Financial terms in English, Dutch and German by sorted theme

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A

   
Absorption Costing Profit and Loss Statement Methodology at which a part of the indirect cost is allocated to the direct costs centers and as such become a part of the production cost price of the product.
Accounting Principles                                      Accounting Principles Basis for "translating" event into numbers
Accrual accounting = Period recognition Profit and Loss Statement Allocation of the cost to the period depends on the usage for revenue purposes. When purchased, produced or paid is irrelevant. If produced but not sold, on balance sheet. If used for revenue but no invoice received jet a manual booking is made (latter is accrual)
Accuracy of the cost Accounting Principles All costs are correct 
Acid test = Quick Ratio Liquidity ratio Current Assets – inventories / short term debt.
Activity Based Costing (ABC) Profit and Loss Statement Method of cost allocation that uses cost drivers like number of employees for the HR department or M2 for housing as the basis for the allocation of the secondary costs to the primary functions based on their usage.
Activity ratio’s Activity ratio's How well is the company managed?
Annual Report                  Annual Report The Annual report consists out of the report from the Corporate Board and the Supervisory Board, the financial statements, the accountant’s declaration and other information with detailed explanations of the financials.
Asset turnover = Day's Assets Outstanding Activity ratio's Assets / Revenues * 365.
Assets Balance Sheet On the left side of the Balance sheet all items are listed the company uses to run the business.

B

   
Balance sheet Balance Sheet Snapshot of a moment in time in which the assets, debts and equity of the company are shown.
Break-even point Profit and Loss Statement Number of units / amount of revenue at which the costs (direct and indirect) are equal to revenue.
Budget Profit and Loss Statement, Balance Sheet & Cash Flow Statement Estimated future P&L, Balance sheet or cash flow statement for planning and alignment purposes.

C

   
Capitalising of Expenses CAPEX Profit and Loss Statement & Balance Sheet Costs that occur for the company in one specific year that will lead to better performance in the coming years can be capitalized. Examples are IT systems that are implemented, renovation of buildings or research costs. By putting the cost on the balance sheet the profit in the first year is higher and of the subsequent years the profit will be lower. The expected use (time) of the asset determines the annual depreciation.
Cash flow schedule = Cash Flow Statement Cash Flow Statement Period overview in which the incoming and outgoing money flows are displayed.
Cash Flow Statement = Cash flow schedule Cash Flow Statement Period overview in which the incoming and outgoing money flows are displayed.
Categorical P&L Profit and Loss Statement P&L statement in which the cost are grouped according to the cost categories.
Common shares Balance Sheet Ownership of the firm is build up according to the stock volumes. Common shares have the highest risk and therefore demand the highest return.
Comparability Accounting Principles Between periods and companies
Completeness of the revenue / turnover Accounting Principles All activities are accounted for
Consistent Accounting Principles In the methods used
Consolidation Profit and Loss Statement, Balance Sheet & Cash Flow Statement Combining of several individual companies towards one in which the links (deliveries to and from, profits etc) between the individuals are eliminated.
Continuity Accounting Principles Assuming the company will remain active and does not go bankrupt
Contribution Margin = Gross Profit Profit and Loss Statement Revenue – Direct cost
Cost Profit and Loss Statement Economic value of the used goods, time etc. to realize the revenue.
Cost benefit overview = Profit and Loss (P&L) Profit and Loss Statement Overview which always represents a period in which the economic value of the activities is shown and the accompanying costs that have occurred for realizing the revenues. 
Cost carrier Profit and Loss Statement Primary department of activity to which costs of supporting general activities are allocated. 
Cost categories Profit and Loss Statement The type of costs like personnel cost, travel. Telephone etc. 
Cost center Profit and Loss Statement Department without revenue responsibility with a specific function (like finance, IT, etc). Cost centers always only have loss.
Creditors Balance Sheet Outstanding receivables from your suppliers.
Creditors turnover = Day's Creditors Outstanding Activity ratio's Creditors / COGS * 365 or Creditors / purchasing value * 365.
Current Assets Balance Sheet Assets that are consumed in the process like stocks, cash and debtors. 
Current liabilities Balance Sheet Debt capital that has to be repaid to the lender within 1 year.
Current Ratio  Liquidity ratio Current Assets / short term debt.

D

   
Day’s Inventory Outstanding = Inventory turnover Activity ratio's Inventory / revenue * 365.
Day's Assets Outstanding = Asset turnover Activity ratio's Assets / Revenues * 365.
Day's Creditors Outstanding = Creditors turnover Activity ratio's Creditors / COGS * 365 or Creditors / purchasing value * 365.
Day's Debtors Outstanding = Debtors turnover Activity ratio's Debtors / Revenue * 365.
Debt ratio = Gearing, = Leverage Balance Sheet Debt / Assets  To what level is the company financed (or burdened) by debt?
Debt to Equity ratio Balance Sheet Debt / Equity. There is no perfect Debt Equity ratio.
Debtors Balance Sheet Outstanding receivables from your customers.
Debtors turnover = Day's Debtors Outstanding Activity ratio's Debtors / Revenue * 365.
Depreciation of assets Profit and Loss StatementBalance Sheet The opposite of capitalizing. Reduction of the value of the asset on the balance sheet by reducing a part of the value and taking the costs in the profit and loss statement.
Direct cost Profit and Loss Statement Also often referred to as production cost. Cost that can be allocated directly to the activities  performed / revenues realized. 
Direct method Profit and Loss Statement All cash flows are registered based on the actual in and outflow of money.. 
Discounted Cash Flow method = Present Value  Investment metrics + cash flow year 1 / WACC + cash flow year 2 / WACC2 + ……. Present value of all future cash flows. 
Dividend Profit and Loss Statement & Balance Sheet Payment of (a part of) the Net profit to the holders of the stocks at a public company / to the owners of the private company.

E

   
Earnings Before Interest and Tax (EBIT) = Operating Profit Profit and Loss Statement Revenue – Cost or Contribution margin – Indirect cost
Earnings per share (EPS) Solvability ratio Net profit / number of nominal shares. EPS in relation to the dividend paid provides an indication whether the company is saving up for later / growing or is overpaying stockholders. 
EBITDA Profit and Loss Statement Earnings before Interest, Tax, Depreciation and Amortisation
Equity = Equity, share capital & reserves Balance Sheet The equity of the form consists out of the paid in stock, profit from the past (retained earnings) and provisions

F

   
Finance cash flow Cash Flow Statement Cash flow from the attraction or repayment of loans or the issuing or purchasing of own shares.
Financial Statements Annual Report The Financial statement consists always out of 3 overviews. 
Fixed Assets Balance Sheet Assets that I use multiple times The company needs to be able to produce, or needs to deliver the services like buildings, machines, patens etc. 
Fixed cost Profit and Loss Statement Costs that do not alter with the production volume of the company. (or only at very large volume changes).
Full Time Equivalent (FTE) Profit and Loss Statement Number of hours that is officially worked in the company at a full contract. An FTE can therefore differ by company. Number of people or “heads” in comparison to number of FTE.
Functional P&L Profit and Loss Statement P&L statement at which the function, product or activities form the basis for the allocation of the costs. Examples are P&L by sales region, by product segments etc. 

G

   
Gearing = Leverage = Debt ratio Balance Sheet Debt / Assets  To what level is the company financed (or burdened) by debt?
Goodwill Balance Sheet The difference between the market value at which the company or item has been bought and the book value it represents. A company you buy for the customer base, sales force, knowledge it has. Those items are not on the balance sheet. The sum of the book values are usually lower. The delta is recognized in the accounts of the purchasing company as goodwill.
Gross Profit = Contribution Margin  Profit and Loss Statement Revenue – Direct cost

I

   
Indirect cost = operating expenses (OPEX) = selling, general & Administrative (SG&A). Profit and Loss Statement Cost that cannot be allocated directly to the performed activity or rendered service. predominantly Management, Finance, Sales, R&D, IT etc.
Indirect method Cash Flow Statement Cash flow is deducted from the P&L. First profit is taken and subsequently all non-cash items are corrected for. Example, Depreciation is a cost but not a cash flow. Increase in inventory is profit neutral but reduces cash flow.
Intangible Assets Balance Sheet Assets that you cannot touch that the company needs to be able to produce, or needs to deliver the services rendered like, patents, rights or goodwill.
Interest Profit and Loss Statement Cost of debt
Internal rate of return IRR Investment metrics Investment = cash flow year 1 / IRR + cash flow year 2 / IRR2 + ……. At which interest rate is the current value of the future cash flows equal to the current investment? 
Inventory turnover = Day’s Inventory Outstanding Activity ratio's Inventory / revenue * 365.
Investment cash flow Cash Flow Statement Cash flow from investing or divesting assets of the balance sheet like land, buildings or machinery.
Investment decisions Investment metrics Where to put my money based on Risk and Time

L

   
Leverage = Debt ratio = Gearing  Balance Sheet Debt / Assets  To what level is the company financed (or burdened) by debt?
Liabilities / Debt capital Balance Sheet Capital attracted to the firm by borrowings like obligations, loans and creditors.
Liabilities and Equity Balance Sheet On the right hand side of the balance sheet it is recorded how the Assets have been paid for. 
Liquidity ratio’s Liquidity ratio How well is the company able to repay its short term debt?

M

   
Margin % Profit and Loss Statement Margin / revenue
Market share capital Balance Sheet Market value of the outstanding shares, based on the stock exchange value. This is not recorded on the balance sheet of the company itself.
Material assets Balance Sheet Assets that I can touch Items that the company needs to be able to produce, or needs to deliver the services like buildings, machines, inventory etc. 

N

   
Net Present Value NPV Investment metrics - investment + cash flow year 1 / WACC + cash flow year 2 / WACC2 + ……. What is the current value of all future cash flows related to the investment? The outcome gives an absolute value to the investment. The methodology presumes the WACC of the investment known.
Net Profit Profit and Loss Statement Operating Profit – Interest - Tax Available for the owners of the company.
Nominal share capital Balance Sheet Total carrying value of the shares (as is printed on them) times the number outstanding. This value is registered on the balance sheet.
Notes to the accounts Annual Report Description of the choices made by the Company in preparing the financial statements. These explanations are especially important when comparing companies and to explain changes in methods used. 
Operating expenses (OPEX) = selling, general & Administrative (SG&A) = Indirect cost Profit and Loss Statement Cost that cannot be allocated directly to the performed activity or rendered service. predominantly Management, Finance, Sales, R&D, IT etc.

O

   
Operating Profit = Earnings Before Interest and Tax (EBIT) Profit and Loss Statement Revenue – Cost or Contribution margin – Indirect cost
Operational cash flow Cash Flow Statement Cash flow from regular / normal daily activities of the company.

P

   
Pay Back Period Investment metrics Number of years and months it takes for the original investment to be paid back. The time value of money is not taken into account. This measure is important because it indicates when the next decision can be made. 
Period recognition = Accrual accounting Profit and Loss Statement Allocation of the cost to the period depends on the usage for revenue purposes. When purchased, produced or paid is irrelevant. If produced but not sold, on balance sheet. If used for revenue but no invoice received jet a manual booking is made (latter is accrual)
Preferred stock Balance Sheet Preferred stock holders receive the fixed return after the debt holders have been paid and before common stock holders. Preferred stock sometimes has extraordinary voting rights.
Present Value = Discounted Cash Flow method Investment metrics + cash flow year 1 / WACC + cash flow year 2 / WACC2 + ……. Present value of all future cash flows. 
Pre-tax profit  Profit and Loss Statement Operational Profit – Interest
Price Earnings ratio Solvability ratio How many times the profit do I have to pay to be able to get the share. This measure is an indication of the perceived growth potential of the company.Market price of the share / EPS.
Profit % = Return on Sales ROS Profit and Loss Statement Operational Profit / Revenue.
Profit and Loss Statement (P&L) = Cost benefit overview Profit and Loss Statement Overview which always represents a period in which the economic value of the activities is shown and the accompanying costs that have occurred for realizing the revenues. 
Profit center  Profit and Loss Statement Department with revenue responsibility. These departments are held accountable for the margin or profit generating ability.
Profitability ratio’s  Profitability ratio's How profitable is my company?
Provisions Balance Sheet In the past reserved profit with a specific goal. Most often the cash related to the provisions is used to expand.
Prudence Accounting Principles With estimates remain conservative

Q

   
Quick Ratio = Acid test Liquidity ratio Current Assets – inventories / short term debt.

R

   
Regularity of the expenditures Accounting Principles Is this the goal I want to spend my money on?
Relevance and Materiality  Accounting Principles Available and interesting information
Reliability Accounting Principles Unbiased, neutral and verifiable
Return on Assets ROA Profitability ratio's The cake / number of people at the party  Operational profit / Total assets.
Return on Capital Employed ROCE Profitability ratio's The cake – big brother / cake eaters   Operational profit – tax / Total assets – non interest bearing liabilities.
Return on Equity ROE Profitability ratio's Operational profit / Equity. 
Return on Invested Capital ROIC Profitability ratio's The cake – big brother / cake eaters + baker   Operational profit - tax / Total assets – non interest bearing liabilities + Capitalized R&D + Historic goodwill.
Return on Net Assets RONA Profitability ratio's The cake / cake eaters  Operational profit / Total assets – non interest bearing liabilities.
Return on Sales = ROS Profit % Profit and Loss Statement Operational Profit / Revenue.
Revenu = Sales = Turnover Profit and Loss Statement Economic value of the performed activities or delivered goods from the period described. 

S

   
Sales = Turnover = Revenu Profit and Loss Statement Economic value of the performed activities or delivered goods from the period described. 
Selling, general & Administrative (SG&A) = Indirect cost = operating expenses (OPEX) Profit and Loss Statement Cost that cannot be allocated directly to the performed activity or rendered service. predominantly Management, Finance, Sales, R&D, IT etc.
Sensitivity analyses Investment metrics Investment analyses (NPV, IRR, Pay back) at which several input parameters are calculated based on conservative estimations (worst case) or optimistic estimations (best case) versus the most likely estimations (base case). 
Solvability ratio’s Solvability ratio How well is the company able to repay its long term obligations and future investments?

T

   
Target Profit and Loss Statement Kind of budget but with an improvement aspect included.
Taxes Profit and Loss Statement  
Timeliness Accounting Principles Information should be included on time
Times Interest Earned Solvability ratio EBIT / Interest expense  How likely is it for the providers of debt that the company is able to pay the interest? 
Turnover = Revenu = Sales Profit and Loss Statement Economic value of the performed activities or delivered goods from the period described. 

V

   
Variable cost Profit and Loss Statement Cost that increase or decrease in line with the production volumes.
Variance Profit and Loss Statement Delta between actual realization and budget or target.

W

   
Weighted average cost of capital WACC Investment metrics Return on equity * % of equity + return on debt * (1-tax %) * % debt = WACC The market dictates how much return on the equity is required based on the risk profile from the company. To calculate what the percentage is use above formula. 
Working capital Balance Sheet Current Assets – current liabilities In every day practice the working capital is often worked out as stocks + work in process+ debtors – creditors.