Financial Terms “F”


Financial Terms Glossary

– F –


FASB

See Financial Accounting Standards Board.


FDIC

See Federal Deposit Insurance Corporation.


Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) is a U.S. agency that insures consumer deposits in commercial banks. As of 2010, the FDIC insures consumer deposits up to $250,000.

The FDIC insures commercial banks and the National Credit Union Administration (NCUA) insures credit union accounts.


Financial Accounting Standards Board

Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAP), the financial reporting standards in the United States.


Financial independence, retire early

Financial independence, retire early (FIRE) is a lifestyle movement to achieve financial independence with the goal of retiring early. This movement encourages high savings rates and aggressive investments in stock index funds to achieve wealth.


Financial Industry Regulatory Authority

The Financial Industry Regulatory Authority (FINRA) is a private organization that regulates brokers and security exchanges in the United States.


Financial literacy

Financial literacy is the ability to understand and use financial skills. This includes personal finance, debt management, budgeting, and investing.


Finance

Finance is the study of money and investments. In a business, it is called corporate finance. For individuals, it is called personal finance. Finance broadly includes accounting, financial statements, and investments.


Financial ratios

Financial ratios are used to evaluate a company. Common examples are the current ratio, return on assets, and debt ratio. The typical categories of financial ratios are

  • liquidity ratios
  • activity ratios
  • debt ratios
  • profitability ratios
  • valuation ratios

Financial statements

Financial statements report the financial condition of a company and its financial position. The three financial statements are:

  1. income statement
  2. balance sheet
  3. cash flow statement

Financial statement analysis

Financial statement analysis examines the financial statements to make decisions. It uses three basic types of analysis:

  • horizontal or trend analysis
  • vertical or common-size analysis
  • ratio analysis

FINRA

See Financial Industry Regulatory Authority


FIRE

See financial independence, retire early.


Fraud

Fraud is intentional deceit for the purpose of illegally gaining assets or legal rights. Fraud can be a violation of civil law or criminal law.


Fraud triangle

The fraud triangle is a model to explain the risk of fraud. For a person to commit fraud there are three necessary conditions. These three conditions are:

  1. motivation
  2. opportunity
  3. rationalization

Future value

Future value is a time value of money (TVM) concept. It is a lump sum of money at a date in the future. It can also be calculated as the value of all future cash flows. Future value uses compound interest. Compounding is the process of growing money into the future. Financial calculators and Excel use the FV function to calculate future value.

The future value formula uses the following variables: PV = present value, i = periodic interest rate, and n = number of periods.


future value formula

Jeff Mankin

Jeff Mankin teaches financial literacy. His website is FinallyLearn.com.

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