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Definition
| An important financial statement that describes a person's financial position- the assets held, less the debts owed, equal the net worth (general level of wealth) - at a given point in time |
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| income and expense statement |
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Definition
| An important financial statement performance over time by presenting income earned and expenses made during a given period |
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| A detailed financial report looking forward, based on expected income and expenses, used to monitor and control spending |
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Term
| flexible-benefit (cafeteria) plan |
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Definition
| A type of employee benefit plan wherein the employer allocates a certain amount of money, and the employee "spends" that money for benefits selected from a menu covering everything from child care to health and life insurance to retirement benefits |
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| professional financial planner |
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Definition
| An individual or firm that helps clients establish long-and short-term financial goals and develop and implement financial plans to achieve those goals |
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Definition
| The concept that a dollar today is worth more than a dollar received in the future; this is true as long as one can earn a positive rate of return (interest rate) on investments |
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| The value to which an amount today will grow if it earns a specific rate of interest over a given period. It can be used to find the yearly savings needed to accumulate a given future amount of money. |
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Definition
| When interest earned each year is left in the account and becomes part of the balance (or principal) on which interest is earned in subsequent years |
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Definition
| A fixed sum of money that occurs annually |
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Term
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Definition
| Amount invested X Future value factor |
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Definition
| Amount of money desired/Future value annuity factor |
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Term
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Definition
| A useful approximation for estimating how long it will take to double a sum at a given interest rate. Dividing 72 by the annual compound interest rate results in a good estimate of the number of years it will take to double your money. |
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Term
| Number of years to double money = |
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Definition
| 72 / Annual compound interest rate |
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Term
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Definition
| The value today of an amount to be received in the future; it is the amount that would have to be invested today at a given interest rate over a specified time period to accumulate the future amount. |
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Term
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Definition
| The value today of an amount to be received in the future; it is the amount that would have to be invested today at a given interest rate over a specified time period to accumulate the future amount. |
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Definition
| The process of finding present value; the inverse of compounding to find future value. |
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| The actual value of an asset, or the price that it can reasonably be expected to sell for in the open market. |
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Definition
| Assets that are held in the form of cash or can be readily converted to cash with little or no loss in value. They help to meet everyday needs of life and provide for emergencies and unexpected opportunities |
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Term
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Definition
| Assets such as stocks, bonds, mutual funds, and real estate that are acquired for the purpose of earning a return rather than providing a service |
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Definition
| Tangible assets that are immovable, such as land and anything fixed to it, such as a house. It generally has a relatively long life and high cost. |
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Term
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Definition
| Tangible assets that are movable and use to provide the general comforts of life; includes automobiles, household furnishings, and jewelry |
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Definition
| Debts, such as credit card charges, installment loans, and real estate mortgages |
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Term
| current (short-term) liability |
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Definition
| Any debt due within 1 year of the date of the balance sheet |
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Term
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Definition
| Any debt due 1 year or more from the date of the balance sheet |
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Term
| open account credit obligations |
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Definition
| Current liabilities that represent the balances outstanding against established credit lines, which are used to purchase various types of goods and services |
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Term
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Definition
| Loans associated with housing and other real estate purchases; they normally have lives of 15 years or more |
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| consumer installment loans |
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Definition
| Loans ( other than mortgages) for which a series of payments is required over a specified period |
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Definition
| An individual's or family's actual wealth; determined by subtracting total liabilities from total assets |
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Definition
| The actual ownership interest in a specific asset or group of assets |
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Definition
| The financial state in which net worth is less than zero |
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Definition
| A method of preparing financial statements in which only cash expenses are recorded |
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Definition
| Earnings received as wages, salaries, self-employment income, bonuses, and commissions; interest and dividends received from savings and investments; and proceeds from the sale of assets. |
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Definition
| Money spent on living expenses and to purchase assets, pay taxes, or repay debt |
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Definition
| Expenses involving equal payments each period (typically each month). |
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Definition
| Expenses that involve payments of varying amounts from one time period to the next. |
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Definition
| An excess amount of income over expenses that can be used for savings or investments, to acquire assets, or to reduce debt. Results in increased net worth. |
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Definition
| An excess amount of expenses over income resulting in insufficient funds that must be made up by drawing down savings or investments, reducing assets, or borrowing. Results in decreased net worth. |
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Definition
| Total net worth divided by total assets; measures the degree of exposure to insovency |
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Definition
| Total net worth / Total Assets |
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Definition
| Liquid assets divided by total current debts; measures ability to pay current debts |
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Term
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Definition
| Liquid assets / Total current debts |
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Term
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Definition
| cash surplus divided by after-tax income; indicates relative amount of cash surplus achieved during a given period |
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Term
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Definition
| Cash surplus / Income after taxes |
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Term
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Definition
| Total monthly loan payments divided by monthly gross (before tax) income; provides a measure of ability to meet monthly debt obligations in a prompt and timely fashion |
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Term
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Definition
| Total monthly loan payments / Monthly gross (before-tax) income |
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Term
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Definition
| A budget that takes into account estimated monthly cash receipts and cash expenses for the coming year |
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Term
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Definition
| A summary that shows how actual income and expenses compare with the various budget categories and where surpluses or deficits exist |
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