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The 'language of finance' can be daunting. We therefore thought that a simple explanation of many of the terms might be helpful, so here goes!
Glossary Index A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
To Narrow your search Select Category: All Accounting Terms Banking Terms General
Acid Test
The ratio between current assets (Less inventory) and current liabilities as shown on the balance sheet. This test gives some indication of a entity's liquidity.More »
The ratio between current assets (Less inventory) and current liabilities as shown on the balance sheet. This test gives some indication of a entity's liquidity.More »
Accounting bases
The (sometimes alternative) methods that have been developed for applying basic accounting concepts to business transactions and for measuring certain items in the accounts, e.g. various methods for calculating depreciation of fixed assets.More »
The (sometimes alternative) methods that have been developed for applying basic accounting concepts to business transactions and for measuring certain items in the accounts, e.g. various methods for calculating depreciation of fixed assets.More »
Bank Draft
A cheque raised by a Bank, issued on a current account and addressed to a specific nominee. This acts as a guaranteed payment.More »
A cheque raised by a Bank, issued on a current account and addressed to a specific nominee. This acts as a guaranteed payment.More »
Bankruptcy
The financial condition of insolvency, particularly when such insolvency has resulted in the filing of a petition for reorganisation or liquidation.More »
The financial condition of insolvency, particularly when such insolvency has resulted in the filing of a petition for reorganisation or liquidation.More »
Cash Basis
A method of accounting that shows expenses and income only when actually paid or received.More »
A method of accounting that shows expenses and income only when actually paid or received.More »
Commercial Lease
A lease in which the Lessee has entered into the lease transaction for business or commercial purposes (also referred to as a business lease).More »
A lease in which the Lessee has entered into the lease transaction for business or commercial purposes (also referred to as a business lease).More »
Factoring
A financial service which allows a company to sell or transfer title to its accounts receivable (invoices) to a Factoring company at a discounted rate. The Factoring company then becomes the principle rather than an agent. Because of this the Factor does not have any recourse to the seller should the customer default on payment (except in the case where the terms of the contract of sale are not fulfilled).More »
A financial service which allows a company to sell or transfer title to its accounts receivable (invoices) to a Factoring company at a discounted rate. The Factoring company then becomes the principle rather than an agent. Because of this the Factor does not have any recourse to the seller should the customer default on payment (except in the case where the terms of the contract of sale are not fulfilled).More »
Invoice Discounting
A financial transaction that allows a company to draw down funds against its sales invoices before the customers have actually paid. This is acheived by the company borrowing a percentage (usually 75 - 80%) of its whole sales ledger from a finance company. Invoice discounting services are available in a variety of forms, but in most cases the finance company will have recourse to the seller if the customer does not pay within a specified period.More »
A financial transaction that allows a company to draw down funds against its sales invoices before the customers have actually paid. This is acheived by the company borrowing a percentage (usually 75 - 80%) of its whole sales ledger from a finance company. Invoice discounting services are available in a variety of forms, but in most cases the finance company will have recourse to the seller if the customer does not pay within a specified period.More »
Book Value
Value of an asset according to the official accounts. This may or may not be accurate.More »
Value of an asset according to the official accounts. This may or may not be accurate.More »
Capital Allowance
An allowance against profits given for tax purposes in respect of expenditure on fixed assets.More »
An allowance against profits given for tax purposes in respect of expenditure on fixed assets.More »
Capital Employed
The amount of long-term funds invested in or lent to a business and used by it to carry out its operations.More »
The amount of long-term funds invested in or lent to a business and used by it to carry out its operations.More »
Working Capital
The amount of liquid funds available to a business at any specific time to carry out its operations.More »
The amount of liquid funds available to a business at any specific time to carry out its operations.More »
Cash Flow
A calculation of the amount of liquid funds that will be available to a company for the performance of its transactions, normally looking to the future.More »
A calculation of the amount of liquid funds that will be available to a company for the performance of its transactions, normally looking to the future.More »
Business Angel
A private individual who is prepared to invest in one or more companies which are seeking a capital injection. In return the investor may seek an equity share in the business although in some cases the investment may take the form of a business loan with security offered in the form of a debenture over the company's assets.More »
A private individual who is prepared to invest in one or more companies which are seeking a capital injection. In return the investor may seek an equity share in the business although in some cases the investment may take the form of a business loan with security offered in the form of a debenture over the company's assets.More »
Compound interest
Interest calculated on the sum of the principle plus accrued interest due at the date of calculation.More »
Interest calculated on the sum of the principle plus accrued interest due at the date of calculation.More »