Financial Terms related to Financial This document is part of the valuable contents available at www.ftpall.com, a free onlineglossary with more than five thousand financial and business terms. This document can be copied and distributed freely Find thousands of financial terms at www.ftpall.com respecting its original format. It is forbidden its transcription, translation or change on its format without authorization of its author or editor.FINANCIALChanges in financial position • Sources of funds internally provided from operations that alter a companys cash flow position: depreciation, deferred taxes, other sources, and capital expenditures.Comprehensive annual financial report • Abbreviated CAFR. The official annual report for the City of Los Angeles. It includes combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section.Consolidated financial statements • A presentation of the financial position of a parent company and its subsidiaries as one entity in a financial statement. See also: Annual Report.Corporate financial management
www.ftpall.com 2|Page • The application of financial principals within a corporation to create and maintain value through decision making and proper resource management.Corporate financial planning • Financial planning conducted by a firm that encompasses preparation of both long- and short-term financial plans.Country financial risk • The ability of the national economy to generate enough foreign exchange to meet Find thousands of financial terms at www.ftpall.com payments of interest and principal on its foreign debt.Degree of financial leverage • Abbreviated DFL. The numerical measure of the firms financial leverage. Measured at a base level of EBIT. Lowest value is 1. The higher the value of DFL the greater the risk, but also the greater the potential return if EBIT increases.Dupont system of financial control • Highlights the fact that return on assets (ROA) can be expressed in terms of the profit margin and asset turnover.Financial accounting standards board • Abbreviated FASB. The U.S. accounting professions rule-setting body, which authorizes generally accepted accounting principles (GAAP). • Standard No. 52 • Is the industry organization which provides guidelines for the recording, reporting and presentation of financial market transactions. Included in this work are the requirements for listing off-balance sheet items and hedging transactions for currencies, physicals, and financials.Financial analyst • Also called securities analysts and investment analysts, professionals who analyze
www.ftpall.com 3|Page financial statements, interview corporate executives, and attend trade shows, in order to write reports recommending either purchasing, selling, or holding various stocks. • See Analyst.Financial assets • Claims on real assets.Financial break even points Find thousands of financial terms at www.ftpall.com • The level of EBIT necessary just to cover all fixed financial costs; the level of EBIT for which EPS=$0.Financial control • The management of a firms costs and expenses in order to control them in relation to budgeted amounts.Financial distress • Events preceding and including bankruptcy, such as violation of loan contracts.Financial distress costs • Legal and administrative costs of liquidation or reorganization. Also includes implied costs associated with impaired ability to do business (indirect costs).Financial engineering • Combining or dividing existing instruments to create new financial products. • Designing new financial securities or processes due to changing market conditions and/or investor preferences.Financial forecasting • The process used to estimate a companys requirement for financing for a future time period.
www.ftpall.com 4|PageFinancial formulas or formulae • Are mathematical expressions to enable repeatable results or computations. Many financial formulas are related to one another. Some of the standard computations are: Interest CalculationsFinancial future • A contract entered into now that provides for the delivery of a specified asset in exchange for the selling price at some specified future date. Find thousands of financial terms at www.ftpall.comFinancial institution • An intermediary that allow for the efficient transfer of the savings of individuals, businesses, and governments into loans or investments.Financial intermediaries • Institutions that provide the market function of matching borrowers and lenders or traders.Financial lease • Long-term, non-cancelable lease.Financial lever • The use of fixed assets in the companys operation and/or use of debt financing in the capital structure.Financial leverage • Use of debt to increase the expected return on equity. Financial leverage is measured by the ratio of debt to debt plus equity. • The magnification of risk and return introduced through the use of fixed-cost financing such as debt and preferred stock. The potential use of fixed financial costs to magnify the effects of changes in earning before interest and taxes (EBIT) on the firms earnings per share (EPS).
www.ftpall.com 5|PageFinancial leverage clientele • A group of investors who have a preference for investing in firms that adhere to a particular financial leverage policy.Financial leverage multiplier • Abbreviated FLM. The ratio of the firms total assets to shareholders equity.Financial leverage ratios • Related: capitalization ratios. Find thousands of financial terms at www.ftpall.comFinancial manager • Actively manages the financial affairs of any type of business, whether financial or nonfinancial, private or public, large or small, profit-seeking or not-for-profit.Financial market • An organized institutional structure or mechanism for creating and exchanging financial assets. • Provide a forum in which suppliers of funds and demanders of loans and investments can transact business directly.Financial merger • A merger transaction undertaken with the goal of restructuring the acquired company to improve its cash flow and unlock its hidden value.Financial objectives • Objectives of a financial nature that the firm will strive to accomplish during the period covered by its financial plan.Financial or capital lease • A longer-term lease than an operating lease that is noncancelable and obligates the lessee to make payments for the use of an asset over a predefined period of
www.ftpall.com 6|Page time; the total payments over the term of the lease are greater than the lessors initial cost of the leased asset.Financial plan • A financial blueprint for the financial future of a firm.Financial planner • An investment professional generalist who helps individuals delineate financial plans with specific objectives and helps coordinate various financial concerns. Find thousands of financial terms at www.ftpall.comFinancial planning • The process of evaluating the investing and financing options available to a firm. It includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against that plan.Financial planning process • Planning that begins with long-term (strategic) financial plans that in turn guide the formulation of short-term (operating) plans and budgets.Financial press • That portion of the media devoted to reporting financial news.Financial ratio • The result of dividing one financial statement item by another. Ratios help analysts interpret financial statements by focusing on specific relationships.Financial risk • The risk that the cash flow of an issuer will not be adequate to meet its financial obligations. Also referred to as the additional risk that a firms stockholder bears when the firm utilizes debt and equity. • The risk to the firm of being unable to cover required financial obligations (interest,
www.ftpall.com 7|Page lease payments, preferred share dividends).Financial services • The part of finance concerned with design and delivery of advice and financial products to individuals, business, and government.Financial statement • generally refers to one of the primary accounting reports: Balance Sheet, Income Statement and Cash Flow Statement Find thousands of financial terms at www.ftpall.comFinancial structure • The entire right hand side of the balance. Refers to the mix of long-term and short- term financing.Financial supermarket • An institution at which the customer can obtain a full array of the financial services now allowed under federal bank, trust and insurance company legislation.London international financial futures exchange • Abbreviated LIFFE. A London exchange where Eurodollar futures as well as futures-style options are traded.Long term financial plan • Financial plan covering two or more years of future operations.Long term strategic financial plans • Planned financial actions and the anticipated financial impact of those actions over periods ranging from 2 to 10 years.Non financial services • Include such things as freight, insurance, passenger services, and travel.Notes to the financial statements
www.ftpall.com 8|Page • A detailed set of notes immediately following the financial statements in an annual report that explain and expand on the information in the financial statements.Perfectly competitive financial markets • Markets in which no trader has the power to change the price of goods or services. Perfect capital markets are characterized by the following conditions: 1) trading is costless, and access to the financial markets is free, 2) information about borrowing and lending opportunities is freely available, 3) there are many traders, and no single trader can have a significant impact on market prices. Find thousands of financial terms at www.ftpall.comPro forma financial statements • Financial statements as adjusted to reflect a projected or planned transaction.S&p financial strength • See Standard & Poors Financial Strength.Short term financial management • Management of current assets and current liabilities.Short term financial plan • A financial plan that covers the coming fiscal year.Short term operating financial plans • Planned short-term financial actions and the anticipated financial impact of those actions.Society for worldwide interbank financial telecommunications swift • A dedicated computer network to support funds transfer messages internationally between over 900 member banks worldwide.Standard & poors financial strength • Abbreviated S&P Financial Strength. The ranking S&P uses to rate the companys
www.ftpall.com 9|Page growth, quality, and stability of earnings and dividends using 8 levels, from A+ (highest) to B+ (average) to C (lowest) to D (in reorganization).Statement of financial accounting standards no. 52 • This is the currency translation standard currently used by U.S. firms. It mandates the use of the current rate method. See: Statement of Financial Accounting Standards No. 8.Statement of financial accounting standards no. 8 Find thousands of financial terms at www.ftpall.com • This is a currency translation standard previously in use by U.S. accounting firms. See: Statement of Accounting Standards No. 52.Value line financial strength • A ranking assigned by the Value Line Investment Survey which rates companies in ten categories according to their financial strength, from A+ (excellent) to C (poorest).