This website uses cookies to ensure you have the best experience. Learn more

Finance Terms Essay

1462 words - 6 pages

Finance is concerned with how individuals, such as managers, lenders, businesses, firms, investors, and borrowers allocate money over a specified period. This paper lists the definitions and roles of financial and accounting terms provided in the course design. The terminology that follows explains and interprets the concepts and elements relevant to the first week’s objectives and topics in Finance 370. Emphasis is placed on types of securities, markets, finance, equity, liability, ratios, and assets.

Finance is the study of how people and businesses evaluate investments and raise capital to fund them. The key role of finance is the management of cash flow in deciding on ...view middle of the document...

That someone can sell securities whenever they want to makes liquidity an important factor in increasing revenue for investors instantly. Though no investment is ever as liquid as cash, the investments benefit the issuing firm in the market.

Risk is any decision not 100 % probable of certainty in the likelihood of turning out a good outcome could be a danger or a risk. It could result in an error type. A key role in finance is in principle two, which states that there is a risk-return tradeoff which we will not take on additional risk unless we expect to be compensated with additional return (Titman, Martin & Keown. 2011. p. 12).

Security is a negotiable tool that represents a financial claim against a firm’s assets. The role is to bring investors and firms looking for financing and cash inflow together in the security market. Initially, securities are sold and bought for the first time in the primary market. Cash flows may be received by the corporations and invested in return generating assets. This cash flow goes back into the firm, for projects, to launch a project, or pay taxes to the government or dividends to investors.

Stock-Common stock is an accounting term that means units of ownership bought by stockholders.

Bond is a debt security that has a face value. It is issued by a bank that is sold in a capital market and takes more than 10 years to mature. It is liquidable when it matures after accruing a low fixed rate than it is paid to the lender. If the lender cashes the bond in early, he or she will not have accrued the total amount of compounded interest or receive the total sum value of the face of the bond. Some bonds issue accrued interest to the lender for the sum of 40 or 80 dollars quarterly.

Capital, which is sometimes referred to as working capital are the funds and assets that a firm has that pays for monthly and immediate operating expenses that a firm needs to grow and survive in the market.

Debt is defined as money that has been borrowed from a financial market and must be repaid with interest. It is a liability, a loan from a financial institution for cash, credit card purchases, more working capital, mortgage, or a personal loan.

Yield is the firm’s dividend yield, which is obtained by dividing the firm’s annual cash dividend and the day’s closing stock price.

Rate of Return is often called ROI or return on investment and is a profit financial ratio. It calculates the value that the firm has lost or gained. Return on investment (profitability ratio) often called return on equity is cash flow/total equity or net/stockholder's equity, and this one is very important to external users because it is one that investor's view and may deem the results as favorable or not because it is a profitability ratio it gives insight into the earning power and success of the company and how many dollars the company earned for each dollar that was invested by the...

Other Papers Like Finance Terms

Export Finance Essay

1977 words - 8 pages equipment but also of consumer goods.The payment terms however depend upon the availability of finance to exporters in relation to its quantum, cost and the period at pre-shipment and post-shipment stage.Production and manufacturing for substantial supplies for exports take time, in case finance is not available to exporter for production. They will not be in a position to book large export order if they don't have sufficient financial funds. Even

Financial Terms Essay

556 words - 3 pages Financial Terms FIN/370 Finance for Business September 21, 2011 Jerry Caldwell 1. Finance- The study of the management of funds. The role of finance in finance is to grow an organization with expense control which ultimately makes a company run smoothly. Without finance a company is not able to sustain. 2. Efficient market - An efficient market is characterized by a large number of profit-driven individuals who act independently

Business Environment Past Papers

1129 words - 5 pages of the terms ‘corporate aims’, ‘corporate objectives’ and ‘corporate strategy’. 1.1.2 Explain how objectives and aims might change through the life of a business: survival, break-even, growth, profit maximisation, market share, diversification. 1.2 Describe the human and other resources required by a business, and relate the resources to corporate objectives. 1.2.1 Describe the inputs required by a business: labour, suppliers, finance, land

Business Management

1129 words - 5 pages of the terms ‘corporate aims’, ‘corporate objectives’ and ‘corporate strategy’. 1.1.2 Explain how objectives and aims might change through the life of a business: survival, break-even, growth, profit maximisation, market share, diversification. 1.2 Describe the human and other resources required by a business, and relate the resources to corporate objectives. 1.2.1 Describe the inputs required by a business: labour, suppliers, finance, land

Ppp and Project Financing in Logistics Infrastructure

2337 words - 10 pages debt repayment terms. Furthermore, it is interesting to observe how the project finance contractual architecture has a noteworthy advantage for logistics infrastructure management. Typically the managing company of a logistics infrastructure (i.e. an intermodal hub port) has an economic structure strongly biased towards fixed costs. In markets where competition is fierce - especially when there are not relevant switching costs in using a

Role of a Manager Within the Functional Areas of Business

882 words - 4 pages , incentives & wages according to performances can be determined. Management works with Marketing and Finance to determine strategies to capitalize on product market area and set budgets for the year. Management works with Human Resource to make sure policy and procedures are up to date with standards. Management works with Human Resource and Finance to determine profitability of company in terms of increasing, decreasing or no change in current staff

Source of Found

1583 words - 7 pages . It is true, nowadays, with the advantages of prompt decision-making, internal flexibility, easy of coordination, relatively low star-up cost compared with big business, just in 2010, there were over 125 million formal MSME (micro, small, and medium enterprise) established in over 132 economies according to International Finance Corporation (2010). However, the prosperity is along with the cruel reality in business battle filed. According to

Uk Post Office

7765 words - 32 pages sector comparators Private Finance Initiative deal Dartford and Gravesham Hospital House of Commons Committee of Public Account’s findings The NHS Trust did not detect significant errors in the public sector comparator. The Trust also did not quantify the full effects of changes in contract terms and of the sensitivity of the deal to changes in key assumptions, as the deal went forward. Had the Trust known that the savings were marginal when

Identifying Business Concepts

625 words - 3 pages the problem. To remedy this problem, more time will be spent studying, and memorizing the definitions of the terms used to describe cash flow within business operations. Finance The topic of finance in any organization describes the understanding of financial management, the organizational structure of the organization, and even the topic of corporate taxes. This tutorial covered financial management, investments, understanding interest rates

Financial Risk Management

1021 words - 5 pages , HSBC, Barclays and UBS, then merged with them (Lybeck 2011, ix). That was the trigger of stimulating the development of risk management. Financial industry started to hire more experts and employees in terms to enhance the analysing functions. Moreover, finding a practical approach to optimize the profits and control the risks at same time became a core issue of global financial conferences. A wide range of people and organizations could be the

Finacial Terms and Goals

863 words - 4 pages Week 1 Financial Terms and Roles Dusty Hardt FIN370 January 14, 2014 Professor Kwende Week 1 Financial Terms and Roles 1) Finance Finance is considers the management of how income acquired and used. Whether dealing with corporate or personal issues, finance may consist of how individual or business acquires, invest, and manage money. Financial decisions are the role finance plays, which consist of money as the resource and how

Related Essays

Defining Financial Terms Essay

666 words - 3 pages Defining Financial Terms 1. Finance: Finance is the science of the management of money and other assets. This is essential for businesses with importance to capital and holdings. (Titman, Keown, & Martin, 2011) 2. Efficient Market: Efficient market is defined as a price where the holdings show both current as well as relevant figures; the assets fundamentally have their actual prices. The affiliation to finance is that the statement of

Fitt Case Study

887 words - 4 pages FITTskills: International Trade Finance Sixth Edition Course Objectives • Define and discuss the “Four Pillars” of trade finance— payment facilitation, risk management, financing and the provision of information related to a transaction • Describe the impact of technology on trade finance • Describe the major products and services related to trade finance, including the role and requirement of each party to a

Defining Financial Terms Essay

607 words - 3 pages Defining Financial Terms Finance – Built upon a combination of both economic and accounting principles. Finance creates a value of wealth and aims to maintain that value of wealth in the market. Finance investigates everything that has to do with money or the value of wealth in the market. The role of finance is to help management deal with financial issues a corporation may encounter. Efficient market – The stock prices reflect

Syllabus 405 Essay

2234 words - 9 pages ). Health care finance: Basic tools for nonfinancial managers (3rd ed.). Sudbury, MA: Jones & Bartlett Publishers. All electronic materials are available on the student website. Week One: Overview of Health Care Finance Details Objectives 1.1 Define basic health care finance terms. 1.2 Describe the four segments that comprise a financial management system. 1.3 Identify financial reporting practices & ethical stds of conduct. Read the Week One Read