Demystifying Finance and Accounting Terms: Your Comprehensive Glossary

Enhance your financial literacy with our comprehensive Finance and Accounting Glossary. Get clear and concise definitions for key financial terms and concepts.

TERMS	DEFINITIONS
Accountant	Professional who prepares and examines financial records.
Accounting	The systematic process of recording, summarizing, analyzing, and reporting financial transactions of an individual, organization, or entity. It provides insights into financial performance, position, and cash flows, aiding in informed decision-making and regulatory compliance.
Accounting Cycle	The sequential process of identifying, recording, and reporting financial transactions.
Accounting Equation	Assets = Liabilities + Equity.
Accounting Policies	Specific rules for recording transactions.
Accounts Payable (AP)	The amount a company owes to its creditors for goods and services purchased on credit.
Accounts Payable Turnover	Measure of how quickly a company pays its suppliers.
Accounts Receivable (AR)	The amount of money owed to a business by its customers for goods or services provided on credit.
Accrual	Recording revenue and expenses when they are earned or incurred, not when cash is exchanged.
Accrual Accounting	An accounting method that records revenue and expenses when they are earned or incurred, regardless of cash flow.
Accrual Basis	Recording transactions when they occur.
Accrual Basis Accounting	An accounting method where transactions are recorded when they occur, regardless of when the cash is exchanged.
Accruals	Expenses or revenues that are recognized before they are paid or received, ensuring accurate financial reporting.
Accrued Expenses	Expenses that have been incurred but not yet paid, requiring an adjustment to accurately reflect the financial position.
Accumulated Depreciation	Cumulative depreciation of an asset.
Acquisition	The process through which one company purchases the majority or all of another company's shares to gain control.
Active Management	A strategy of portfolio management that involves making specific investment decisions to outperform a benchmark index.
Adjusted Gross Income (AGI)	Gross income minus specific deductions, used as the basis for calculating taxes.
Adjusting Entry	Journal entry made at the end of an accounting period to adjust account balances.
Affiliate Marketing	Promoting products for a commission.
Alpha	A measure of an investment's performance compared to a benchmark index, indicating its added value.
Alternative Investments	Non-traditional investments, such as private equity, hedge funds, or real estate.
Amortization	The gradual reduction of debt through regular payments that cover both principal and interest.
Amortization Expense	Allocation of intangible asset cost over time.
Amortization Schedule	Table showing loan payment breakdown.
Angel Investor	An individual who provides capital to startup businesses in exchange for ownership equity.
Annual Percentage Rate (APR)	Interest rate for loans.
Annual Report	Yearly financial summary of a company.
Annuity	A series of equal payments made at regular intervals, often used for retirement income.
Appreciation	The increase in value of an asset over time.
Arbitrage	Profiting from price discrepancies of the same asset in different markets.
Ask Price	The price at which a seller is willing to sell a security, also known as the offer price.
Asset	Anything of value owned by an individual, company, or institution.
Asset Allocation	Distributing investments across different asset classes to achieve a desired risk-return profile.
Asset Management	The management of investments and other financial assets on behalf of clients.
Assets	Economic resources owned or controlled by a company that have future value.
Assets Under Management (AUM)	Total value of assets managed by an investment firm.
Audit	A thorough examination of financial records to ensure accuracy and compliance with regulations.
Audit Risk	Risk of misstated financial information not being detected.
Audit Trail	Documentation of transactions to verify accuracy.
Automated Clearing House (ACH)	A network that facilitates electronic funds transfers and direct deposits.
Back Office	The administrative and support functions of a financial institution, including settlement, record-keeping, and compliance.
Back-End Load	A sales charge on mutual fund shares that is paid when an investor sells the shares.
Bad Debt Expense	The portion of accounts receivable considered uncollectible.
Balance Sheet	A financial statement that provides a snapshot of a company's financial position by showing assets, liabilities, and equity.
Balance Sheet Equation	Assets = Liabilities + Equity.
Balanced Fund	A mutual fund that invests in a mix of stocks and bonds to achieve a balanced risk-return profile.
Bank Reconciliation	The process of matching a company's bank records with its own financial records to ensure accuracy.
Bankruptcy	A legal process where an individual or business is unable to repay their debts and seeks relief from creditors.
Basis Point	One-hundredth of a percentage point, commonly used in financial contexts to describe interest rates or spreads.
Bear Market	A prolonged period of declining prices in a financial market, typically characterized by a drop of 20% or more from recent highs.
Bear Market Rally	A temporary upward movement in stock prices within a bear market.
Bearer Bond	A bond that does not have the owner's information and is payable to whoever holds it.
Blue Chip Stocks	Shares of large, well-established, and financially sound companies known for their stability and reliability.
Bond	A debt security issued by governments or corporations, paying interest and returning the principal upon maturity.
Bond Yield	The annual return an investor can expect from a bond, considering its price and interest payments.
Bonds	Debt securities issued by governments, municipalities, or corporations to raise capital.
Book Value	Asset's original cost minus accumulated depreciation.
Bookkeeping	The systematic recording of financial transactions, including income, expenses, assets, and liabilities.
Bourse	A stock exchange, particularly in French-speaking countries.
Break-Even Point	Sales level where costs equal revenue.
Broker	An intermediary who facilitates securities transactions between buyers and sellers.
Budget	A financial plan that outlines expected revenues and expenses over a specific period.
Bull Market	A sustained period of rising prices in the financial markets.
Bullion	Precious metals, such as gold and silver, in their physical form.
Business Cycle	The natural fluctuations in economic activity between periods of expansion and contraction.
Buy and Hold	An investment strategy where an investor buys securities and holds onto them for the long term.
Buy-side	Institutions, such as mutual funds and pension funds, that buy securities for investment purposes.
Call Option	A financial contract that gives the holder the right to buy an asset at a specific price within a certain time frame.
Callable Bond	A bond that can be redeemed by the issuer before its maturity date.
Capital	Financial assets or the funds used to generate income or wealth.
Capital Asset Pricing Model (CAPM)	Calculating expected return on an asset.
Capital Expenditure (CapEx)	Investments made by a company to acquire, upgrade, or maintain physical assets like buildings and equipment.
Capital Gain	The profit earned from selling an asset at a higher price than its purchase price.
Capital Gains	Profits made from the sale of investments, such as stocks or real estate, which are subject to taxation.
Capital Gains Tax	Tax on investment profits.
Capital Market	A market where financial instruments like stocks, bonds, and other long-term securities are bought and sold.
Capital Markets	Financial markets where long-term securities like stocks and bonds are bought and sold.
Carrying Amount	Value at which an asset or liability is recognized.
Cash Accounting	An accounting method where transactions are recorded only when cash is received or paid.
Cash Basis Accounting	Transactions recorded only when cash is exchanged.
Cash Equivalent	Highly liquid assets that are easily convertible to cash within a short time.
Cash Flow	The movement of money into and out of a business or investment.
Cash Flow Forecast	Estimation of future cash inflows and outflows.
Cash Flow Statement	A financial statement showing how changes in balance sheet accounts affect cash and cash equivalents.
Cash Management	Efficient use of cash.
CDO (Collateralized Debt Obligation)	A complex financial product that pools and repackages debt obligations.
CDS (Credit Default Swap)	A financial derivative that provides insurance against the default of a debt issuer.
Central Bank	The entity responsible for controlling a country's money supply and monetary policy.
Certificate of Deposit (CD)	A time deposit with a fixed term and interest rate, offered by banks.
Churning	Excessive buying and selling of securities by a broker to generate commissions.
Closed-End Fund	A type of investment fund with a fixed number of shares that trade on an exchange.
Collateral	An asset pledged by a borrower to secure a loan.
Commercial Bank	A financial institution that offers services such as deposit accounts, loans, and basic financial products.
Commercial Paper	Short-term debt issued by corporations to fund day-to-day operations.
Commodities	Raw materials or primary agricultural products that are traded in the market.
Commodities Market	A marketplace for trading physical goods such as agricultural products, energy, and metals.
Commodity	A raw material or primary agricultural product used in commerce.
Compound Interest	Interest calculated on the initial principal and accumulated interest from previous periods.
Conservatism Principle	Recognizing potential losses earlier than potential gains.
Consumer Price Index (CPI)	A measure of inflation based on the average change in prices paid by consumers for goods and services.
Contingent Asset	Potential asset from uncertain future events.
Contingent Liability	A potential liability that depends on a future event, such as lawsuits or warranties.
Contra Account	An account used to offset the balance of another account, helping to provide a more accurate financial picture.
Contra Liability Account	Account offsetting liability account.
Convertible Bond	A type of bond that can be converted into a specified number of shares of the issuer's common stock.
Convertible Preferred Stock	Shares that can be converted into a specified number of common shares at the holder's discretion.
Corporate Bond	Debt issued by corporations.
Cost Accounting	The process of recording, analyzing, and allocating costs to products or services.
Cost Allocation	Spreading costs over relevant activities.
Cost Behavior	How costs change in response to changes in activity levels or volume.
Cost Driver	The factor that directly causes a particular cost to be incurred.
Cost of Capital	The minimum return a company needs to generate on its investments to satisfy shareholders.
Cost of Equity	The return a company must offer to attract investors to its common stock.
Cost of Goods Manufactured (COGM)	Total production cost of goods.
Cost of Goods Sold (COGS)	The direct costs of producing goods or services that a company sells during a specific period.
Cost-Volume-Profit Analysis	An analysis of how costs, sales, and profits will vary at different levels of activity or production.
Coupon Rate	The annual interest rate paid on a bond's face value.
Credit	An accounting entry that increases liabilities or equity and decreases assets.
Credit Rating	An assessment of the creditworthiness of an individual or entity.
Credit Risk	The risk of loss due to a borrower's failure to make payments on a debt obligation.
Credit Score	A numerical representation of a person's creditworthiness based on credit history.
Cryptocurrency	Digital or virtual currencies that use cryptography for secure transactions.
Currency	Money in circulation, used as a medium of exchange in a specific country or region.
Currency Exchange Rate	The value of one currency in terms of another.
Current Liability	Debt due within one year.
Custodian	Entity safeguarding assets for others.
Cyclical Stocks	Stocks of companies whose performance is closely tied to economic cycles.
Day Trading	The practice of buying and selling securities within the same trading day.
Debenture	A long-term debt instrument issued by a company, not backed by physical assets.
Debit	An accounting entry that increases assets and decreases liabilities or equity.
Debt	Money borrowed by an individual, company, or government, to be repaid with interest.
Debt Consolidation	Combining debts into one.
Debt to Equity Ratio	Proportion of debt to shareholders' equity.
Debt-to-Equity Ratio	A financial metric that measures the proportion of debt used to finance a company's assets relative to equity.
Default	Failure to meet the terms of a loan or debt agreement.
Default Risk	The likelihood that a borrower will fail to make timely payments on a debt.
Deferred Expense	Cost that is initially recorded as an asset and then expensed over time.
Deferred Revenue	Revenue received in advance of delivering goods or services, creating a liability until the obligation is fulfilled.
Deferred Tax Asset	Future tax benefit from past transactions.
Deflation	A sustained decrease in the general price level of goods and services.
Depletion	The allocation of the cost of natural resources (like oil or minerals) over their usage or extraction.
Depository Institution	A financial institution that accepts deposits from customers, including banks and credit unions.
Depreciation	The decrease in value of an asset over time.
Derivative	A financial contract whose value is based on the performance of an underlying asset, index, or interest rate.
Diluted Earnings Per Share (Diluted EPS)	Adjusted EPS considering convertible securities.
Direct Cost	A cost that can be traced directly to a specific cost object, such as a product, department, or project.
Direct Labor Cost	Wages paid to employees working directly on production.
Diversification	Spreading investments across different assets to manage risk.
Dividend	A payment made by a corporation to its shareholders, usually in the form of cash or additional shares.
Dividend Reinvestment Plan (DRIP)	Automatically reinvesting dividends.
Dividend Yield	A ratio indicating the annual dividend payment as a percentage of the stock's market price.
Dividends	Distribution of company earnings to shareholders.
Double Entry	A system of bookkeeping where every transaction has equal and opposite effects on at least two accounts.
Double-Entry Bookkeeping	A method of recording financial transactions that ensures every transaction has equal and opposite effects on at least two accounts.
Dow Jones Industrial Average (DJIA)	An index that tracks the stock performance of 30 major U.S. companies.
Duration	A measure of a bond's sensitivity to interest rate changes.
Earnings Before Interest and Taxes (EBIT)	Operating profit.
Earnings Per Share (EPS)	A financial metric that represents the portion of a company's profit allocated to each outstanding share of common stock.
EBIT (Earnings Before Interest and Taxes)	Operating profit before interest and taxes.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)	A measure of a company's operating performance and cash flow.
Economic Indicator	A statistic used to assess the overall health and performance of an economy or a specific sector.
Equity	Ownership interest in a company, represented by shares of stock.
Equity Capital	Funds raised by a company through the sale of shares of ownership.
Equity Financing	Raising capital by issuing shares of ownership in a company to investors in exchange for cash.
Equity Market	A market where ownership interests in companies (equity) are bought and sold.
Equity Multiplier	Measure of company's financial leverage.
Exchange Rate	The value of one currency in terms of another.
Exchange-Traded Fund (ETF)	A fund that tracks an index and trades on a stock exchange like a stock.
Expense	The costs incurred to generate revenue in the ordinary course of business.
Expenses	The costs incurred in generating revenue during normal business operations.
Federal Reserve	The central banking system of the United States responsible for monetary policy and regulating financial institutions.
Financial Accounting	External reporting of a company's financial information.
Financial Advisor	Professional providing investment advice.
Financial Analysis	The process of evaluating a company's financial performance and health using various techniques and ratios.
Financial Intermediary	An institution that connects borrowers and lenders in the financial markets.
Financial Leverage	Use of debt to amplify returns.
Financial Planner	A professional who helps individuals and businesses manage their finances.
Financial Ratios	Mathematical expressions of the relationship between various financial variables.
Financial Statement	A formal record of a company's financial activities, including the balance sheet, income statement, and cash flow statement.
Financial Statements	Balance sheet, income statement, cash flow statement, and statement of changes in equity.
Fixed Asset	A long-term tangible asset used in the operations of a business, such as land, buildings, or equipment.
Fixed Cost	A cost that remains constant regardless of changes in production or sales volume.
Fixed Costs	Expenses that remain constant regardless of production or sales levels.
Fixed Income	Investments that provide a fixed periodic payment, such as bonds or certificates of deposit.
Foreign Exchange (Forex)	The global marketplace for trading currencies.
Foreign Exchange (Forex) Market	The global marketplace for trading currencies.
Forensic Accounting	The application of accounting principles to investigate and uncover financial irregularities or fraud.
Free Cash Flow (FCF)	Cash generated after expenses and investments.
Front-End Load	A sales charge on mutual fund shares that is paid at the time of purchase.
Full-Costing Method	An approach that allocates all costs, both variable and fixed, to a product or service.
Fund Manager	Professional overseeing investment funds.
Fundamental Analysis	Analyzing a company's financial statements and operations to assess its value.
Futures	Contracts that obligate parties to buy or sell an asset at a predetermined price on a future date.
Futures Contract	An agreement to buy or sell an asset at a specified price on a future date.
GAAP (Generally Accepted Accounting Principles)	Standardized accounting principles.
GDP (Gross Domestic Product)	The total value of goods and services produced within a country's borders.
General and Administrative Expenses (G&A)	Indirect operating costs not directly tied to production.
General Ledger	A comprehensive record of all financial transactions organized by accounts.
Gilt	A government bond issued by the United Kingdom.
Globalization	The process of integrating economies, cultures, and societies through international trade and investment.
Going Concern	Assumption of business continuity.
Gold Standard	A monetary system where a country's currency is directly linked to a specific quantity of gold.
Goodwill	Intangible asset representing excess cost over fair market value of acquired company's net assets.
Gross Domestic Product (GDP)	The total value of all goods and services produced within a country's borders in a specific time period.
Gross Margin	A profitability ratio that measures the percentage of revenue remaining after subtracting the cost of goods sold.
Hedge Fund	An investment fund that pools capital from accredited individuals or institutional investors to employ various strategies in order to generate high returns.
Hedger	An individual or entity that uses financial instruments to reduce or eliminate risk exposure to price fluctuations.
Hedging	A risk management strategy that involves taking offsetting positions to reduce potential losses from adverse price movements.
Horizontal Analysis	Comparing financial data over multiple periods to identify trends.
Impairment Loss	Writing down the value of an asset.
Income Statement	A financial statement showing a company's revenues, expenses, and profits.
Income Tax	Tax levied on a company's profit.
Income Tax Expense	Tax due on taxable income.
Index Fund	A type of mutual fund or ETF that aims to replicate the performance of a specific market index.
Individual Retirement Account (IRA)	Retirement savings account.
Inflation	The rate at which the general level of prices for goods and services is rising, resulting in a decrease in purchasing power.
Inflation Rate	The percentage change in the general price level of goods and services over a specific period of time.
Initial Margin	The minimum amount of funds that an investor is required to deposit to open a trading position.
Initial Public Offering (IPO)	The first sale of a company's stock to the public.
Institutional Investor	Large organizations investing in securities.
Insurance	A contract where one party agrees to compensate another for specified losses.
Intangible Asset	Non-physical assets with economic value, such as patents, trademarks, or goodwill.
Intangible Asset Impairment	Reduction in value of intangible assets.
Interest Rate	The cost of borrowing money or the return on investment, expressed as a percentage.
Internal Control	Processes and procedures implemented by a company to ensure accurate and reliable financial reporting and prevent fraud.
Inventory	The goods and materials a business holds for the purpose of resale or production.
Inventory Turnover Ratio	Measure of inventory efficiency.
Investment	Allocating resources with the expectation of generating future income or capital appreciation.
Investment Bank	A financial institution that assists companies in raising capital and provides advisory services.
Investment Banking	A segment of banking that assists companies in raising capital and providing financial advice.
Investment Horizon	The time period over which an investor expects to hold an investment.
Investor	An individual or entity that allocates capital with the expectation of generating returns.
IPO	Initial Public Offering, first sale of stock to public.
Issuer	The entity that offers or sells a security.
Job Market	The supply and demand for labor within an economy.
Joint Costs	Costs incurred in producing two or more products together, making it challenging to allocate costs accurately.
Joint Stock Company	A business entity in which ownership is divided into shares that can be traded on a stock exchange.
Joint Venture	A business arrangement in which two or more parties agree to pool their resources and expertise to achieve a specific goal.
Journal Entry	Recording financial transactions in a journal.
Junk Bond	A high-yield, high-risk bond issued by a company with a lower credit rating.
Key Performance Indicator (KPI)	A measurable value that demonstrates how effectively a company is achieving key business objectives.
K-shaped Recovery	An economic recovery in which different sectors or groups experience divergent growth trajectories.
K-Value	A numerical parameter used in various financial calculations, such as option pricing and risk management.
Ledger	A book where financial transactions are recorded.
Leverage	The use of borrowed money to increase the potential return of an investment.
Leverage Ratio	Proportion of debt to total capital.
Leveraged Buyout (LBO)	The acquisition of a company using a significant amount of borrowed money to finance the purchase.
Liabilities	A company's legal debts or obligations arising during business operations.
Liability	A company's legal debts or obligations that arise during the course of business operations.
LIFO (Last-In, First-Out)	Inventory valuation method.
Liquidity	The ease with which an asset can be converted into cash without significantly affecting its market price.
Liquidity Ratio	A measure of a company's ability to meet short-term obligations using its most liquid assets.
Liquidity Risk	The risk that an asset cannot be quickly converted into cash without a significant loss in value.
Loan	Money lent with the expectation of repayment, often with interest.
Long-Term Debt	Debt payable over more than one year.
Long-Term Liability	Debts or obligations that extend beyond one year, such as bonds or mortgages.
Managerial Accounting	The process of providing financial information to internal users for decision-making and planning.
Margin Call	A demand from a broker for an investor to deposit additional funds to cover potential losses.
Market Capitalization	The total value of a company's outstanding shares of stock, calculated by multiplying the stock's current price by the number of shares.
Market Capitalization (Market Cap)	The total value of a company's outstanding shares of stock.
Market Order	Buy/sell order executed immediately.
Materiality	The extent to which an error or omission in financial information would influence the judgment of a reasonable person.
Materiality Principle	Determining whether an item's inclusion in financial statements influences decision-making.
Maturity	The date on which a debt instrument, such as a bond or loan, becomes due and is repaid.
Merger	The combining of two or more companies to form a single entity.
Mergers and Acquisitions (M&A)	The consolidation of companies through various types of transactions.
Microfinance	Financial services, such as loans and savings, provided to low-income individuals and businesses.
Monetary Policy	The control of a country's money supply and interest rates by its central bank.
Money Market	A segment of the financial market where short-term debt securities are traded.
Money Supply	The total amount of money circulating within an economy.
Monopoly	A market structure in which a single company dominates the supply of a product or service.
Mortgage	A loan used to purchase real estate, with the property serving as collateral.
Municipal Bond	Debt issued by governments.
Mutual Fund	An investment vehicle that pools money from multiple investors to invest in securities.
NASDAQ	A stock exchange that primarily lists technology and internet-related companies.
National Debt	The total amount of money that a government owes to external creditors and domestic lenders.
Net Asset Value (NAV)	The total value of a mutual fund's or ETF's assets minus liabilities, divided by the number of shares outstanding.
Net Book Value	Asset's value after deducting accumulated depreciation.
Net Income	The total profit earned by a company after subtracting all expenses, taxes, and interest from its total revenue.
Net Profit Margin	Ratio of net income to total revenue.
Net Worth	The difference between a person's assets and liabilities, indicating their financial position.
NYSE	New York Stock Exchange, prominent stock exchange.
Operating Cash Flow (OCF)	Cash generated from operating activities.
Operating Expense	The costs incurred in running a business that are not directly tied to the production of goods or services.
Operating Expense Ratio	Ratio of operating expenses to total revenue.
Operating Income	A company's revenue minus its operating expenses, representing its profitability from core operations.
Opex (Operating Expenses)	The ongoing costs of doing business, such as rent, utilities, and salaries.
Option	A financial contract that gives the holder the right, but not the obligation, to buy or sell an asset.
Options	Financial derivatives that give the holder the right, but not the obligation, to buy or sell an asset at a predetermined price.
Options Trading	The buying and selling of options contracts on underlying securities.
Outstanding Shares	The total number of shares of a company's stock held by all its shareholders, including institutional investors and insiders.
Overhead	Indirect costs not directly tied to production.
Overhead Costs	Indirect costs that are not directly tied to a specific product or service, such as rent, utilities, and administrative salaries.
Over-the-Counter (OTC)	Trading of financial instruments directly between two parties without a central exchange.
Over-the-Counter (OTC) Market	A decentralized market for trading financial instruments directly between parties.
P/E Ratio (Price-to-Earnings Ratio)	A valuation ratio that measures a company's current share price relative to its earnings per share.
Payables	Short-term obligations to creditors.
Payroll Accounting	The recording and management of employee compensation, benefits, and deductions.
Penny Stock	A low-priced, speculative stock with a small market capitalization.
Penny Stocks	Low-priced, high-risk stocks.
Pension	A retirement plan that provides regular income to an individual after they retire.
Pension Fund	Fund set aside for employee pensions.
Period Cost	Costs not directly tied to production.
Ponzi Scheme	A fraudulent investment scheme that promises high returns to earlier investors using funds from new investors.
Portfolio	A collection of investments, such as stocks, bonds, and cash, held by an individual or entity.
Portfolio Management	The process of selecting and managing a mix of investments to achieve a specific financial goal.
Preferred Dividend	Payment to preferred shareholders.
Preferred Stock	A class of ownership in a corporation that has a higher claim on the company's assets and earnings than common stock.
Price Elasticity of Demand	A measure of how sensitive demand for a product is to changes in its price.
Price-Earnings Ratio (P/E Ratio)	The ratio of a company's stock price to its earnings per share.
Price-to-Earnings Ratio (P/E Ratio)	Stock price relative to earnings.
Prime Rate	The interest rate that commercial banks charge their most creditworthy customers.
Private Equity	Investments in privately held companies, often involving ownership stakes.
Profit and Loss Statement (P&L)	Another term for an income statement, which shows a company's revenues, expenses, and profits over a specific period.
Profit Margin	A measure of profitability, calculated as net income divided by revenue.
Profitability Ratios	Measures of a company's ability to generate profit.
Public Accounting	The practice of providing accounting and auditing services to clients as an independent professional.
Public Company	Company with shares traded on public market.
Public Offering	The sale of new securities to the public by a company or government entity.
Qualified Dividend	A type of dividend that is eligible for lower tax rates than ordinary dividends.
Quantitative Analysis	The use of mathematical and statistical methods to analyze financial markets and make investment decisions.
Quantitative Easing	A monetary policy used by central banks to increase the money supply and stimulate economic activity.
Quick Ratio	A liquidity ratio that measures a company's ability to cover its short-term obligations with its most liquid assets.
Quick Ratio (Acid-Test Ratio)	A measure of a company's ability to cover its short-term obligations using its most liquid assets.
Rally	A significant upward movement in the prices of financial markets.
Rate of Return	Investment gain or loss.
Ratio Analysis	The examination of relationships between financial variables using various accounting ratios to assess a company's performance and financial health.
Ratios	Mathematical relationships used to analyze financial statements.
Raw Materials	Basic components for production.
Real Estate	Property consisting of land, buildings, and natural resources.
Real Estate Investment Trust (REIT)	A company that owns, operates, or finances income-producing real estate.
Receivables	Amounts owed to a business by its customers.
Research and Development (R&D)	Investment in innovation.
Retained Earnings	Accumulated net income not distributed as dividends.
Retirement Plan	A savings plan designed to provide income during retirement.
Return on Assets (ROA)	A ratio that measures a company's profitability relative to its total assets.
Return on Equity (ROE)	A measure of a company's profitability, calculated as net income divided by shareholders' equity.
Return on Investment (ROI)	A measure of the profitability of an investment, calculated as the ratio of the net profit to the initial cost.
Revenue	The income generated by a company's primary operations, such as sales of goods or services.
Revenue Recognition	Recognizing revenue when it is earned.
Reverse Stock Split	A corporate action in which a company reduces the number of its outstanding shares, increasing the share price proportionally.
Risk	The potential of losing money or not achieving expected returns.
Risk Management	The process of identifying and mitigating potential risks in investments or business operations.
Risk Tolerance	Ability to withstand investment losses.
Savings Account	A deposit account held at a financial institution that earns interest on the deposited funds.
SEC (Securities and Exchange Commission)	Regulatory agency overseeing securities industry.
SEC (U.S. Securities and Exchange Commission)	A regulatory agency that oversees the securities industry.
Securities	Financial instruments that represent ownership or debt, such as stocks and bonds.
Securities and Exchange Commission (SEC)	US regulatory agency for securities industry.
Segment Reporting	The practice of breaking down financial information by business segment to provide a clearer picture of performance.
Short Selling	Borrowing and selling securities with the expectation of buying them back at a lower price.
Social Security	A government program providing income for retired and disabled individuals.
Solvency Ratios	Measure of a company's long-term financial viability.
Statement of Cash Flows	A financial statement that provides information about a company's cash inflows and outflows from operating, investing, and financing activities.
Statement of Changes in Equity	A financial statement that shows how a company's equity changed during a specific period.
Stock	Ownership shares in a corporation, representing a claim on its assets and earnings.
Stock Exchange	A marketplace where buyers and sellers trade securities.
Stock Market Index	A benchmark that measures the performance of a specific group of stocks representing a segment of the financial market.
Stock Split	A corporate action in which a company divides its existing shares into multiple shares, often to lower the share price.
Stockholders' Equity	The residual interest in the company's assets after deducting liabilities.
Subsidiary	Company owned by another company.
Swaps	Financial derivatives that allow parties to exchange cash flows or liabilities.
Tangible Asset	Physical assets with economic value.
Tangible Book Value	Book value of tangible assets.
Tax	A compulsory financial charge or levy imposed by a government.
Tax Bracket	A range of income subject to a specific income tax rate.
Tax Deduction	An expense that can be subtracted from a company's taxable income to reduce the amount of income subject to taxation.
Tax Liability	The total amount of taxes owed by an individual or entity to a government authority.
Taxable Income	The amount of income subject to taxation after deductions and exemptions.
Taxation	The process of imposing levies on individuals, corporations, or goods to fund government activities.
Technical Analysis	The study of historical market data to predict future price movements.
Ticker Symbol	Abbreviation identifying publicly traded companies.
Trading Volume	Number of shares traded.
Transaction	An event that impacts financial position.
Treasury Bond	A long-term debt security issued by a government to finance public spending, usually with a maturity of 10 years or more.
Treasury Stock	Shares of a company's own stock that it has reacquired and held in its own treasury.
Treasury Stock Method	Method for calculating diluted EPS.
Trial Balance	A list of all accounts in the general ledger with their respective balances, used to ensure that debits equal credits.
Uncollectible Accounts Expense	Provision for accounts that may not be paid.
Underabsorption	When actual production overhead is greater than the overhead absorbed by production.
Underlying Asset	The financial instrument or security upon which a derivative contract is based.
Underlying Security	The asset, such as a stock or bond, on which a derivative contract is based.
Underwriting	The process of evaluating the risk of insuring or lending to an individual or entity.
Unearned Revenue	A liability that arises when a company receives payment from customers before it provides goods or services.
Unemployment Rate	The percentage of the labor force that is unemployed and actively seeking work.
Unrealized Gain	An increase in the value of an investment that has not been sold, resulting in a paper profit.
Unsecured Debt	Debt without collateral.
Valuation	Determining the worth of an asset.
Value Investing	A strategy of selecting investments based on their lower market prices relative to their intrinsic value.
Variable Cost	A cost that changes in direct proportion to changes in production or sales volume.
Variance	Difference between expected and actual results.
Variance Analysis	The process of comparing budgeted or planned performance to actual performance to identify discrepancies.
Venture Capital	Funding provided to early-stage companies with high growth potential in exchange for equity ownership.
Venture Capitalist	An individual or firm that invests in early-stage companies with high growth potential in exchange for equity ownership.
Vertical Analysis	Comparing financial data as a percentage of total revenue or assets.
Vesting	The process of earning ownership rights in an employer-sponsored retirement plan.
Volatility	The degree of variation in the price of an asset over time.
Wall Street	A street in New York City symbolizing the financial markets and the U.S. financial industry.
Warrant	A financial instrument that gives the holder the right, but not the obligation, to buy or sell an underlying security at a predetermined price.
Warrants	A financial instrument giving the holder the right to buy company stock at a specific price.
Warranty Expense	Estimated cost of honoring product warranties.
Wealth Management	Professional financial services that help individuals and families manage their wealth and investments.
Withdrawal	The act of removing funds from a bank account, investment, or other financial instrument.
Withholding Tax	Tax withheld from payments.
Working Capital	The difference between a company's current assets and current liabilities, representing its short-term liquidity.
Working Capital Ratio	Ratio of current assets to current liabilities.
Working Capital Turnover	A measure of how efficiently a company uses its working capital to generate sales.
X-efficiency	The degree to which a firm operates efficiently and minimizes waste in its production processes.
Yield	The income generated by an investment, often expressed as a percentage of its cost or current value.
Yield Curve	A graphical representation of the relationship between the interest rates and the time to maturity of debt securities.
Yield to Maturity (YTM)	Total return anticipated from holding a bond.
Zero Coupon Bond	A bond that is sold at a discount to its face value and does not pay periodic interest, but is redeemed at face value at maturity.
Zero-Based Budgeting (ZBB)	A budgeting method where expenses must be justified for each new period, starting from zero.
Zero-Coupon Bond	A bond that is issued at a discount to its face value and does not pay periodic interest, but is redeemed at face value at maturity.
Zero-Sum Game	A situation where one participant's gain is exactly balanced by another participant's loss.
Zombie Company	A company that is unable to cover its debt servicing costs but continues to operate.
Zoning Laws	Regulations that control the use of land and buildings in specific areas.
Z-Score	A statistical measure used to predict the likelihood of bankruptcy for a company.
1031 Exchange	A tax-deferred exchange of real estate properties held for investment or business purposes.
401(k)	A retirement savings plan sponsored by employers, allowing employees to contribute a portion of their salary.
403(b)	Retirement plan for employees of nonprofits.
529 Plan	A tax-advantaged savings plan designed to encourage saving for future education expenses.