For non-finance professionals, the thought of talking about data, stock, and budgets can seem intimidating. By developing your financial vocabulary, you can excel professionally and achieve new goals. This glossary contains the words that students, non-professional, or a professional might face in the world of finance.
Amortization
noun
Amortization is a method of spreading an intangible asset's cost over the course of its useful life. Intangible assets are non-physical assets that are essential to a company, such as a trademark, patent, copyright, or franchise agreement.
Example: 75% of the mortgages have an amortization of 25 years or less
en: amortissement
Asset Allocation
noun
Asset allocation refers to how you choose to spread your money across different investment types, also known as asset classes.
Example: We find a relationship between the liability structure and the asset allocation.
en: répartition des actifs
Assets
noun
Assets are items you own that can provide future benefit to your business, such as cash, inventory, real estate, office equipment, or accounts receivable, which are payments due to a company by its customers. There are different types of assets. There are the current assets, they can be converted to cash within a year. Also, there are the fixed assets, they can’t immediately be turned into cash, but are tangible items that a company owns and uses to generate long-term income.
Example: growth in net assets is profitable
en: Actifs
Balance Sheet
noun
A balance sheet is an important financial statement that communicates an organization’s worth, or “book value.” The balance sheet includes a tally of the organization’s assets, liabilities, and shareholders’ equity for a given reporting period.
Example: The balance sheet provides a static picture of the financial position at a point in time.
en: Bilan
Capital Gain
noun
A capital gain is an increase in the value of an asset or investment above the price you initially paid for it. If you sell the asset for less than the original purchase price, that would be considered a capital loss.
Example: The investor did not incur any capital gains liability.
en: Gain en capital
Capital Market
noun
This is a market where buyers and sellers engage in the trade of financial assets, including stocks and bonds.
Example: This is a market where buyers and sellers engage in the trade of financial assets, including stocks and bonds.
en: Marché des capitaux
Cash Flow
noun
Cash flow refers to the net balance of cash moving in and out of a business at a specific point in time.
Example: The company is looking at new ways to generate cash flow.
en: flux de liquidités
Compound Interest
noun
This refers to “interest on interest.” Rather, when you’re investing or saving, compound interest is earned on the amount you deposited, plus any interest you’ve accumulated over time. While it can grow your savings, it can also increase your debt; compound interest is charged on the initial amount you were loaned, as well as the expenses added to your outstanding balance over time.
Example: The difficulty with calculating mortgage payments is due to compound interest .
en: Intérêts composés
Depreciation
noun
Depreciation represents the decrease in an asset’s value. It’s a term commonly used in accounting and shows how much of an asset’s value a business has used over a period of time.
Example: As on previous occasions, the great depreciation in the value of the currency has led to a repudiation of part of its nominal value.
en: Dépréciation
Equity
noun
Equity, often called shareholders’ equity or owners’ equity on a balance sheet, represents the amount of money that belongs to the owners of a business after all assets and liabilities have been accounted for. Using the accounting equation, shareholder’s equity can be found by subtracting total liabilities from total assets.
Example: The possibility of equity financing depends on the state of the equity market
en: équité
Liquidity
noun
Liquidity describes how quickly your assets can be converted into cash. Because of that, cash is the most liquid asset. The least liquid assets are items like real estate or land, because they can take weeks or months to sell.
Example: The company maintains a high degree of liquidity
en: Liquidité
Net Worth
noun
You can calculate net worth by subtracting what you own, your assets, with what you owe, your liabilities. The remaining number can help you determine the overall state of your financial health.
Example: He has a net worth of more than $100 billion
en: valeur nette
Profit Margin
noun
Profit margin is a measure of profitability that’s calculated by dividing the net income by revenue or the net profit by sales.
Example: The profit margin had been artificially inflated.
en: Marge Bénéficiare
Return on Investment (ROI)
noun
Return on Investment is a simple calculation used to determine the expected return of a project or activity in comparison to the cost of the investment, typically shown as a percentage. This measure is often used to evaluate whether a project will be worthwhile for a business to pursue. ROI is calculated using the following equation: ROI = [(Income - Cost) / Cost] * 100
Example: By measuring their return on investment, they understand when spending money will save them money.
en: retour sur investissement
Valuation
noun
Valuation is the process of determining the current worth of an asset, company, or liability. There are a variety of ways you can value a business, but regularly repeating the process is helpful, because you’re then ready if ever faced with an opportunity to merge or sell your company, or are trying to seek funding from outside investors
Example: The company was acquired at a high valuation.
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