Skip to main content

Financial Glossary 2

Over capitalisation
when the business had more funds invested in the business than can be profitably employed

Risk management
is the process of identifying and minimising the potential cost of unfavourable events.

Insurance
Is a service offering protection against future possible loss as a result of some unfavourable event in the future.

Budget
is an expression of management plans in financial terms

Profitability
is a financial objective of the business and is concerned with the adequacy of profit

Liquidity
is a financial objective of a business and is concerned with being able to meet all cash obligations when they are due

Growth
is a financial objective and is concerned with increasing the size of the business

Cash budget
is a plan for cash receipts, cash payments and the resultant cash balance at certain points in time

Targeted profit level
should provide a reasonable return on the owners' investment - this means that the return on the capital invested should be equal to the prevailing bank interest rates plus a premium for risk

Fixed Costs (FC)
Are costs which remain constant over a period of time and over a wide range of sales volume

Variable Costs (VC)
Vary in direct proportion to changes in sales volume

Total Costs (TC)
is the sum of fixed cost plus variable cost

Cost-volume-profit (CVP) analysis
is an analysis of the mathematical relationships between costs, volume of sales, and profit over a range of output

Break-even point
is the output level where neither a profit or a loss is made because total costs equals sales

Financial information system
is a system which attempts to provide accurate and timely financial information needed to manage an organisation effectively

Accounting system
consists of those processes, people, and equipment which capture and convert financial information for use in decision making

A Balance Sheet
is a list of all the assets, liabilities and owners equity of an organisation at a point in time

An Income statement
is a report detailing revenue and expenses of a period,and the resultant profit or loss

A Statement of Cash Flows
is a report which shows the cash inflows and cash outflows of an organisation during a particular period, and the resulting cash balances

Comparative financial statements
Are accounting reports which provide figures for at least two consecutive accounting periods

Extraordinary revenue or expenses
items that are not of a reoccurring nature

Financial ratio analysis
is a range of techniques that establish relationships between two or more variables so that meaningful financial comparisons can be made

Financial Controls

Are procedures, methods, tools, and techniques aimed at keeping an organisation moving towards its goals and preventing financial losses.
Labels:

Comments

Post a Comment

Popular posts from this blog

RISK in Investments

Investment decisions are a trade off between Risk and Return. Risk refers to the possibility that the actual outcome of an investment will differ from its expected outcome. Most investors are concerned about the actual outcome being less than the expected outcome. The wider the range of possible outcomes,the greater the risk. SOURCES OF RISK The three major sources of risk are: Business Risk Interest Rate Risk Market Risk   Business Risk As a holder of corporate securities (equity shares and debentures) you are exposed to risk of poor business performance. This may be caused by a variety of factors like heightened competition, emergence of new technologies, development of substitute products , shifts in consumer preferences, inadequate supply of essential inputs,changes in governmental policies and so on. The principal reason might be inept and incompetent management. Interest Rate Risk The changes in interest rate have a bearing  on the welfare of investors. As th
Post a Comment
Read more

A note on Motivation

Motivation Theories Motivation- those factors that cause ,channel, and sustain people’s behavior. Motivation is not always easy to discern. Most successful managers ,however, have learned by experience that people are generally very responsive to praise and encouragement-expressed not only in words but also in actions and need to feel successful in their work to give their best effort to the organization. Different View points on Motivation The Traditional Model The traditional model of motivation is associated with Fredrick Taylor and scientific management which held that an important aspect of the manager’s job was to make sure that workers perform repetitive  tasks in the most efficient way. The Human Relations Model In the human relations model, workers were expected to accept management’s authority because supervisors treated them with consideration and were attentive to their needs. The intent of managers ,however remained the same- to have the workers accept
Post a Comment
Read more

Certified Bitcoin Professional Exam

Studying for the CBP exam is easy. The 33 topics are covered extensively online making it easy to learn the knowledge required for certification. A  CBP Study Guide  is available to assist your review. The Common Body of Knowledge for the Certified Bitcoin Professional certification is defined as follows: History of Money and Ledger-based Economics Centralized Ledgers Functions of Currency Distributed Consensus History of Bitcoin Price Derivation Basic Cryptography Terms and Definitions Hash Functions Symmetric and Asymmetric Encryption Digital Signatures Bitcoin Basics Bitcoin Community Bitcoin Addresses and Keys Bitcoin Transactions Bitcoin Blockchain Ledger bitcoin the Unit Bitcoin the Network BIPs Buying and Selling bitcoin Blockchain Explorers UTXOs Mining Purpose and Function Algorithm Mining Pools Mining Hardware Security and Centralization Wallets, Clients and Key Management Wallet Types Bitcoin Clients Deterministic Wallets (AKA B
2 comments
Read more