Accrued Interest
The amount of interest owing but not paid.

Annual Report
A report, issued annually by corporations to their shareholders, that contains basic financial statements as well as management's opinion of the past year's operations and future prospects.

Asked Price
The price at which a dealer in securities will sell shares.

Asset
Resources that a business owns to produce goods and provide services. There are tangible assets, such as cash, inventory, land and buildings, and intangible assets, such as patents and good will.

Asset Turnover
A broad measure of asset efficiency.

Balance Sheet
Financial statements providing the status of a company's assets, liabilities and shareholders equity on a specific date.

Bond
Usually a fixed-interest security under which the issuer contracts to pay the lender a fixed principal amount at a stated date in the future and a series of interest payments, either semi-annually or annually. Interest payments may vary throughout the life of the bond.

Capital Assets
Land, buildings, plant, equipment and other assets acquired for carrying on the business of a company with a life exceeding one year. Assets are normally expressed in financial accounts as cost minus accumulated depreciation.

Capital Investment  
Money used to purchase fixed assets for a business, such as land, buildings or machinery. It also refers to money invested in a business on the understanding that it will be used to purchase permanent assets rather than to cover day-to-day operating expenses.

Capitalization
The total amount of debt and equity issued by a company.

Common Shares  
Shares representing ownership and voting rights in a company.

Competitive Advantage
The strategies, skills, knowledge, resources or competencies that differentiate a business from its competitors.

Compound Interest
An interest rate that is applicable when interest in succeeding periods is earned not only on the initial principal but also on the accumulated interest of the previous period.

Contingency  
An existing situation, the result of which is unknown. This may be positive or negative.

Coupon  
Interest rate payable on bonds, whether bearer or registered. It also refers to the detachable portion of the certificate entitling the bearer to payment of the interest.

Credit  
Rating of a company's credit (ability to pay back debt), usually by a third-party credit agency.

Current Assets
Items that are either cash now or are expected to be turned into cash within one year's time. These include cash, accounts receivable, inventory and marketable securities.

Deal Breaker
A significant issue relating to proposed financing between the prospective investor and the entrepreneur that must be resolved in order to close the deal.

Deferred Taxes
Future tax liability resulting from the difference between depreciation and capital cost allowance.

Dilution
Reduction in per share participation in net earnings and ownership through an increase in issued stock.

Discounting  
The process of finding the present value of a series of future cash flows. Discounting is the reverse of compounding.

Divestiture
Sale of part of a company. It is the opposite of merger.

Dividend  
A cash or share payment to shareholders. Ordinarily it is paid from the earnings or retained earnings of a company on a per share basis. Dividends are not deductible by the payor for tax purposes.

Earnings
In general, refers to a company's total sales minus the cost of sales and operating expenses, including interest and income tax.

EBIT (BAII)
Earnings before interest and taxes.

Equity
The residual value of a business or investment after all debts and other claims are settled.

Exchange Risk  
The risk associated with an asset or liability denominated in a foreign currency. It is vulnerable to the movement of exchange rates. 

Expected Return
The total amount of money (return) an investor anticipates to receive from an investment.  

Financial Risk
The portion of total corporate risk over and above the basic business risk that results from using debt.

Financial Statement  
A report summarizing the financial condition or financial results of a business on any date or for any period.

Financial Trend Analysis
Process of analyzing financial statements of a company for any continuing relationship.

Foreign Exchange  
Claims in a foreign currency payable abroad, including bank deposits, bills, cheques. Foreign exchange rates refer to the number of units of one currency required to buy another.

Future-oriented Financial Information  
Information about prospective results of operations, financial position and changes in financial position based on assumptions about future economic conditions and courses of action. Future-oriented financial information is presented as either a forecast or a projection.

Going Public
The sale of shares by a closely held corporation (or its principal shareholders) to the public at large.

Horizontal Analysis
The process of comparing consecutive financial statements by examining the increases or decreases between the periods in terms of absolute dollars and percentages.

Income After Taxes to Sales
The bottom-line financial performance after taking into account income tax obligations. Evaluates the ability of a business to squeeze income from each sales dollar.

Interest
A charge for the use of money supplied by a lender.

Leverage  
The relationship between interest-bearing debt and equity in a company (financial leverage) or the effect of fixed expense on after-tax earnings (operating leverage).

Liquid Asset
Any asset that can be quickly converted to cash without significant loss of value.

Management  
Individuals in an entity that have the authority and the responsibility to manage the entity. The positions of these individuals, and their titles, vary from one entity to another and, to some extent, from one country to another depending on the local laws and customs. Thus, when the context requires it, the term includes the board of directors or committees of the board that are designated to oversee certain matters (e.g. audit committee).

Market Capitalization  
Aggregate value of a corporation as determined by the market price of its total issued and outstanding stock.

Market Risk
The part of a security's risk that cannot be eliminated by diversification.

Maturity Date
Date on which a debt is due for payment.

Minority Shareholders
Shareholders who by virtue of their percentage ownership of the company do not have voting control of the company.

Net Income
The level of profit in a business after the deduction of income taxes, depreciation, operating expenses and other expenses. It is also known as after-tax profit or net profit.


Networking
Making use of contacts, associates and friends.

Option  
Right to buy or sell a specified property at a specified amount at some time in the future.

Owners' Equity
The total funds invested in a business by the owners. This represents the total assets of a business minus total liabilities, and is also known as equity capital or net worth.

Participating Preferred Share  
Preferred share that, in addition to paying a fixed dividend, provides for the right to participate with the common shares in the earnings of the company. Usually, participation arises under specific circumstances.

Preferred Shares  
Like common shares, they represent ownership in a company. However, these shares are usually non-voting and have a fixed dividend rate. In the event of liquidation, preferred shareholders rank ahead of common shareholders but behind creditors for claims against the assets of the company.

Price/Earnings Ratio
Price of a stock divided by its earnings per share, typically over the last 12 months.

Prospectus
A securities disclosure document that provides full, true and plain disclosure of all facts that may materially affect the market price or value of a company's securities (whether issued or proposed to be issued). It is prepared in accordance with the requirements of the governing securities legislation.

Redundant Assets  
Assets that are not required for the ongoing operation of the business and could be withdrawn without affecting future earning potential.


Retained Earnings  
The amount of earnings retained and reinvested in a business and not distributed to the shareholders as dividends.

Risk  
The probability that actual future returns will be less than expected returns.

Sensitivity Analysis  
Technique used to determine the effects on net income or cash flow due to changes in assumptions (i.e. "what if" analysis).

Share Capital
Total shares authorized to be issued, or actually issued, by a company.

Shareholders  
Owners of one or more shares in a company.

Spread 
The difference between items, typically between two rates of interest or currencies.

Stock Dividend
A dividend paid in shares as opposed to cash.

Vertical Analysis
The process of reducing all items in the balance sheet and income statement to a percentage of total assets or sales revenue, respectively.

What If Scenarios
Analysis of the economic effect of possible future situations, such as economic downturns, loss of key customers, changes in interest rates or price levels, or new competitors or technologies.

Z-score
Linear analysis where five measures are objectively weighted to give an overall score that becomes the basis for classifying the financial health of a business.