SBI terms pt 2

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  1. Goodwill
    An intangible asset that represents the excess of the amount paid for an acquired company over the fair market value of the net assets of that company. Basically, it is the value of the name and reputation of the acquired company.
  2. Gross margin/ gross profit /product profit
    The excess of sales over cost of sales or the profit from sales before considering operating, general and other expenses.
  3. Gross margin percentage/ gross profit percentage/ product profit percentage
    Gross margin expressed as a percentage of sales.
  4. Held-to-maturity securities
    Debt securities that the holder/owner has the ability and intent to hold to maturity. They are carried at amortized cost (original cost less principal payments and premium or discount amortization).
  5. Highly leveraged
    A company with a large proportion of bonds and preferred stock outstanding relative to the amount of common stock.
  6. Impairment (permanent) of loans (investments)
    The probability that the lender (investor) will not collect all amounts in accordance with the loan agreement.
  7. Income statement/ statement of earnings/ statement of profit and loss, P&L/ Operating statement
    Report summarizing the revenues and expenses and reporting the net income (or loss) of a business for an entire accounting period.
  8. Income taxes/ tax provision/ provision for income taxes
    The amount of income tax expense reported for the period.
  9. Income taxes payable
    The obligation to pay federal, foreign, state and local income taxes athat are due within one year from the balance sheet date.
  10. Intangible assets
    Nonphysical assets with continuing value, like goodwill, copyrights trademarks and franchises.
  11. Interest
    Payments by borrowers of funds to compensate lenders for the use of their funds.
  12. Interest coverage
    The number of times the annual interest on debt obligations is covered by income for the year before considering interest on the debt obligations and income taxes.
  13. Inventory
    The cost of goods on hand that were purchased and/or manufactured or that are being manufactured for sale to customers.
  14. Inventory turnover
    The number of times the average inventory is sold during the year.
  15. Investment securities
    Securities (debt or equity) held for strategic purposes and/or long term appreciation of income.
  16. LIFO
    • Last in, first out
    • An inventory-costing method that states inventory at its earliest cost while charging cost of sales at its latest cost (in the reverse order that the inventory was accumulated).
  17. Leverage/ financial leverage
    Relates a company’s long-term debt to its capital structure. Also, it is the practice of obtaining capital structure. Also, it is the practice of obtaining capital using borrowed funds or preferred stock, rather than common stock.
  18. Liability
    An obligation to pay for assets or goods or services acquired or to repay borrowed funds.
  19. Long-term debt/ current portion of long term debt/ other long term debt
    Borrowed funds due after one year from the balance sheet date.
  20. Long term liabilities
    Obligations that are due after one year from the balance-sheet date.
  21. Lower cost or market rule
    The rule is that inventory should be valued at its cost or market value, whichever is lower. The intent is to provide a conservative figure in valuing a company’s inventory.
  22. Management discussion and analysis (MD&A)
    An SEC required report where management provides selected financial data to ighlight significant trends in the company’s financial position or operating results.
  23. Market price/ fair market value
    The price at which a good can be sold in the open market
  24. Marketable securities
    Jreadily liquid securities (debt or equity) that can be converted into cash on very short notice
  25. Mortgage bonds
    Formal, secured debt obligations that are backed by certain specific assets of the issuer.
  26. Net income, net loss/ net profit or loss/ bottom line
    The final result of all revenue and expense items for the period.
  27. Net of taxes
    Terms meaning the value or amount has been adjusted for the effects of applicable taxes.
  28. Net profit ratio
    Net income expressed as a percentage of sales.
  29. Net quick assets
    The excess of quick assets over current liabilities.
  30. Notes payable
    Short or long term obligation evidenced by a formal borrowing agreement (such as a promissory note) to repay borrowed funds.
  31. Operating income or loss
    The profit or loss generated by a company’s normal, recurring operating activities before considering nonoperating items, income taxes, gains or losses from diposals of a segment of the business and extraordinary items.
  32. Operating margin
    Operating income expressed as a percentage of sales.
  33. Other long term debt
    All debt due after one year from the balance-sheet date that is not reported elsewhere in the balance sheet date that is not reported elsewhere in the balance sheet.
  34. Par value
    The nominal or face value of a security assigned by the issuer for balance sheet reporting. It has no relation to market value.
  35. Preferred dividend coverage
    The number of times the preferred dividend is covered (earned) by net income.
  36. Preferred stock
    An equity security that entitles its holders to certain preferences over common shareholders, such as dividends, liquidation value and convertibility into other securities etc.
  37. Preferred stock ratio
    The percentage that preferred stockholders’ equity bears to total tangible capitalization (the sum of shareholders’ equity and longterm debt reduced by intangibles).
  38. Prepaid expenses
    Payments in advance for goods or services, which will be consumed and deducted from income during the duture, normal operating cycle, generally one year.
  39. Price-earnings ratio, P/E ratio
    The comparison of the market price of a share of stock to the earnings per share of that stock, expressed as a ratio.
  40. Property, plant and equipment/ fixed assets
    Assets not intended for sale that are used to manufacture, display, warehouse and transport the company’s products and house its employees.
  41. Quick assets
    Assets that can be converted quickly to cash.
  42. Quick assets ratio
    The relationship between quick assets and current liabilities, expressed as a ratio.
  43. Retained earnings
    The total profit or loss of the company less the total of all dividends paid, since the company’s startup.
  44. Return on equity (ROE)
    Net income for the period expressed as percentage of average shareholders equity for the period.
  45. Securities and exchange commission (SEC)
    • The main securities regulatory authority in the U.S.
    • Shareholders equity
    • The total of shareholders’ investments in the company and total profits or losses since the start-up of the company, less all dividends and/or capital distributions, unrealized gain on available for sales securities and any foreign currency translation adjustments since the company’s start up.
  46. Stated value
    The nominal or face value of a security assigned by the issuer in lieu of par value for balance sheet reporting. It has no relation to market value.
  47. Stock option, compensatory (on uninsured stock)
    An agreement, usually between an issuer and its executives/ employees, that grants the right to purchase securities, such as common stock, at a specified prince. Options are common stock equivalents and may dilute earnings per common share.
  48. Stock option
    A security bought and sold in the public securities markets that provides the holder the right, but not necessarily the obligation, to buy or sell a specified security in the quantity, at the amount, and during the time period specified in the option.
  49. Trading securities
    Securities (debt or equity) bought an sold frequently, principally to generate short term profits. They are carried at hair market value, with any changes in the value reported in income.
  50. Treasury stock
    The total cost of any of the company’s stock that has been repurchased or otherwise reacquired from shareholders and held in the company’s treasury.
  51. Treasury stock method
    A method of calculate the effect on earnings per share of stock options and warrants. All options proceeds from the assumed conversion of in the money options are assumed to be used to repurchase shares (that is, required and held in the company’s treasury) at the average stock price for the period.
  52. Unrealized gain/loss
    The difference between the cost (or previously reported fair market value)) of an asset held at the balance sheet date and its fair market value at that date.
  53. Warrant
    A security, generally evidenced by a certificate, giving the holder the right to purchase securities, such as common stock, at a specified price. Warrants are common stock equivalents and may dilute earnings per common share.
  54. Working capital
    The excess of current assets over current liabilities.
  55. expenses
    • assets used up in generating revenue.
    • recognition of expenses = reduction of assets or possibly increase in liabilities though not necessarily both.
  56. cost
    the value of resources given up for some purpose.
  57. revenue
    • cash or promise of cash in exchange for selling goods/services.
    • recognition of revenue = increase in assets.
  58. marketing
    the process by which indivs and groups obtain what they need and want through creating, offering, and exchanging products of value with others.
  59. market metrics
    % of business related to the portion of the market.
  60. cost object
    • what we are trying to find the cost of.
    • the "it" is What does it cost?
  61. direct costs
    costs that can be traced to the cost object at a reasonable cost.
  62. indirect costs
    • costs that cannot be traced to the cost object.
    • (costs made by assumption)
    • if a large proportion of costs are indirect, you want to worry about what assumptions are behind those costs.
Card Set:
SBI terms pt 2
2012-06-15 16:36:57
SBI terms pt

SBI financial terms cont.
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