Finance Vocabulary | Business English Vocabulary

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
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).

Audit
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.

Balance sheet
A balance sheet is a summary of a company’s finances, including all assets, revenue,
and liabilities.

Capital
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.

Dividend
When someone owns stocks or shares in a company, the income they receive from
them is called a dividend.

Equity
This represents the value of a company, by calculating the difference between its assets
and liabilities.

Gross margin/profit
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.

Interest
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.

Liability
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.

Net margin/profit
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 statementsIt’s time to get planning!

Revenue
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.

Shares
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.