debts as they come due.
82
What are long-term liabilities?
Claims that come due more than one year after the date of the balance sheet.
83
What is managerial accounting?
Accounting that provides financial information that managers inside the organization can use to evaluate and make decisions about current and future operations.
84
What is net loss?
The amount obtained by subtracting all of a firm’s expenses from its revenues, when the expenses are more than the revenues.
85
What is net profit (net income)?
The amount obtained by subtracting all of a firm’s expenses from its revenues, when the revenues are more than the expenses.
86
What is net profit margin?
The ratio of net profit to net sales; also called return on sales. It measures the percentage of each sales dollar remaining after all expenses, including taxes, have been deducted.
87
What are net sales?
The amount left after deducting sales discounts and returns and allowances from gross sales.
88
What is net working capital?
The amount obtained by subtracting total current liabilities from total current assets; used to measure a firm’s liquidity.
89
What are operating expenses?
The expenses of running a business that are not directly related to producing or buying its products.
90
What is owners’ equity?
The total amount of investment in the firm minus any liabilities; also called net worth.
91
What are private accountants?
Accountants who are employed to serve one particular organization.
92
What are profitability ratios?
Ratios that measure how well a firm is using its resources to generate profit and how efficiently it is being managed.
93
What are public accountants?
Independent accountants who serve organizations and individuals on a fee basis.
94
What is ratio analysis?
The calculation and interpretation of financial ratios using data taken from the firm’s financial statements in order to assess its condition and performance.
95
What are retained earnings?
The amounts left over from profitable operations since the firm’s beginning; equal to total profits minus all dividends paid to stockholders.
96
What is return on equity (ROE)?
The ratio of net profit to total owners’ equity; measures the return that owners receive on their investment in the firm.
97
What are revenues?
The dollar amount of a firm’s sales plus any other income it received from sources such as interest, dividends, and rents.

World Of Business (1 decks)

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