Glossary of terms

FINANCE

Program Grande Ecole 2nd year

Année 2016-2017

english/french glossary of terms

Y.Rannou

A

Accounts payable. Accounts payable are equal to Supplier payables and related accounts minus advances and deposits paid on orders. (French equivalent: compte Fournisseurs- effets à payer)

Accounts receivable. Accounts receivable are equal to Customer receivables and related accounts (debtors in UK) + Outstanding bills discounted - Advances and deposits on orders being processed. (French equivalent: compte Clients- effets à recevoir)

Accrued income. Income earned in a given period that will be received in the following periods. (French equivalent: Produits à recevoir)

Accrued expenses. Charges relating to goods or services supplied in the current period, not yet paid for. (French equivalent: Charges à payer)

Amortisation. Amortisation is the way that the loss in Value of an Intangible asset due to its use is accounted for. It is a "non-cash" charge insofar as it merely reflects arbitrary accounting assessments of the loss in Value. (French equivalent: Amortissement)

Assets. Assets represent the uses to which the resources the company raises from all providers of funds (Shareholders, creditors, suppliers, tax authorities, etc.) are put. Two major categories of assets: Fixed assets and Current assets. (French equivalent: Actifs)

Asset turnover ratio. The asset turnover ratio is an efficiency ratio that measures the company's ability to generate sales from its assets by comparing net sales with average total assets. In sum, it shows how efficiently a company can use its assets to generate sales. (French equivalent: Taux de rotation de l’actif)

B

Balance sheet. The balance sheet is a snapshot of all Assets and Financial resources (i.e. liabilities) at a given moment in time. It is always at equilibrium, guaranteed by the Double-entry accounting practice adopted by all companies. (French equivalent: Bilan)

Bankruptcy costs. Bankruptcy is triggered when a company can no longer meet its short-term commitments and thus faces a liquidity crisis. Bankruptcy generates both direct (court proceedings, lawyers, etc.) and indirect costs (loss of credibility vis-à-vis stakeholders, loss of certain business opportunities, etc.). These costs have an impact on the choice of Financial structure. (French equivalent: Coûts de liquiditation ou coûts associés à la détresse financière)

Basis point. Basis point is 1/100 of a percentage point (French equivalent: Point de base)

Book value. An accounting measure that gives the Net worth of an asset according to its carrying Value on the company's Balance sheet. (French equivalent: Valeur comptable)

Bookkeeping. Bookkeeping refers to a process whereby all the transactions affecting the Assets and Liabilities of a firm are systematically recorded. (French equivalent: Saisie des opérations comptables)

By-nature (or By-Category) income statement format. This format of Income statement shows material consumption, staff costs, external costs depreciations. (French equivalent: Compte de résultat par nature de charges)

By-destination income statement format. This format of Income statement shows the Cost of goods sold, selling and marketing Costs, research and development Costs and general and administrative Costs. (French equivalent: Compte de résultat par fonction)

C

Capital employed. Capital employed is the sum of a company's Fixed assets and its Working capital. It is financed by both Shareholders' equity and Net debt. Also called Invested Capital. (French equivalent: Actif Economique)

Capital expenditures. Capital expenditures (also called Capex) are Acquisitions of tangible Fixed assets and intangible Fixed assets. (French equivalent: Investissements)

Cash flow budget. It is a document forecasting Future trends in the cash flow of the company that allows the treasurer to manage Interest expense. (French equivalent: Budget de trésorerie)

Cash flow statement. It is a document informing about past trends in the cash flow of the company that are usually classified by different categories: operating, financing and investing activities. Also called Statement of changes in financial position. (French equivalent: Tableau des flux de trésorerie)

Cash flow Return on investment (CFROI). CFROI is an accounting indicator of Value creation. In its simplified version, CFROI = EBITDA/ Capital employed. Thus, it is compared to the cost of capital. It is used particularly in sectors in which Charges to Depreciation do not necessarily reflect the normal deterioration of Fixed assets. (French equivalent: Taux de rentabilité interne des investissements)

Comparative analysis. Comparative analysis consists of asessing a company's key Profit ratios so that they can be compared with the average ratios of companies operating in the same sector of activity. Benchmarking is a synonym of Comparative analysis. (French equivalent: Analyse comparée)

Compound Annual Growth Rate (CAGR). It measures the annual growth percentage of a financial indicator (such as turnover, EBITDA or Net profit) over a period of several years. (French equivalent: Taux de Croissance Annuel Moyen (TCAM))

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