Saturday, January 30, 2016

COMMON SLANG TERMS OF ACCOUNTING AND FINANCE‏

1) TAKING A BATH - Intentionally incurring all losses in  current period, rather than spreading it to other periods


2) TAKE A FLIER - Intentionally investing in high risk investments, leading to huge losses for current period


3) FLIGHT TO QUALITY- Moving to a low risk investment



4) BUBBLE - Rapid growth of an economic accompanied by a downturn in assets/securities prices



5) SPECULATION - Gambling based on individual calculations


6) MARKET CRASH - Unexpected downturn of investments value



7) HEDGE - Entering into futures contract to prevent adverse price changes


8) MASTER FEEDER FUND - Combination several funds of  into one portfolio, which reduces cost and increases service level


9) LONG POSITIONS - Purchase of a security, anticipating that its will rise in value subsequently
 

10) QUOTE STUFFING - Forcing weaker market competitors to lose out on opportunities by flooding market with quotes and removing them at high speed


11) BLEEDING EDGE - Unknown risk future of an upcoming technology


12) WHITE ELEPHANT - A Burden


13) SIX STIGMA - Quality control guide for defect goods


14) OBSOLESCENCE - Technology that are no longer attractive to consumers



15) BUILT IN OBSOLESCENCE - Product produced is made known to be outdated after a short period, in order to keep customers spending frequently


16) FREE CASH FLOW/ FCF - Cash available to increase assets


17) FREE CASH FLOW TO EQUITY/ FCFE - Amount of cash available to equity shareholders after expenses , debt payments and reinvestment



FORMULA TO FCFE

FCFE = Earning / Per Share - (Capital Expenditure - Depreciation) (1-Debt ratio**)- (Change in Net Working Capital* ) (1- Debt ratio**)


OR
 
FCFE = Net Income - Capital Expenditure - Change in Net Working Capital*+ New debt - Debt payment

*WC= CA-CL
**Debt Ratio= Total Liabilities/ Total Assets
(1:1 means Liabilities = Assets)


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