Business English Vocabulary: Finance
Millions of people around the world are employed in the financial services sector, dealing in and overseeing trillions of dollars every day. Whether you’re interested in a career in financial services or just want to familiarize yourself with some of the key terms, this guide will give you a good starting point.
Assets are anything that is owned or controlled by a company that generates money. They can be tangible (like property) or intangible (like brand reputation).
An audit examines a company’s accounts and records to ensure that financial statements are accurate and that it is performing as expected. Once an audit is complete and the results evaluated, a company may make any changes that are necessary. Audits are essential to check that a company isn’t breaking any laws.
A balance sheet is a summary of a company’s finances, including all assets, revenue, and liabilities.
This refers to the money needed for any assets or resources that a company must buy in order to run itself. New businesses often refer to start-up capital, meaning the initial amount they need to get going.
When someone owns stocks or shares in a company, the income they receive from them is called a dividend.
This represents the value of a company, by calculating the difference between its assets and liabilities.
This is the difference between the amount of revenue a company makes and the cost of making its products or providing its services. It’s different to net margin/profit, because it doesn’t take into account any deductions for outgoings, such as salaries, expenses, and tax.
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When a company takes out a loan, it must repay the full amount of that loan, plus an additional amount, which is known as the interest and is normally a percentage figure.
This is the amount a company owes as a debt or obligation, which must appear on the balance sheet and be paid from its revenue or assets.
The net profit is the money left from the gross profit once all deductions are made. It is often informally referred to as the ‘bottom line’ because traditionally this figure appeared at the very bottom of financial statements.
The money from sales a company receives from its normal business activities, usually selling products or services, is known as its revenue, which is sometimes called turnover. Revenue tends to be reported as a weekly, monthly, quarterly, or yearly figure, rather than individual sales amounts.
Return on Investment (ROI)
When a company makes an investment to grow its business and increase its performance – such as buying another company, entering a new market, or even employing new staff – it is looking to get back more than the amount it invested. Evaluating the ROI is key to ensuring profitability.
When a company is listed on the stock market, people can buy a share of ownership in that company, through stocks or shares. Each share represents a unit of value as a proportion of the total value of the company.