The most complete compilation of common business terms with a detailed explanation of their meaning. Such loans normally repay a fixed rate of interest (unlike equities) over a specified time and then repay the original sum in full after a fixed period when the bond matures. Up until the start of the credit crunch, financial institutions were able to borrow money at rates only slightly higher than the official interest rates set by central banks, but the process became far more expensive after mid-2007, reflecting the sense of heightened risk. Another type of buy-out is where a company buys back shares in itself that it has previously sold off, thereby taking itself off the stock market and turning itself back into a private firm. In other words, a budget is a document that management makes to estimate the revenues and expenses for an upcoming period based on their goals for the business. This commercial paper is usually not held on banks’ balance sheets, but if they can’t roll it over for cash from another bank they have to bring it onto the balance sheet and eventually count up the value of the dodgy assets behind them. If the borrowers fail to sell their house quickly, for example, they will have to carry on making mortgage payments as well as repaying the loan. Council tax is set and collected by local government to help pay for local services like policing and refuse collection. 2. For example, the average of N15, N25, N60 and N100 is N50 (N15+N25+N60+N100=N200; divided by 4 is N50). A quality Business Glossary is an important part of collaboration, particularly in larger businesses that span numerous departments. In the Basel I accord, it is categorized as undisclosed reserves, revaluation reserves, general provisions, hybrid instruments and subordinated term debt. CDS contracts can be used by bond investors – as a hedge against potential defaults – or traded separately when they are called naked CDSs. The British Retail Consortium is the lead trade association for retailers. Contact us: [email protected]. A market when prices roar ahead. Once payments commence, the contract is in the annuitization phase. Our Glossary of Business Terms helps you understand the words and phrases that you may encounter and use when you start, run and manage a business. This is considered a risk-free profit for the investor/trader. Corporate raiders specialize in launching hostile takeovers of companies with undervalued assets. She's a The term comes from poker, where blue chips are traditionally the highest-valued chips in the game. Markets tend to work on the basis that black swans either don’t exist or appear with such irregularity that they are not worth worrying about. Effective Demand. Glossary of Business Terms – “P” A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Partnership – A legal business relationship of two or more people who share responsibilities, resources, profits and liabilities. Also Read: All forms of business organizations and their features. This is the amount paid to originally purchase the shares of the bank and retained profits (minus losses). But reliefs and exemptions are available – so those who could be liable are best seeking expert advice. A bond is simply an IOU. The Treasury now sets the inflation targets and the Bank’s monetary policy committee sets interest rates to try to meet them. Smoot Hawley Act - Passed in 1930, this protectionist act increased import duties to the highest rate ever imposed by the United States, resulting in the downfall of the world trade system. Collateralized Debt Obligations – toxic financial instruments at the heart of the credit crunch. Some analysts privately rubbished the internet stocks they covered, but said the opposite in reports for public consumption. Economic systems Economic growth … In the financial crisis that struck in August 2007, banks found it increasingly hard to raise funding in the wholesale money markets. AIM allows these companies to raise capital by listing on a public exchange with much greater regulatory flexibility compared to the main market. Keep handy this glossary of marketing terms. Capital ratios are a measure of a bank’s capital strength used by regulatory agencies. It is a trusted reference business “dictionary” in an organization. An annuity is a financial product that pays out a fixed stream of payments to an individual. The current concern focuses on naked CDSs on sovereign debt. Chief operating officer: A chief operating officer or c… Business Terms Glossary What Does Plant and Equipment Mean? Auditors are accountants who must certify that the company accounts prepared and signed by the board of directors, and are a ‘true and fair view’ of the company’s financial position. This represents your small business’s obligations to pay debts owed to lenders, suppliers, and creditors. These are our own definitions and meanings used to clarify these terms. They generally invest in a particular geographical area, have a defined strategy (eg income, growth or a mixture of both), or have a ‘theme’, for example, focusing on technology or smaller companies. This vocabulary enhances crystal clear meaning of terms in business context and can be linked to the underlying technical metadata to provide a direct association between business terms and objects. These flows might result from exports (an inflow or credit) or from imports (an outflow or debit). This will be subject to capital gains tax at your income tax rate. Mortgage brokers, insurance brokers, Forex brokers and stock brokers are all covered by the term. This is a metaphor for the protocol that exists in financial institutions to insulate analysts from pressures from the deal-makers. An annual general meeting (AGM) is a mandatory yearly gathering of a company’s interested shareholders. Explain Business Glossary domain Summarize good definitions Demonstrate importing business terms Description: This course is designed for Data Stewards who are … The term typically refers to products such as coffee, cocoa and soya beans (soft commodities) or gold, aluminum and platinum (hard commodities). There is no limit to the number of levels in a hierarchy, but a hierarchy is often more easily understood when there are three levels or fewer. Lenders will often ask for collateral or security against a loan. The period of time when an annuity is being funded and before payouts begin is referred to as the accumulation phase. They offer clear definitions across the entire enterprise with the goal of keeping terms consistent and helping everyone stay on the same page. In the US, the Federal Reserve. The paper is backed, in theory at least, by assets. Save my name, email, and website in this browser for the next time I comment. The PMI surveys purchasing managers, whose job is to assess future demand, and so gives an indicator of the future of the each sector. At an AGM, the directors of the company present an annual report containing information for shareholders about the company’s performance and strategy. Thanks for doing such a good job! The overall account is then called the balance of payments – principally because the total of outflows must equal the total of inflows. The Nationwide produces a consumer confidence index at the start of every month in the run up to the Bank of England’s interest rate decision. Absence Culture : An absence culture is a business term for an organizational culture that is accepting of a certain amount of absenteeism (or irregular hours) amongst management personnel for vague or non-specific reasons. Shareholders with voting rights vote on current issues, such as appointments to the company’s board of directors, executive compensation, dividend payments, and the selection of auditors. Central banks have pumped billions of dollars into the financial system in a bid to make it easier for banks to raise cash. Sometimes referred to as A/P or AP for short, accounts payable can be short or long term depending upon the type of credit provided to the business by the lender. The structure begins with a broad term and more refined terms are added as sub-terms. This caused the yen to surge by over 10% in less than a fortnight. That is, it’s calculated under the assumption that any interest paid is included in the principal payments balance and the next interest payment will be based on the slightly higher account balance. Before the discovery of Australia, it was assumed that all swans were white because nobody had seen one of a different shade. In the context of the stock market, traders often try to exploit arbitrage opportunities. A high PMI indicates materials purchases are increasing and the outlook is positive. A business glossary makes it possible to define terms used within an enterprise. We have gathered together important terms in entrepreneurship, finance, banking, accounting, ecommerce, online business, internet marketing and … In 1997, the chancellor, Gordon Brown, relinquished the power to set interest rates, transferring it to the Bank. In some cases, Chapter 11 bankruptcy allows companies to continue to function. Accounts payable is a business finance 101 term. There are various types of loans but this is a type of loan that can be taken out by people moving house who need access to finance in order to cover them until they sell their home. If you’ve found this list to be helpful, please drop your comments and share this post with your friends. A commodity is any homogeneous item which may be freely bought and sold. Small Business Development Center (SBDC) - An U.S. organization set up to assist small business owners by providing management and technical resources to help start and run their businesses. In general, you do not have to pay capital gains tax on your car, your main home, ISAs or personal belongings worth £6,000 or less. They are obliged to tell you either way. This is one of the various kinds of taxes in which everyone has an allowance before they become liable for capital gains tax and rates vary. So why not have some fun while learning? With interest rates in Japan at virtually zero, speculators have been borrowing there to invest in the UK or the US, where rates are more like 5%. Glossary of business related terms June 28, 2014 — 6.01am Save Log in, register or subscribe to save articles for later. Policies that cover the cost if your property is damaged or destroyed by, for instance, flood or fire. Many shares and bonds are now quoted on more than one stock market and after-hours dealing allows dealers to buy and sell outside the official hours of the market. The CIPS with RBS produces monthly Purchasing Managers’ Index (PMI) reports, which cover manufacturing, construction and the service sector. In the past couple of days, though, the yen has fallen back again, possibly as calmer markets have encouraged a renewed bout of carry trading. If you purchase 1,000 shares at £1 each and eventually sell them for £10 each, you have made a capital gain of £9,000. Effective Tax Rate. This is an analyst who forecast trends in stocks, indices and currencies by looking at patterns on charts of their historic performance. Commission investigations often take around six months and the delay can be enough to put off the bidder. Gilt-edged or Treasury bonds usually pay out interest twice a year. The balance of payments accounts record all flows of money in and out of a country. Channels of distribution: The channel used in the transfer of goods or merchandise from a manufacturer to the end user. This is a body which decides whether a monopoly, or a potential monopoly, is in the public interest. This is the tendency of economies to move through periods of boom and bust, with fluctuations in economic growth occurring every five years or so. Put simply, if the original stockholders paid £100 to buy their stock and the bank has made £10 in profits each year since, paid out no dividends and made no losses, after 10 years the bank’s tier one capital would be £200. A business glossary is a means of sharing internal vocabulary within an organization. Glossary of Int’l Business Terms Global connections anytime, anywhere Acceptance - This term has several related meanings: (1) A time draft (or bill of exchange) that the drawee has accepted and is unconditionally obligated to It is the apex of all types of banks. Our glossary contains the most common phrases and jargon used together with the definition of what it actually means. Some bear markets are short – bad news creates a panic and stocks are sold off suddenly. Earnings Before Interest and Taxes. In the US, the rule is every quarter. The Business Glossary enhances Data Governance, through an organized list of terms, with specific meanings. It is a statement of account that presents summary of assets and liabilities of a business in a well arranged form, so that the financial position of the business is clearly ascertained. By purchasing a bond you are lending money to the institution issuing the bond. Investment grade bonds are considered to be at the lower end of the risk-scale because large, famous companies with good finances and most governments are unlikely to go bankrupt and default on the IOU. The City Corporation is Britain’s oldest local government; it has the status of a county, with powers that exceed those of London’s 32 other boroughs, notably control of its own police force. Entrepreneur in Heat. It is generally used for large purchases such as cars or homes. According to generally accepted accounting principles, the sum of the owner's (shareholders') equity and a business' liabilities equals the total assets a business has. Actuaries are employed by insurance companies and pensions providers to calculate factors such as life expectancy, accident rates and likely payouts by using complex mathematical formulas. Another way of structuring the business glossary is to use are… Business design enables organizations to deliberately craft a business model to prove sustainability in the marketplace by validating the building blocks of a business model. These are their half-year profits. An economic indicator of future inflation, because higher earnings cause price rises if they are not matched by increases in productivity. The individual assets of the company, such as its equipment, real estate, brands or intellectual property, may be more valuable than the company as a whole due to such factors as poor management or poor economic conditions. Use the Wix Encyclopedia to easily search for the business terminology all professionals need to know. They were invented in the late 1990s and are a form of insurance on bonds issued by companies or countries that investors buy and sell. Learn how your comment data is processed. Leaving the parent … Budget is simply a formal statement of estimated income and expenses based on future plans and objectives. The field of marketing is very diverse and ranges from word-of mouth-advertising to corporate brochures. Chapter 11 is a chapter of the US bankruptcy code that gives a company an opportunity to reorganize and emerge from bankruptcy. As loans or credit agreements can vary in terms of interest-rate structure, transaction fees, late penalties and other factors, a standardized computation such as the APR provides borrowers with a bottom-line number they can easily compare to rates charged by other lenders. In theory, equity analysts are supposed to provide impartial information on the companies they analyze. Charges are often in the 4% – 5.5% a year range, although these can be lower if you buy through a discount broker or fund supermarket without advice. These financial products are primarily used as an income stream for retirees. Some of these intermediaries may call themselves “agents” or “consultants” and may or may not be tied to offering deals from a limited pool of suppliers. The bid and offer price are made by the market maker. Save articles for later Add … The OFT can refer takeovers to the Competition Commission, which may find against a proposed deal on the grounds that it would harm competition in the UK. The annual equivalent rate (AER) is the interest rate for a savings account or investment product that has more than one compounding period. The notion of impartial advice to investors took a huge knock in the Wall Street scandals of recent years. This site uses Akismet to reduce spam. There is a big risk, though, that the exchange rate moves against you. Some acronyms have different meanings outside of the world of business. If an investor wants to buy shares, they will “hit” the market on the offer side. All flows of money are added together and grouped according to their type. Please note that because there are so many different descriptions applied to fees, we have grouped all the different … This should cover the cost of rebuilding the property, not its market value. Asset-backed commercial paper is a form of IOU that banks use in money markets to lend and borrow from each other. Plant and equipment is the same as long-term, fixed, or capital assets. The percentage of the money you pay into a pension scheme or life insurance policy that is actually invested. If this fails, the administrator will sell the company’s assets to make at least a partial payment to creditors. An asset is anything a business owns. A term often heard is “management buy-out” which means the management buys company shares to become the owner of that company. Governments are in a constant battle to even out the peaks and troughs – Gordon Brown prides himself on ending boom and bust – but none has ever completely solved the problem. By using the Data Catalog business glossary, an organization can describe its business vocabulary as a hierarchy of terms, and it can create a classification of terms that better represents its business taxonomy. The UK’s central bank, the Bank of England was originally founded in 1694 by a group of private bankers to raise money for the crown. Few banks are willing to lend any more against these questionable assets and are reluctant to roll them over, preferring to have their cash back. For example, an ‘agreement’ is a general term that can be used to classify other, more specific terms like ‘contract’ and ‘purchase order’. Upon annuitization, the holding institution will issue a stream of payments at a later point in time. The prolonged bear market of 2000-2002, following the bursting of the hi-tech bubble, was the worst since the 1929-1932 crash when overvalued stocks, economic crises in Europe, banking crises in the US, reductions in international trade and a lack of confidence led to three years of massive declines. Note: This glossary is meant to be a casual summary of terms to help people feel more comfortable with business concepts. This is the tax paid to the Inland Revenue when you make a capital gain, that is, a profit from selling an asset, which could be anything from shares to a painting or a holiday home. The bear markets of 1987 and 1998 fit into this category. If it looks like an issuer might have trouble paying, its CDS price rises because the bond is more risky and it will cost more to insure. Business Glossary – Top Business Terms Definitions A-Z, Nigerian Stock Exchange – All you need to know, All forms of business organizations and their features, 5 Tips for Succeeding in Your Own Small Business, 5 Ways to Improve Your Sales Team’s Productivity, Is Having A Limited Budget Taking A Toll On Your Marketing Dreams? APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan. The amount you pay depends on what valuation band your property falls into. Producers pass the cost on to consumers through price rises. Cost-push inflation occurs when production input costs – wages, raw materials – rise. Yes, there are more business terms to be added to this list soon. Cash commodity: The actual physical commodity or asset that is purchased or sold and the payment rendered immediately is known as a cash commodity. This is a monthly CBI survey on conditions in the industrial sector. Chapter 11 bankruptcy is a form of corporate financial reorganization in which a company’s assets gets sold off to pay creditors. Laura Lake is a former writer for The Balance Small Business. Duplicate names aren't allowed. This is the appellation given to a company considered to be large, safe and prestigious. All businesses need assets to produce products or sell services. If a bureau de change buys and sells all day long (and the exchange rates do not change) they will make money on the spread. You will usually need to find a substantial deposit, often around 20%, and guarantee that the rent on the property will more than cover mortgage repayments. The smaller the spread, the better the deal is likely to be for the buyer. Capitalization: The long-term financing amounts and terms used by a firm which includes within its folds, things like common stock, preferred stock, retained earnings and long-term debt. Bid – offer spread is used to describe the buying price (offer) and selling price (bid) of shares, currency, bonds or other financial instruments. Economic expansions tend inexorably to create bubbles in share or house prices or both, which inevitably burst. This includes any fees or additional costs associated with the transaction but does not take compounding into account. In Nigeria, it is called the Central Bank of Nigeria CBN. The generic term used to describe an intermediary between two parties, generally a buyer and a seller. Business Constraint (s) Business constraints are limitations placed on the solution design by the organization that needs the solution. In the UK, it is the Bank of England. Business Glossaries help define terminology across business units. It involves taking advantage of the difference in the price of a share or currency, usually in two different markets. A business arrangement in which the day-to-day operations are controlled by one or more general partners and funded by limited or silent partners who are legally responsible for losses based on the amount of their investment. The part of the balance of payments that records a nation’s incoming and outgoing investment flows, such as payments for parts of or entire companies (direct or portfolio investment), stocks, bonds, bank accounts, real estate and factories. Before digging deep into search engine optimization, you should be familiar with these terms and Arbitrage is basically buying a security in one market and simultaneously selling it in another market at a higher price, profiting from the temporary difference in prices. Their work contradicts random walk theory. Individuals may also be able to file for Chapter 11 bankruptcy. Most banks have been unable, as well as unwilling, to state how much the write-down of those asset values will cost them, and how much of a black hole is in their balance sheet. Most business glossaries share certain characteristics such as standard Data Definitions and documentation of them; Clear definitions with explanation of exceptions, synonyms, or variants, as well as: The difference between the two prices is the spread. This is a key measure of UK inflation which is used to assess the government’s inflation target and which the Bank of England’s monetary policy committee works to achieve. Markets where producers combine with manufacturers and speculators to create a smoothly functioning.! Of economics is a big risk, though, that the world is not to! Company or bankruptcy price Index risk, though, that the world business..., N60 and N100 is N50 ) by purchasing a bond you are lending money to the end of owners! 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