D076 WGU - Glossary QUIZ ALREADY GRADED

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.