Finance Terms You Should Know

Starting your own business requires familiarity with the complex world of finance. Do not worry if you do not speak the lingo; Fast and Easy Funds is here to clear up the confusion with the ABCs of finance terms.

Net Income: A business’s total comprehensive income, including earnings and profit after all expenses have been deducted.

Gross Income: The amount of money you earn before anything is deducted for taxes or other expenses.

Stocks: Equities or shares in a company. Essentially, having stock in a company gives you a partial claim on their assists and earnings.

Growth Stocks: Shares of companies that investors believe will grow faster than usual. They are high risk and high reward, as they rise fast and fall fast

Value Stocks: Shares of companies that investors feel are undervalued. Shares are sometimes undervalued due to bad publicity or a negative quarterly report; however, they have a higher potential.

APR: Annual percentage rate, or the amount of interest you gain from keeping your money in the same account over a year.

Bonds: When you lend money to the government or a corporation, you receive it back with added interest over time.

Dependent: A person who depends on your income financially. This is typically a child or someone you support.

Mutual Fund: An investment made up of a pool of funds collected from many investors, investing in things like stocks and bonds.

Cash Flow: The net operating income – excluding total debt of service payments

Debt Ratio: A debt to income comparison.

Asset Allocation: An investment strategy that adjusts the percentage of each asset in an investment per the investors risk tolerance, goals, and investment period.

Fee Agreement: The agreement between a broker and a borrower discussing compensation and repayment.

Cash Advance: Short term loans that allow cash withdraws against your credit card.

Easy Term Loan: A loan for a specific amount with an agreed repayment schedule.

Account Receivable: The money a company has the right to receive after a good or service has been provided.

Capital: Money provided by Fast and Easy Funds toward a purpose, such as starting a company.

FICO Score: Stands for “Fair Isaac Corporation” and is the number used by banks to determine your credit worthiness. Combines several factors such as payment history, length of credit history, and amount owed. The higher the score, the better off you are.

Collateral: Something pledged as security for repayment of a loan. If the borrower is unable to repay their debts, the item will be forfeited.

Compound Interest: The interest you earn on the amount deposited in an investment, added to accumulated interest over time.

 

Get familiar with these finance terms and allow for the financing specialists at Fast and Easy Funds to guide you through the process of obtaining working capital for your company.