Definition Private equity refers to a form of investment in which funds are used to acquire, invest in, or provide financing for privately held companies or businesses. What is private equity? These investments are typically made by private equity firms, which are specialised financial institutions that manage funds dedicated to private equity investments. Here are […]
Definition ‘Interest rate’ refers to the cost of borrowing money or the return earned on an investment, typically expressed as a percentage. What is an interest rate? An interest rate is a fundamental concept in finance and economics. When you borrow money, such as taking out a business loan or using a credit card, the […]
Definition The J-curve effect is an economic and financial concept that describes the short-term negative impact of a devaluation or depreciation of a country’s currency on its trade balance, followed by a longer-term improvement in the trade balance. What is the J-curve effect? The J-curve effect is a useful concept for understanding the lag between […]
Definition Job costing is a cost accounting method used by businesses to track and allocate the costs associated with producing specific products or providing particular services. What is job costing? Job costing is a detailed and precise approach to cost accounting that is particularly useful in industries where products or services are custom-made or where […]
Definition In business and commerce, a kickback refers to a form of bribery or unethical practice where someone, typically an employee or a contractor, receives money, goods, or services in exchange for providing favourable treatment or business opportunities to another person or entity. What are kickbacks? Kickbacks are considered illegal and unethical because they involve […]
Definition A limited liability company (LLC) is a type of business structure that combines elements of both a corporation and a partnership or sole proprietorship. What is a limited liability company? It offers limited liability to its owners, which means that their personal assets are generally protected from the company’s debts and liabilities. Here are […]
Definition A line of credit is a financial arrangement that allows an individual or a business to borrow a specific amount of money from a lender up to a predefined limit. What is a line of credit? Unlike a traditional business loan where you receive a lump sum amount upfront, a line of credit provides […]
Defintion Amortization refers to the process of gradually reducing or paying off a debt, such as a loan or a mortgage, over a specific period of time through regular payments. What is amortization? These payments typically consist of both the principal amount borrowed and the interest that accrues on the outstanding balance. Amortization schedules outline […]
Definition The annual percentage rate (APR) is a standardised way of expressing the overall cost of borrowing, including both the interest rate and certain fees, as a single percentage. It’s designed to provide borrowers with a clearer understanding of the true cost of a loan or credit product. What is the annual percentage rate? The […]
Definition Bonds are debt securities issued by governments, municipalities, corporations, and other entities to raise capital. When an investor buys a bond, they are essentially lending money to the issuer in exchange for regular interest payments and the return of the principal amount at the bond’s maturity. What is a bond? Bonds are popular investments […]
Definition A finance broker is a professional who acts as an intermediary between individuals or businesses seeking financial products or services and financial institutions that provide those products or services. What is a broker? They help connect borrowers with lenders and assist in finding suitable financial solutions based on the borrower’s needs and financial situation. […]
Definition Cash flow refers to the movement of money into and out of a business or individual’s financial accounts over a specific period of time. It represents the net amount of cash generated or consumed by various financial activities, such as operating, investing, and financing activities. What is cash flow? There are three main components […]
Definition Collateral refers to assets or property that a borrower pledges to a lender as a security for a loan. What is collateral? This serves as a guarantee for the lender that if the borrower is unable to repay the loan, the lender can seise and sell the collateral to recover the borrowed amount. Collateral […]