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A
1. ABC Method of Inventory control: Method that controls expensive inventory items more
closely than less expensive item.
2. Accounts Payable: The amounts due to suppliers of goods and services of an organization.
3. Accounting rate of return: Calculated by dividing the average income after tax by the
initial outlay of project.
4. Account Receivable: Amounts of money owed to a firm by customer who has bought goods
or services on credit.
5. Acid test Ratio: A measured of liquidity, defined as current assets fewer inventories divided
by current Liabilities.
6. Acquisition: When a firm buys another firm.
7. Actuary: A professional who is specialized in the field of insurance.
8. After Tax Cash flow: Total cost generated by an investment annually, defined as profit after
tax plus depreciation or equivalently, operating income after tax plus the tax rate times
depreciation.
9. Agency Problem: conflicts of interest among stockholders bondholders, and managers.
10. Amalgamation: The joining of two or more business, also called merger.
11. Amortization: Process of writing of or liquidating an asset or loan periodically on an
installment basis.
12. Annual Report: Yearly record of a publicly held companys financial condition.
13. Annuity: A series of uniform receives (payment) for a specific number of years, which
results from an initial deposit (receipts).
14. Annuity Due: An annuity with n payment, where the first payment is made at time t =0 and
the last payment is made at time t=n-1.
15. Annuity factor: Present value of Tk. 1 paid for each of t periods.
16. Appreciation: Increase in the value of an asset.
17. Arbitrage: The simultaneous buying and selling of a security at two different prices in two
different markets.
18. Asset: Anything owned by an individual or a business, which has commercial or exchange
value.
19. ATM: A computerized machine that enables customers to withdraw cash from their current
accounts especially outside normal banking hours.
20. Average collection period: Average amount of time required to collect an account
receivable. Also knows as days sales outstanding.
B
1. Balance Sheet: A summary of affirms financial positions on a given date that shows total
assets= total liabilities+ owners equity.
2. Beta: An index of systematic risk. It measures the sensitivity of a stocks returns to change in
returns on the market portfolio.
3. Bill of Lading: A shipping document indicating the detail of the shipment and delivery of
goods and their ownership.
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4. Bond: A long term debt instrument issued by a corporation or government.
5. Bond Premium: The amount by which the current price of a bond exceeds its current price.
6. Bond discount: The amount by which the face value of a bond exceeds its current price.
7. Book Value: An asset the accounting value of an asset- the assets cost minus its
accumulated depreciation.
8. Break- even point: The sales volume required so that total revenue and total costs are equal.
9. Break-even analysis: A technique for studying the relationship among fixed costs, variable
cost, sales volume and profits. Also called cost volume profit analysis.
10. Back to Back Letter of Credit: Two letters of credit (LCs) used together to help a seller
finance the purchase of equipment or services from a subcontractor. With the original LC
from the buyer's bank in place, the seller goes to his own bank and has a second LC issued,
with the subcontractor as beneficiary. The subcontractor is thus ensured of payment upon
fulfilling the terms of the contract.
11. Balance of Payment:
C
1. Capital asset Pricing model (CAPM): A model that describes the relationship between risk
and expected return.
2. Capital Budgeting: The Process of identifying, analyzing and selecting investment projects
whose returns are expected to extend beyond one year.
3. Capital Gain (Loss): The amount by which the proceeds from the sales of a capital asset
exceeds the assets original cost.
4. Capital Market: The market for relatively long term (greater than one year original
maturity) financial instruments (Bonds, and stocks).
5. Capital Structure: The mix of a firms permanent long term financing represented by debt,
preferred stock and common stock equity.
6. Cash cycle: The length of time from the actual outlay of cash for purchase until the
collection of receivables resulting from the sale of goods or services, also called cash
conversion cycle.
7. Commercial Paper: Short term unsecured promissory notes generally issued by large
corporations.
8. Common Stock: Securities that represent the ultimate ownership position in a corporation.
9. Compound interest: Interest paid on any previous interest earned as well as on the principal
borrowed.
10. Cost of Capital: The required rate of return on the various types of financing.
11. Cost of debt: The required rate of return on investment of the common share holders of the
company.
12. Cost of goods sold: Beginning inventory plus cost of goods purchased or manufactured
minus ending inventory.
13. Cost of Preferred stock: The required rate of return on investment of the preferred share
holders of the company.
14. Coupon Rate: The stated rate of interest on a bond.
15. Current Ratio: Current asset divided by Current Liability.
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D
1. Debenture: A long term, unsecured debt instrument.
2. Debt Ratio: Ratio that show the extent to which the firm is financed by debt.
3. Declining balance depreciation: Methods of depreciation calling for an annual charge
based on a fixed percentage of the assets depreciated book value at the beginning of the year
for which the depreciation charge applies.
4. Depreciation: The systematic allocation of the cost of a capital asset over a period of time
for financial reporting purposes, tax purpose, or both.
5.
T
1. Tangible Assets: An asset whose value depends on particular physical properties. It includes
assets such as building, machinery, land, mine, work of art etc. also called real assets.
2. Tax holiday: A period during which a company is executed from paying taxes as an export
incentive or an incentive to start up a new industry.
3. Tax: A tax (from the Latin taxo; "rate") is a financial charge or other levy imposed upon a
taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such
that failure to pay is punishable by law. Taxes are also imposed by many administrative
divisions. Taxes consist of direct or indirect taxes and may be paid in money or as its labor
equivalent.
4. Tenor: Maturity of a loan.
5. Term Loan: A bank loan, with a floating interest rate, for a specified amount that matures in
between one and ten years and requires a specified repayments schedule.
6. Term life Insurance: life insurance which provides coverage at a fixed rate of payments for
a limited period of time, the relevant term.
7. Tight Money: A term to indicate time periods in which financing may be difficult to find
and interest rates may be quite high by normal standers. Also called dear money.
8. Time Deposit: An interest paying account that has a fixed maturity date, often called
certificate of deposit.
9. Time interest earned ratio: A measure of a company's ability to honor its debt payments.
It may be calculated as either EBIT or EBITDA divided by the total interest payable.
10. Trademark: A unique name, word, or symbol used to identify a product.
11. Trading: Buying and selling of securities.
12. Treasury Bills (T-Bills): Short term noninterest bearing obligation of the government
treasury issued at a discount and redeemed at maturity for full face value.
13. Treasury Bonds: Long term (more than 10 years original maturity) obligation of the
government treasury.
14. Treasury Notes: Medium term (2-10 years original maturity) obligation of the government
treasury.
15. Treasury Stock: Common stock that has been repurchased and is held by the issuing
company.
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16. Trend analysis: Trend Analysis is the practice of collecting information and attempting to
spot a pattern, or trend, in the information. In some fields of study, the term "trend analysis"
has more formally defined meanings
17. Trend: The general direction of the market.
18. Treynor Index: A measure of risk-adjusted performance of an investment portfolio. The
Treynor Index measures a portfolio's excess return per unit of risk, using beta as the risk
measure; the higher this number, the greater "excess return" being generated by the portfolio.
The index was developed by economist Jack Treynor. Also known as the Treynor Ratio.
19.
U
1. Underwriters: Investment bankers that purchase securities from the issuing company and
resell them.
2. Underwriting: A process by which investment banker purchases shares from an issuer and
sell it to the public.
3. Unsystematic risk: Company or industry specific risk that is inherent in each investment.
The amount of unsystematic risk can be reduced through appropriate diversification. Also
known as "specific risk," "diversifiable risk" or "residual risk."
W
1. Warrant: A relatively long term option to purchase common stock at a specified exercise
price over a specified period of time.
2. Waiting period: Time during the security and exchange commission studies a firms
registration statement.
3. Weak Market: A market with a few buyers and many sellers and a declining trend in prices.
4. Weak from Efficiency: A security price reflects all market related data. Such as historical
security price movement and volume of securities traded.
5. Wealth Maximization: Maximization of the value of the shareholders.
6. Weighted average cost of capital: The rate that a company is expected to pay on average to
all its security holders to finance its assets.
7. WIP: Work in process, work in progress, (WIP) goods in process, or in-process
inventory are a company's partially finished goods waiting for completion and eventual sale
or the value of these items. These items are either just being fabricated or waiting for further
processing in a queue or a buffer storage. The term is used in production and supply chain
management.
8. Working capital management: The administration of the firms current assets and the
financing needed to support current assets.
9. Working Capital cycle: The working capital cycle measures the amount of time that elapses
between the moment when your business begins investing money in a product or service, and
the moment the business receives payment for that product or service.
10. Working Capital Ratio: Working Capital expressed as a percentage of a sales.
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11. Working Capital Turnover: Shows how efficiently working capital is employed, measuring
the amount of net revenue generated per taka of working capital.
12. Working capital: (abbreviated WC) is a financial metric which represents liquidity
available to a business, organization or other entity, including governmental entity. Along
with fixed assets such as plant and equipment, working capital is considered a part of
operating capital. Net working capital is calculated as current assets minus current liabilities
Y
1. Yield to maturity: The expected rate of return on a bond if bought at its current market price
and held to maturity.
2. Yield: The premised rate of return on an investment under certain assumption.
Z
1. Zero coupon Bond: A bond that pays no interest but sells at a deep discount from its face
value.