FinanceTalking Financial Glossary

The buying of the trade debts of a company, assuming the task of debt collection and accepting the credit risk, thus providing the company with working capital.

Fair value is the amount of consideration agreed upon in an arm's length transaction between knowledgeable, willing parties who are under no compulsion to act. Fair value is similar to market value. Under IFRS, companies must include in their income statement the change in fair value of their financial assets and liabilities over the course of a year, even though these changes are unrealised.

Financial Accounting Standards. The official accounting standards setting body in the US, FASB, issues Financial Accounting Standards (FAS), which companies must follow if their accounts are to show a true and fair view.

The Financial Accounting Standards Board. FASB is the official accounting standards setting body in the US and issues Financial Accounting Standards (FAS), which companies must follow if their accounts are to show a true and fair view.

Fellow of the Institute of Chartered Accountants.

Free Cash Flow Yield. The free cash flow per share expressed as a percentage of the share price.

The US central bank.

The dividend declared after the year end, which together with any interim dividend forms the total dividend for the year.

A lease in which the lessee acquires all the financial benefits and risks attaching to ownership of whatever is being leased. A finance lease asset is shown on the balance sheet of the lessee, together with the related loan.

Usually the ratio of debt to equity. Gearing is a measure of balance sheet risk - the higher the proportion of debt in the funding mix, the higher profits will be in good times and the lower they will be in bad times. Gearing is associated with risk because it increases the volatility of profits ? and because the lenders have first call on profits. The gearing ratio shows the amount of money borrowed in relation to the equity (or the shareholders' funds). Gearing can also be calculated as the ratio of debt to debt plus equity or the ratio of equity to total assets or debt to EBITDA. In the US, gearing is referred to as leverage.

A UK organisation, set up in 1989 to oversee and support the work of the Accounting Standards Board and the Financial Reporting Review Panel, to encourage good financial reporting.

Financial Reporting Exposure Drafts (FREDs) are published by the ASB for discussion prior to issuing a new accounting standard.

A subsidiary of the Financial Reporting Council (FRC) which reviews accounts to determine whether they have been properly prepared.

Financial Reporting Standards are published by the ASB after consultation with industry and the City. FRSs must be followed by companies if the accounts are to show a true and fair view.

The Financial Services Authority (FSA) is the main financial regulator in the UK and oversees all investment business.

A year that is connected to finance, such as a company's accounting period or a year for which budgets are made up.

The tax year that in the UK runs from the beginning of April to the end of March the following year.

An asset for continuing use in the business, such as property, plant and machinery and office equipment. Fixed assets are also known as capital assets or non-current assets.

Fixed costs tend not to vary with sales volume. For example, head office costs.

The market for gilts and bonds is called the fixed income market. The term 'fixed income' comes from the fact that the interest on bonds (the investor's income) is generally paid at fixed quarterly or six-monthly intervals.

The market for gilts and bonds is called the fixed income market. The term 'fixed income' comes from the fact that the interest on bonds (the investor's income) is contractually fixed and generally paid at fixed quarterly or six-monthly intervals.

A security on which interest is paid at fixed intervals. Gilts and other bonds are fixed income instruments.

The market for gilts and other bonds. It is called the fixed interest or fixed income market because the interest on bonds (the investor's income) is paid at fixed quarterly or six-monthly intervals.

A type of security that gives a fixed stated interest payment once or twice per annum. These include gilts, bonds and preference shares.

A small listed company, too small or illiquid to be included in the FTSE all-share index. Often known as a FTSE fledgling.

To list a company's shares on a stock exchange so that they can be publicly traded. A flotation is also known as an Initial Public Offer (IPO).

An interest rate that changes with the market rate in a predetermined manner usually in relation to the base rate.

Floating rate notes (FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a spread.

The room in a stock exchange, commodity exchange, Lloyd's etc, in which dealing takes place.

The process by which a company's shares are listed on a stock exchange so that they can be traded publicly. Also known as an Initial Public Offer (IPO).

An abbreviation of the term 'fast moving consumer goods'..

The name given to the Financial Times-Stock Exchange 100 share index. Often shown as FTSE.

A broker who specialises in arranging deals in foreign currencies. Most transactions are between commercial banks and governments.

A person who buys and sells foreign currencies, usually as an employee of a commercial bank on behalf of customers. They may also be authorised to speculate.

An international market in which foreign currencies are traded.

A forfeiter accepts at a discount and pays out money in advance for bills of exchange and letters of credit received from foreign buyers or exporters.

Form 20F is the SEC's annual reporting form for non-US companies. It contains three years worth of financial information, together with a management discussion and analysis (MD&A).

Form 8-K is the SEC's current report form, used to report the occurrence of any new material events or corporate changes which are of importance to investors or security holders.

An agreement between two parties on an interest rate to be paid at a specified time in the future.

Forward rate agreement. An agreement between two parties on an interest rate to be paid at a specified time in the future.

The Financial Reporting Council. A UK organisation, set up in 1989 to oversee and support the work of the Accounting Standards Board and the Financial Reporting Review Panel to encourage good financial reporting.

Financial Reporting Exposure Draft. FREDs are published by the ASB for discussion prior to issuing a new accounting standard.

The shares of a listed company that are available to the public (ie not tied up in management hands or in the hands of major shareholders who are unlikely to sell).

The shares of a listed company that are available to the public (ie not tied up in management hands or in the hands of major shareholders who are unlikely to sell).

Floating Rate Notes. FRNs are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a spread.

Dealing on the basis of research or similar information which has not yet been published - i.e. before that research or information is provided to the public.

The Financial Reporting Review Panel. A subsidiary of the Financial Reporting Council which reviews accounts to determine whether they have been properly prepared.

Financial Reporting Standard. FRSs are published by the ASB after consultation with industry and the City. FRSs must be followed by companies if the accounts are to show a true and fair view. The draft standards are called FREDs - financial reporting exposure drafts.

Financial Services Authority. The FSA is the main regulator in the UK. It oversees all investment business and is the UK Listing Authority and as such, operates the rules for listed companies (the UKLA rules).

FTSE is a company owned by the Financial Times and the Stock Exchange, which publishes a series of share indices. The best known index is the FTSE 100 - the top 100 companies. May also be referred to as footsie.

The Financial Times-Stock Exchange 100 share index. The FTSE 100 is a weighted average arithmetic index of the share prices of the 100 largest companies on the London Stock Exchange by free float market capitalisation. The base was 1,000 in January 1984. The constituents are reviewed quarterly.

The Financial Times-Stock Exchange 250 share index. The FTSE 250 is a weighted index of the 250 largest companies by free float market capitalisation after the top 100. The FTSE 350 Index combines the top 100 and the mid 250.

The Financial Times-Stock Exchange 350 share index. A weighted index of the top 350 companies by free float market capitalisation on the London Stock Exchange. The FTSE 350 includes the FTSE 100 and the FTSE 250 indices.

The FTSE all share is a weighted index of all the shares on the London Stock Exchange that are sufficiently frequently traded to meet FTSE's criteria for inclusion. It excludes FTSE fledgling companies.

A small listed company, too small or illiquid to be included in the FTSE all share index.

FTSE, a company owned by the Financial Times and the Stock Exchange, publishes a series of indices, which are used as a barometer of share prices on the London Stock Exchange.

A description of a company whose shares appear on the official list of the main market of the London stock exchange.

Shares which have been issued and paid for in full.

A person who decides which investments a fund should hold. Also called an investment manager, portfolio manager or an asset manager.

A fund which invests in other funds.

Analysis undertaken to determine the value of an investment, usually shares - involves valuing the underlying business, often using discounted cash flow techniques.

Fundamental value is the perceived value of a security (which may differ from its market value), generally calculated using DCF techniques. Also known as intrinsic value.

Factors driving the company's core markets in terms of prices, volumes etc, which in turn drive a company's cash flows.

The ability to exchange or substitute a security for another security of the same type.

The value that a sum of money invested at compound interest will have in the future.

A contract to buy or sell a standard quantity of a commodity, currency, or security for delivery on a fixed date in the future at a price that is fixed now. A future involves a definite purchase or sale and not an option to buy or sell.

Futures involve a contract to buy or sell something for delivery at a fixed date in the future at a price that is fixed now. They involve a definite purchase or sale, not an option to buy or sell and so there is an unlimited possibility of loss. Much of the trade on the futures markets is speculation. Speculators are necessary to provide the contracts which others want for hedging.

Foreign exchange movements. Those movements in the accounts between periods which are wholly attributable to movements in the exchange rates at the different points in time.