WGU - D076 Glossary Questions and Answers | Already
Graded A+| Updated 2023|2024
Accounting
The system of recording, reporting, and summarizing past financial information and
transactions.
Accounts Receivable Turnover (AR Turnover)
An activity ratio found by credit sales divided by accounts receivable.
Activity Ratios
A category of ratios that measure how well a company uses its assets to generate
sales or cash, showing the firm's operational efficiency and profitability.
Additional Funds Needed (AFN)
Another name for the discretionary financing needed or external financing needed. It
represents the additional financing needed given a firm's expectations for future
growth.
Affirmative Covenants
A bond covenant that describes things the company pledges itself to do in order to
protect bondholders.
Agency Costs
Costs that are incurred when management does not act in the best interest of
shareholders.
Agency Problem
When the agent (the management) does not act in the best interest of the principal
(the owners).
Aggressive Assets
Companies or securities with beta greater than 1.
Annual Percentage Rate
The annual interest rate that is charged for borrowing money or that is earned
through investment.
Annuity
A stream of cash flows of an equal amount paid every consecutive period.
Annuity Due
A series of equal payments made at the beginning of consecutive periods.
Asset Pricing
The process of valuing assets.
Auction Market
A secondary market with a physical location and where prices are determined by
investors' willingness to pay.
Average Collection Period (ACP)
An activity ratio found by the number of days in a year (365) divided by AR turnover.
Balance Sheet Forecasting
Using sales growth and the profit forecast to construct a pro forma balance sheet to
understand the future implications of the sources and uses of finances.
Banks and Credit Unions
Receive deposits and extend loans to individuals and businesses.
Benchmarking
The process of completing a financial analysis to compare a firm's financial
performance to that of other similar firms.
, Beta
A variable that describes how the price of a security varies with the market.
Bid-ask Spread
The difference between the bid and ask prices that compensate the specialist for the
risk that he or she bears for willingness to provide liquidity.
Board of Directors
A group of people who jointly supervise the activities of an organization.
Bond Indenture
A legal contract that governs the relationship between a firm and its bondholders.
Bondholders
A person who loans a corporation money by buying debt securities.
Business Finance
An area of finance that deals with sources of funding, the capital structure of
corporations, the actions that managers take to increase the value of the firm to its
owners, and the tools and analysis used to allocate financial resources.
Cannibalization
The reduction in sales of a company's own products due to introduction of another
similar product.
Capital
A financial asset that can be used by a firm or individual. Examples of capital may be
machinery or cash held by a firm.
Capital Asset Pricing Model (CAPM)
A model used to determine the risk-return relationship for an asset.
Capital Budgeting
The process of evaluation and planning for purchases of long-term assets.
Capital Budgeting Criteria
Metrics and calculations used to determine whether a project or asset will add value
and be a worthwhile investment.
Capital Investment
The sum of money invested in a business to purchase long-term assets to further its
objective of maximizing owner wealth.
Capital Markets
A type of financial market used for long-term assets that are held for greater than
one year.
Capital Structure
The mixture of debt and equity used to finance a firm.
Capital-constrained Environment
When a limited amount of funds are available.
Cash Budgets
A plan for controlling cash inflows and outflows business to balance income with
expenditures.
Cash Management
Managing the day-to-day finance operations of a firm.
Central Banks
Ensure that a nation's economy remains healthy by controlling the amount of money
circulating in the economy.
Common Stock
A type of stock that represents equity in a firm and confers the right to vote at
shareholder meetings.
Compounding
Graded A+| Updated 2023|2024
Accounting
The system of recording, reporting, and summarizing past financial information and
transactions.
Accounts Receivable Turnover (AR Turnover)
An activity ratio found by credit sales divided by accounts receivable.
Activity Ratios
A category of ratios that measure how well a company uses its assets to generate
sales or cash, showing the firm's operational efficiency and profitability.
Additional Funds Needed (AFN)
Another name for the discretionary financing needed or external financing needed. It
represents the additional financing needed given a firm's expectations for future
growth.
Affirmative Covenants
A bond covenant that describes things the company pledges itself to do in order to
protect bondholders.
Agency Costs
Costs that are incurred when management does not act in the best interest of
shareholders.
Agency Problem
When the agent (the management) does not act in the best interest of the principal
(the owners).
Aggressive Assets
Companies or securities with beta greater than 1.
Annual Percentage Rate
The annual interest rate that is charged for borrowing money or that is earned
through investment.
Annuity
A stream of cash flows of an equal amount paid every consecutive period.
Annuity Due
A series of equal payments made at the beginning of consecutive periods.
Asset Pricing
The process of valuing assets.
Auction Market
A secondary market with a physical location and where prices are determined by
investors' willingness to pay.
Average Collection Period (ACP)
An activity ratio found by the number of days in a year (365) divided by AR turnover.
Balance Sheet Forecasting
Using sales growth and the profit forecast to construct a pro forma balance sheet to
understand the future implications of the sources and uses of finances.
Banks and Credit Unions
Receive deposits and extend loans to individuals and businesses.
Benchmarking
The process of completing a financial analysis to compare a firm's financial
performance to that of other similar firms.
, Beta
A variable that describes how the price of a security varies with the market.
Bid-ask Spread
The difference between the bid and ask prices that compensate the specialist for the
risk that he or she bears for willingness to provide liquidity.
Board of Directors
A group of people who jointly supervise the activities of an organization.
Bond Indenture
A legal contract that governs the relationship between a firm and its bondholders.
Bondholders
A person who loans a corporation money by buying debt securities.
Business Finance
An area of finance that deals with sources of funding, the capital structure of
corporations, the actions that managers take to increase the value of the firm to its
owners, and the tools and analysis used to allocate financial resources.
Cannibalization
The reduction in sales of a company's own products due to introduction of another
similar product.
Capital
A financial asset that can be used by a firm or individual. Examples of capital may be
machinery or cash held by a firm.
Capital Asset Pricing Model (CAPM)
A model used to determine the risk-return relationship for an asset.
Capital Budgeting
The process of evaluation and planning for purchases of long-term assets.
Capital Budgeting Criteria
Metrics and calculations used to determine whether a project or asset will add value
and be a worthwhile investment.
Capital Investment
The sum of money invested in a business to purchase long-term assets to further its
objective of maximizing owner wealth.
Capital Markets
A type of financial market used for long-term assets that are held for greater than
one year.
Capital Structure
The mixture of debt and equity used to finance a firm.
Capital-constrained Environment
When a limited amount of funds are available.
Cash Budgets
A plan for controlling cash inflows and outflows business to balance income with
expenditures.
Cash Management
Managing the day-to-day finance operations of a firm.
Central Banks
Ensure that a nation's economy remains healthy by controlling the amount of money
circulating in the economy.
Common Stock
A type of stock that represents equity in a firm and confers the right to vote at
shareholder meetings.
Compounding
