What are the financial terms?

What are the financial terms?

Here are 10 financial terms everyone should know

• Compound interest. Compound interest is interest on the amount of money you have deposited or borrowed.
• FICO score. Getty Images.
• Net worth.
• Asset allocation.
• Capital gains.
• Rebalancing.
• Stock options.
• Defined-contribution plans.

What are operating activities?

Operating activities are the daily activities of a company involved in producing and selling its product, generating revenues, as well as general administrative and maintenance activities. Key operating activities for a company include manufacturing, sales, advertising, and marketing activities.

What do you call revenue and expense?

A company’s financial statement indicates how the revenue, money received from the sale of products and services before expenses are taken out, is transformed into the net income, the result after all revenues and expenses have been accounted for, also known as Net Profit.

What is meant by economic profit?

An economic profit or loss is the difference between the revenue received from the sale of an output and the costs of all inputs used, as well as any opportunity costs. In calculating economic profit, opportunity costs and explicit costs are deducted from revenues earned.

What are the 6 basic financial statements?

They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders’ equity. Balance sheets show what a company owns and what it owes at a fixed point in time.

What are the 5 principles of finance?

The five principles are consistency, timeliness, justification, documentation, and certification.

What are operating activities in cash flow statement?

Cash flows from operating activities is a section of a company’s cash flow statement that explains the sources and uses of cash from ongoing regular business activities in a given period. This typically includes net income from the income statement, adjustments to net income, and changes in working capital.

What is operating cash flow formula?

Operating Cash Flow = Operating Income + Depreciation – Taxes + Change in Working Capital.

What is an example of economic profit?

Economic profit is the profit from producing goods and services while factoring in the alternative uses of a company’s resources. For example, the implicit costs could be the market price a company could sell a natural resource for versus using that resource. A paper company owns a forest of trees.

What is the formula for economic profit?

Economic profit = total revenue – ( explicit costs + implicit costs). Accounting profit = total revenue – explicit costs.

How is the yield of an investment calculated?

The yield is usually expressed as an annual percentage rate based on the investment’s cost, current market value , or face value. Yield may be considered known or anticipated depending on the security in question, as certain securities may experience fluctuations in value. Yield is forward-looking.

What’s the difference between a yield and a coupon?

A bond yield can have multiple yield options depending on the exact nature of the investment. The coupon is the bond interest rate fixed at issuance, and the coupon rate is the yield paid by fixed-income security. The coupon rate is the annual coupon payments paid by the issuer relative to the bond’s face or par value.

What makes a yield different from a return?

Yield is forward-looking. Furthermore, it measures the income, such as interest and dividends, that an investment earns and ignores capital gains. This income is taken in the context of a specific time period and then annualized, with the assumption that the interest or dividends will continue to be received at the same rate.

How is risk related to the yield on an investment?

Risk is an important component of the yield paid on an investment. The higher the risk, the higher the associated yield potential. Some investments are less risky than others. For example, U.S. Treasuries carry less risk than stocks.