100 finance terms in english you should know

This document presents 100 essential financial terms in English, designed to help students master key concepts in finance. The terms are organized into categories, including Basic Financial Terms, Financial Metrics & Ratios, Investment & Stock Market Terms, Banking & Loans, Corporate Finance & Business Operations, Government & Economic Terms, and Financial Statements. Each term is accompanied by a clear definition to facilitate learning.

Should Know

A Comprehensive Guide for Students

May 11, 2025

For educational use in teaching finance concepts to students.

This document presents 100 essential financial terms in English, designed to help students master key concepts in finance The terms are organized into categories, including Basic Financial Terms, Financial Metrics & Ratios, Investment & Stock Market Terms, Banking & Loans, Corporate Finance & Business Operations, Government & Economic Terms, and Financial Statements Each term is accompanied by

a clear definition to facilitate learning

1 Basic Financial Terms

Assets Anything a company or person owns that has value, like cash,

buildings, or equipment

Liabilities Debts or obligations a company owes, such as loans, salaries, or

unpaid bills

Equity The owner’s share in a company, calculated as total assets

minus total liabilities

Revenue The total money a company earns from selling goods or

services before expenses

Expenses The costs a company incurs to run its business, like rent, wages,

and utilities

Profit (Net Income) What remains after subtracting expenses from revenue; the

company’s earnings

Gross Profit Revenue minus the direct costs of making a product or

providing a service

Operating Income Profit from a company’s core business activities, excluding

taxes and interest

Cash Flow The movement of money in and out of a business, indicating its

liquidity

Balance The amount of money in an account or owed on a loan at a

specific time

Capital Wealth or resources available for investment or business

operations

Net Worth The total value of an individual’s or company’s assets minus

liabilities

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2 Financial Metrics & Ratios

Net Profit Margin A percentage that shows how much of each dollar in revenue

turns into profit

EBITDA Earnings Before Interest, Taxes, Depreciation, and

Amortization - a measure of profitability that ignores certain costs to focus on core earnings

Return on Investment

(ROI)

A measure of how profitable an investment is, comparing gains

to costs

Debt-to-Equity Ratio

(D/E Ratio)

A measure of a company’s financial health by comparing its total debt to its total equity

Return on Assets (ROA) A measure of how efficiently a company uses its assets to

generate profit

Return on Equity (ROE) A measure of how effectively a company uses shareholders’

money to generate profit

Liquidity Ratio A measure of how easily a company can pay its short-term

debts using its available cash and assets

Debt-to-Income Ratio

(DTI)

A measure of how much debt a person has compared to their income, used by lenders to assess creditworthiness

Current Ratio The ratio of current assets to current liabilities, indicating

short-term financial health

Quick Ratio A stricter measure of liquidity, excluding inventory from

current assets

Gross Margin The percentage of revenue remaining after subtracting the cost

of goods sold

Operating Margin Ratio The percentage of revenue left after operating expenses,

reflecting operational efficiency

Price-to-Book Ratio (P/B

Ratio)

Compares a company’s market value to its book value, assessing stock valuation

Earnings Per Share (EPS) A company’s profit divided by its number of outstanding

shares, indicating profitability per share

Asset Turnover Ratio Measures how efficiently a company uses its assets to generate

sales

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3 Investment & Stock Market Terms

Market Capitalization

(Market Cap)

The total value of a company’s shares in the stock market

Price-to-Earnings Ratio

(P/E Ratio)

A measure that compares a company’s stock price to its earnings per share

Index Fund A type of investment fund that follows a specific stock market

index, like the S&P 500

Mutual Fund A pool of money from many investors used to buy a diversified

portfolio of stocks, bonds, or other assets

Hedge Fund A private investment fund that uses high-risk strategies to try

to earn high returns

Stock Split When a company divides its existing shares into more shares to

make them more affordable for investors

Bear Market A period when stock prices are falling, often leading to investor

pessimism

Bull Market A period when stock prices are rising, leading to investor

optimism

Dividend Yield The percentage of a company’s stock price paid out as

dividends annually

Exchange-Traded Fund

(ETF)

A fund traded on stock exchanges, holding assets like stocks or bonds, often tracking an index

Portfolio A collection of investments owned by an individual or

institution

Volatility The degree of variation in a stock’s price over time, indicating

risk

Short Selling Selling borrowed shares with the hope of buying them back at a

lower price

Initial Public Offering

(IPO)

The first time a company sells its shares to the public

Blue Chip Stocks Shares of large, stable companies with reliable performance and

dividends

Capital Gains Profits from selling an asset at a higher price than its purchase

price

Diversification Spreading investments across various assets to reduce risk

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4 Banking & Loans

Annual Percentage Rate

(APR)

The total cost of borrowing money, including interest and fees, shown as a yearly percentage

Adjustable-Rate

Mortgage (ARM)

A home loan where the interest rate can change over time

Escrow A third party holding money or assets until certain conditions

are met, often used in real estate transactions

Foreclosure When a lender takes back a home because the borrower failed

to make mortgage payments

Underwriting The process where banks or lenders assess the risk of giving

someone a loan or insurance

Subprime Loan A loan given to borrowers with poor credit, usually with higher

interest rates

Debt Consolidation Combining multiple debts into one loan, usually to get a lower

interest rate or simplify payments

Fixed-Rate Mortgage A home loan with a constant interest rate throughout the loan

term

Credit Score A numerical rating of a person’s creditworthiness, used by

lenders to assess loan risk

Collateral An asset pledged to secure a loan, which the lender can seize if

the loan is unpaid

Interest Rate The percentage charged by a lender for borrowing money, or

earned on savings

Overdraft When an account balance goes below zero due to withdrawals

exceeding available funds

Line of Credit A flexible loan allowing borrowers to draw funds up to a set

limit as needed

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5 Corporate Finance & Business Operations

Working Capital The money available to cover short-term expenses, calculated

as current assets minus current liabilities

Capital Expenditures

(CapEx)

Money spent on buying, upgrading, or maintaining physical assets like buildings or equipment

Depreciation The gradual loss of value of an asset over time, like a car losing

value as it ages

Amortization The process of spreading out the cost of an intangible asset (like

a patent) over time

Accrual Accounting A method of recording financial transactions when they

happen, rather than when cash is exchanged

Cost of Goods Sold

(COGS)

The direct costs of producing goods, including materials and labor

Operating Margin A percentage that shows how much profit a company makes

from its sales after paying for operating costs

Financial Leverage Using borrowed money to increase potential returns on an

investment

Equity Financing Raising money for a business by selling ownership shares

instead of taking on debt

Debt Financing Raising money for a business by borrowing, typically through

loans or bonds

Break-Even Point The level of sales where total revenue equals total costs,

resulting in no profit or loss

Cash Conversion Cycle The time it takes for a company to convert investments in

inventory into cash

Retained Earnings Profits kept by a company for reinvestment rather than paid

out as dividends

Budget A financial plan outlining expected income and expenses over a

period

Fixed Costs Expenses that remain constant regardless of production levels,

like rent

Variable Costs Expenses that vary with production levels, like raw materials

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6 Government & Economic Terms

Consumer Price Index

(CPI)

A measure that tracks changes in the prices of everyday goods and services to gauge inflation

Inflation Rate The percentage increase in prices over time, reducing the

purchasing power of money

Federal Reserve (The Fed) The central bank of the U.S., responsible for controlling

inflation, interest rates, and money supply

Macroeconomics The study of how the entire economy functions, including

inflation, growth, and unemployment

Microeconomics The study of individual businesses and consumers and how

they make financial decisions

Quantitative Easing (QE) A central bank policy of printing money to buy assets and

stimulate the economy

Quantitative Tightening

(QT)

A policy where the central bank reduces the money supply to control inflation

Stagflation A situation where the economy faces slow growth, high

inflation, and high unemployment at the same time

Capital Structure The mix of debt and equity a company uses to finance its

operations and growth

Dividends Payments made by a company to its shareholders, usually from

profits, as a reward for investing in the company

Gross Domestic Product

(GDP)

The total monetary value of all goods and services produced within a country

Fiscal Policy Government use of taxation and spending to influence the

economy

Monetary Policy Central bank actions to control money supply and interest

rates

Trade Deficit When a country imports more goods and services than it

exports

Bond Yield The return an investor earns from a bond, expressed as a

percentage

7 Financial Statements

Balance Sheet A financial statement showing a company’s assets, liabilities,

and equity at a specific moment in time

Income Statement A report that shows a company’s revenues, expenses, and

profits over a certain period

Cash Flow Statement A record of all cash moving in and out of a business, helping

track liquidity

Statement of

Shareholders’ Equity

A report showing changes in a company’s equity over a period

Financial Audit An independent review of a company’s financial statements to

ensure accuracy

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Closing Note

This guide provides 100 essential finance terms to build a strong foundation for students learning fi-nancial concepts Use this document as a reference for classroom discussions and practical applications

in finance

For Educational Use