Financial Management Glossary

Financial Management Glossary - FINANCIAL MANAGEMENT...

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FINANCIAL MANAGEMENT GLOSSARY Accounts payable  = Liability that represents amounts owed to suppliers/vendors during the upcoming year. Accounts receivable  = Asset that represents amounts due from customers during the upcoming year. Accrued liabilities amounts owed to employees) during the upcoming year. Additional paid-in capital  = Equity that represents the amount shareholders paid above the par value when purchasing the  stock from the company. Amortization expense  = Expense that represents the allocation of the cost of intangible assets over their useful lives.  It is a  non-cash expense. Basis points  = 100 basis points equals 1% Book value of equity  = Total equity on the balance sheet. Book value per share  = Total equity / shares outstanding Cash and equivalents  = Asset that represents cash and investments in financial securities that have maturities less than 90  days. Common stock  = Equity security that represents ownership in a company and has voting rights.  Common shareholders receive a  dividend at the discretion of the Board of Directors.  The amount on the balance sheet represents the par value of the stock. Cost of common stock (aka cost of common equity)  = Required rate of return of common shareholders, which  comes in the form of dividends and/or capital gains. Cost of debt  = Required rate of return of debtholders, which comes in the form of interest.  The cost of debt after tax is the  relevant cost of debt for decision-making purposes since interest is deductible for tax purposes. Cost of goods sold  = Expense that represents the cost to a company of the merchandise sold to the customers. Cost of preferred stock
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Financial Management Glossary - FINANCIAL MANAGEMENT...

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