Financial Glossary – C
C2C – stands for consumer-to-consumer or customer-to-customer. It refers to the exchange of goods and services among consumers. In other words, one member of the public selling something to another member of the public. It contrasts with B2C, i.e., business-to-consumer.
C-Level Executives – or C-Suite Executives are top corporate officers in a company. The ‘C’ stands for ‘Chief’, as in CEO (Chief Executive Officer) or CIO (Chief Information Officer).
Call to Action – a sales, marketing, and advertising term that refers to a sentence, phrase, or graphic image that attempts to enourage consumers to take action. The aim might be to get them to buy something, ask for more information, subscribe, request a free demo or trial, etc.
Canvassing – calling people by telephone or visiting them door-to-door. Canvassing is cold calling, i.e., the person opening the door or answering the telephone does not know the visit or call is going to happen. People canvass during election campaigns, to recruit new members, to sell things, or to raise awareness. Market researchers sometimes canvass when they are gathering data.
Capital – the assets (other than labor and land) needed for production. Examples include machinery, buildings and vehicles. It also refers to money used to start up a business or expand one, as well as funds used for investments.
Capital Adequacy Ratio (CAR) How CAR is calculated – expresses how capable a bank can absorb losses. It is determined by calculating the ratio of capital to risk.
Capital Appreciation – an increase in the market value of an asset. This occurs when the market price for an asset is higher than what the investor originally paid for.
Capital Assets – things that a business needs to produce its goods or deliver services, like machinery, computer equipment, vehicles, etc. Capital gains tax must be paid if a capital asset is sold.
Capital Controls – measures taken by either a central bank or government to restrict the amount of money flowing in or out of a country. They may include tariffs, volume restrictions, legislation, and minimum-stay requirements.
Capital Flight – when huge quantities of money flow out of a country because its citizens and foreign investors have lost confidence in the economy. Reasons include defaulting on an important debt, a steep increase in taxes, political instability, or a natural disaster.
Capital Flows – the movement of investment money in and out of nations. It does not include money that businesses and individuals use to pay for imported goods. The term includes, for example, the international movement of money in and out of stock and bond markets.
Capital Formation – the expansion of capital goods through savings, which results in economic growth. Capital goods are things like buildings, equipment, machinery, tools, vehicles that are used for producing goods and providing services. Also known as capital accumulation.
Capital Gain – when you sell a capital asset for more than you bought it for, you have made a capital gain. If you sell it for less, it is a capital loss. In most countries, people have to pay capital gains tax.
Capital Goods – products and things that are used to produce goods and services. Examples include buildings, computers, machinery, equipment, vehicles, etc.
Capital Growth – the increase in value of an investment or asset over time. It is measured by comparing an asset’s original value with what it is worth today. Also known as capital appreciation.
Capitalism – an economic system in which industry, trade and production are mainly owned privately and operated to generate profit.
Capitalization – this term has several meanings. 1. The provision of capital for a business. 2. The conversion of assets or income into capital. 3. A quantitative assessment of a firm’s capital structure. 4. Writing or printing words using capital letters, or starting each word with a capital letter.
Capital Markets – markets where long-term debt or equity-backed securities are traded. Funds from savers are directed to companies, organizations and government that require medium- and long-term finance.
Capital Project – a huge project that lasts a long time, costs a lot of money, and is usually extremely complex. Companies undertake capital projects to improve or create a capital asset. When publicly funded, capital projects are usually infrastructure projects.
Captain of Industry – a leading business person who apart of amassing a great fortune, has contributed positively to his or her country and its people by creating jobs, boosting production, improving productivity, or founding colleges, museums and centers of culture. A robber baron, on the other hand, also got rich, but usually at the expense of his/her people and nation.
Captive Market – a group of potential buyers who have to purchase a particular product because there is a lack of choice. The seller has a monopoly. People buying food and drink in sports stadiums, movie theaters, and airports are part of a captive market.
Carbon capture and storage (CCS) – CSS refers to the capture of carbon dioxide (CO2) and its transportation to a safe location for storage.
Carbon Dioxide – or CO2 is a colorless and odorless gas. Carbon dioxide is vital for life on Earth. CO2 is also a greenhouse gas. In other words, it helps keep the planet’s surface warm. There is a global effort to reduce CO2 emissions.
Carbon Market – an environmental policy device that makes businesses and countries pay for carbon emission. Governments set a cap on how much CO2 each company can emit. Those that exceed their cap can purchase leftover allowances from low polluters. Also known as carbon emissions trading, emissions trading, or carbon trading.
Carbon Tax – A carbon tax is an environmental tax on the emissions of carbon dioxide – a heat-trapping “greenhouse” gas. It is a form of carbon pricing.
Career – a job or occupation that you undertake for a major period in your life. Vocations such as the police or medicine are careers. Not all jobs are careers.
Cargo – goods or (agricultural) produce transported by ship, train, motorized vehicles, or airplanes. Freight means the same as cargo. Livestock (cattle, chickens, etc.) may also be classed as cargo when they are being transported.
Car Insurance – a contract between you, a car owner, and an insurance company, in which the insurer protects you in case of an accident. The insurance policy covers, for example, the car repair or replacement costs and medical expenses related to personal injuries.
Cash – the most liquid asset there is. In layman’s terms it means just coins, notes and traveler’s checks. Technically, short-term deposits, checks and other negotiable instruments are also considered as cash.
Cash Accounting – a method of bookkeeping in which payments and receipts are entered on the day they occur, instead of when the orders are placed. More commonly used by smaller enterprises. Contrasts with accrual accounting.
Cash Against Documents – an arrangement in which the buyer, typically an importer, may only collect goods delivered by the seller (exporter) after paying the related bill of exchange in full.
Cash Conversion Cycle (CCC) – measures how long it takes invested money to start appearing in a firm’s cash flow. CCC measures liquidity risk when a company grows. Also known as net operating cycle or cash cycle.
Cash Cow – refers to a brand (product), company division or business that makes good profits in a mature market and does not require heavy reinvestment. The cash cow generally has a leading market share.
Cash Crop – a crop a farmer sells to get money, as opposed to a subsistence crop, which feeds the farmer and his family.
Cash Equivalents – assets than can be rapidly turned into cash; they are highly liquid, are very short term, and have a high credit quality. They are normally grouped with cash (cash and cash equivalents) in a company’s financial statement.
Cash Flow – an expense or revenue stream that increases or decreases a cash account over a specified period. It is the flow of money in and out of an organization, business, or an account.
Cashier – an employee who operates the cash register in a store, movie theater, hotel, hairdresser or other type of business. In the UK it also means a bank employee who deals directly with customers (US: bank teller). In accountancy, a cashier is the person in charge of disbursing and receiving payments.
Cashier’s Check – a check guaranteed by a bank, drawn directly on a customer’s account. The bank assures the receiver that the amount stated will be paid. Also known as a banker’s draft, treasurer’s check, or teller’s check.
Cash Management – managing the amount of money a company receives and pays out and when these receipts and payments occur. It is also a service banks offer to customers, usually their larger corporate ones.
Cash Market – a public market where financial products or commodities are purchased and delivered immediately (up to two working days from trade date). Also known as the spot market or physical market. It contrasts with the futures market.
Cash Ratio – calculated by adding up all cash and cash equivalents, and dividing the total by all current liabilities. It is one of several ways of measuring a company’s liquidity. Also called cash asset ratio or cash coverage ratio.
Cash Register – a machine used in stores, restaurants and other businesses to store money and record the amount received from each sale. It also prints out a receipt. In the UK it is also called a till.
Catfishing – pretending to be someone you are not by setting up a fake social media account. The catfish develops romantic relationships with victims – which can last many years. Their aim is to extract money from them by deception – to con them.
CBD (Cannabidiol) – one of the cannabis plant’s active substances. It is the second most prevalent substance of the cannabis or marijuana plant. CBD, which was discovered in 1940, is a phytocannabinoid. Studies have shown that it could be used for the treatment of epilepsy, pain, and possibly other neurological disorders.
Central Bank – an institution that is in charge a country’s currency, interest rates, and money supply. It is not the same as a commercial bank. It is in charge of how money functions in a country, or a group of countries as is the case with the European Central Bank.
Certificate of Deposit – an interest-bearing, short- or medium-term debt instrument issued by a bank. It is a type of promissory note commonly sold in the USA and other countries by banks, credit unions and thrift institutions. It offers greater interest rates than bank savings accounts. There are many different types of certificates of deposit (CDs), including callable CD, traditional CD, zero-coupon CD, bump-up CD, liquid CD and brokered CD.
Certificate of Origin (CO) – a document with information about a product’s origin, i.e., where it was made. It also has information on its destination. The document helps countries determine whether they must levy a tariff on the product.
CPA (Certified Public Accountant) – the most highly qualified individual in the world of accountants in the USA and many other English-speaking nations. The equivalent professional in the UK, Ireland, and some other Commonwealth countries is a Chartered Accountant.
CFD in Derivative Trading – CFD (Contract For Difference) is an extremely popular type of derivative trading. Traders can speculate on rising and declining prices and make money. If their predictions are wrong, they can also lose money.
Chairman – a general term for an individual in charge of a meeting. The head of the board of directors of a company is also a chairman. Some organizations prefer to use the term chair or chairperson.
Challenger Bank – a small or young bank that is competing against the giant high street banks, such as the Big 5 in the UK. Challenge banks have become much more common since the 2007/8 global financial crisis, with central banks such as the Bank of England loosening regulations and trying to encourage more competition.
Champagne Stock – a stock that greatly rises in value over a very short period of time. During that short period, the share price will typically have doubled or tripled.
Chartered Accountant – the most highly qualified person in the field of accountancy. It is the US equivalent of a CPA (certified public accountant) and exists in the UK, Ireland, and several Commonwealth nations.
Chatbots – bots that chat with humans online, and thanks to artifial intelligence, interact just like we do. They are also called Chatterbots or Talkbots.
Chattel Mortgage – a type of loan in which a movable personal property is put up as security. Chattel could be a car, cattle, machinery, a boat, or any personal possession that is movable. While the loan is being repaid the lender owns the possession that was used as security.
Chief Executive Officer (CEO) – the most senior corporate officer or administrator. The CEO is in charge of managing a for-profit or non-profit organization. Some companies (and countries) use the term ‘President’ with the same meaning.
Chief Financial Officer (CFO) – a ‘c-executive’ who maintains and tries to boost a company’s long-term financial health and status. He or she is the highest ranking corporate officer in a company who specializes in finance. In the UK, people generally refer to this person as the financial director.
Chief Human Resources Officer (CHRO) – an organization’s top executive in charge of human resources. The CHRO used to report to the COO or CFO, but is more likely to report to the CEO today.
Chief Information Officer (CIO) – the executive responsible for the management of technology. He or she makes sure that the information available within the company is relevant and easy to use. We also refer to this position as CDIO (Chief Digital Information Officer) and Information Technology Director.
Chief Investment Officer (CIO) – an executive (often board level) who heads investments in a company or financial institution. They are in charge of managing and supervising all investment activities, maintaining good investor relations, managing pension investments, and working with outside analysts.
Chief Marketing Officer (CMO) – the top marketing executive in a company. This person is in charge of developing, implementing, and overseeing marketing and advertising programs. CMOs report to the company’s Chief Executive Officer (CEO).
Chief Operating Officer (COO) – a company executive who oversees all the ongoing business operations. We also use the terms Director of Operations, Operations Director, and Chief Operations Officer. This person reports directly to the CEO (Chief Executive Officer). It is usually the second-highest position in a company.
Chief Technology Officer (CTO) – a top executive who is in charge of a company’s technological needs. We may also refer to this person as the Chief Technical Officer. CTOs work closely with the Chief Informaiton Officer (CIO).
Christmas – a Christian festival when billions of people celebrate the birth of Jesus Christ. Most workers in Europe, Australasia, the Americas, and many other countries have a holiday from work and school. The weeks leading up to Christmas are important for retailers. In fact, many retailers would collapse if they missed their Christmas sales.
Circular Economy – an economy that aims to get rid of waste, overconsumption of Earth’s resources, carbon emissions, and pollution. When a country moves towards a circular economy or circularity, it is going green.
Classical Economics – an economic school of thought that emerged after Adam Smith wrote the book ‘The Wealth of Nations’. Classical economists believe that the government should not intervene in the market, because it is better at find its own way toward a natural equilibrium.
Client – a customer with whom you build a relationship. When a customer makes a purchase, the seller then focuses on the next one. With a client it is different, you see him or her again and again – it is a longer term relationship. In most cases, the term client can be replaced by customer, but not the other way round. However, lawyers, psychologists and people who offer advice have clients, and not customers. In computing, the client is the device that communicates with a server.
Client-Centric – or ‘customer-centric’, refers to a method of doing business where the client or customer is at the center of the company’s effort. The customer is king. The commercial enterprise concentrates on the client rather than the product or sales. Client-centric businesses tend to be more successful and achieve better growth and profits than those with other cultures.
Climate Change – the term refers to the long-term shift in our planet’s weather patterns and average temperatures. Global warming, when average temperatures rise, is a type of climate change. If temperatures across the planet declined, that would also be a climate change matter, but not a global warming one.
Closed Economy – a country that does not trade with other nations. There are no imports or exports. A closed economy is an autarky. It is the opposite of an open economy. Closed economies claim they are self-sufficient and do not wish to or need to engage in international trade. Today, entirely closed economies do not exist.
Closed fund – a mutual fund that has stopped issuing shares to new investors, mainly because it has grown too big.
Cloud Computing – a type of computing where files and other data are stored in remote computers rather than your own hard drive. Data is stored and shared in ‘the cloud’, which basically means the Internet. Imagine an external hard drive in ‘the sky’, with ‘the sky’ being remote servers on the Internet.
Collateral – a possession (asset) that a borrower offers as security on a loan. Collateral lowers the risk for the lender and also allows them to reduce the interest rate on the loan.
Collateralized Debt Obligation (CDO) – a security that turns individual fixed-income assets into a product that can be sliced into different products and then sold. CDOs are structured financial products backed by a pool of loans.
Coinsurance – has several meanings: 1. The sharing of risk between insurer and insured – in health insurance similar to copayment or copay, but copayment is a fixed amount while coinsurance is a percentage that the insurance firm pays. 2. The sharing of risks between two or more title insurance companies. 3. In the real estate business, coinsurance is imposed by the insurer on the insured – a type of penalty – for under-insuring, under-declaring or under-reporting the property’s value.
Combined Ratio – a calculation that tells us how profitable an insurance company is in its underwriting operations. The measurement excludes investment income. Typically expressed in percentage terms, any figure below 100% means it is profitable.
Command Economy – an economy in which the supply of goods and services as well as their prices are regulated and controlled by central government, and not market forces. Central government has planners who decide which goods and services are produced, as well as their distribution. Also called a centralized economy, planned economy or controlled economy. It is the opposite of a market economy.
Commerce – a component of business that focuses on the purchasing and selling of products and services for money or other products (barter). The term is synonymous with ‘trade’. Humans have been involved in commercial activities for many tens of thousands of years. The Internet brought e-commerce (electronic commerce), which is dramatically changing how most of us do business.
Commercial Bank – a financial institution that takes people’s, companies’ and organization’s deposits, and lends its customers money in the form of loans, in contrast with investment banks, which deal with securities, mergers and acquisitions, and asset management.
Commercial Paper – an unsecured money market instrument that is issued as a promissory note. It is a short-term loan taken out in the form of an IOU that can be traded.
Commodities – raw materials and primary agricultural products. A product or substance that we buy and sell in huge quantities, such as coffee, grain, metals, oil, etc. Types of energy, such as electricity, are also commodities.
Commodity Market – a market where raw materials and primary agricultural products (commodities), rather than manufactured goods, are bought and sold. It is similar to the equity market, but instead of buying and selling stocks, investors trade in commodities.
Common Stock – a type of security that serves as evidence of part ownership of a company. Common stockholders usually have voting rights, but are only paid dividends after preferred stockholders have been paid. Known in the UK as ordinary shares. Also called voting shares.
Communication – the act of imparting, conveying, or exchanging information or emotions by uttering sounds, writing words, flag signs, smoke signals, etc. One entity conveys data to another. The entities could be humans, animals, or smart machines.
Competitive Advantage – when a business has an edge over another in the provision of a certain good or service. For example, Mercedes has a competitive advantage over most other luxury car-makers because its automobiles break down less often and maintain their value. Being able to sell a product at a lower price than competing companies is another example of competitive advantage.
Computer-Aided Design – also known as CAD, refers to computer software that helps designers create, modify and optimize designs. It replaces drafting by hand with an automated and efficient process. A growing number of professions are today using CAD. An architect would find it extremely difficult to function properly in today’s environment without computer-aided design software.
Communism – a social, political and economic system in which, in principle, the workers (state or government) control the production of food, goods and services, and there are no different social classes.
Commute – can be a verb or noun. The verb means to travel to and from work. People who do this are commuters. An example of a noun may be: “I saw a strange incident during my commute.”
Commuter – a person who travels between home and work on a regular basis.
Company – an organization or any entity that makes or sells goods or services in order to make a profit. A small minority of companies are non-profit. The term is synonymous with ‘firm’ and ‘corporation’. There are many different types of companies.
Company Secretary – the person responsible for making sure the company operates according to the law and is managed correctly. This is a senior position. Since the turn of the century, the breadth and importance of the role of the company secretary has expanded considerably. The term Corporate Secretary is more commonly used in North America.
Comparative Advantage – an economic theory put forward by the 18th century British economist David Ricardo in which two nations are better off specializing and trading with each other than trying to be completely self-sufficient, even if one of the countries has superior productivity in making all goods. The products that the country opts not to make should be imported. Ricardo’s Comparative Advantage illustrated the advantages of international trade by comparing Portugal’s economy with England’s.
Compensation – either refers to money and other benefits that are paid to an employee for work done, or money that is paid to somebody to make up for something that has been lost or damaged or some problem. The term also has non-business meanings, which the article covers briefly.
Competition – in business, a situation in which suppliers of goods and services strive to be the most successful. They try to beat each other. They compete for the consumer’s business.
Competitor – somebody, a business or entity that is trying to win or do better than the others. In many cases, the focus is to compete successfully against just one adversary – often called a rival. Competitors are vital components of a free market economy.
Compliance – the ability to comply or adhere to a set of rules, regulations, standards, policies, or orders. It means the same as adherence. The verbs are to comply (with) and to adhere (to). There is compliance when a company conforms to a set of rules.
Comprehensive Insurance – a type of car (vehicle) insurance that covers you for all types of damage, and not just the collision damage to the other party’s car. The policyholder is also covered against theft, fire, floods, broken glass, rockslides, vandalism, tsunamis, earthquakes and all non-collision events. ‘Third Party, Fire and Theft’ insurance only covers you for damage to the other car plus fire and theft.
Con – a trick to get somebody’s money or to get them to do something. Con artists deceive people, i.e., they use tricks and deception, usually to get people’s money. A con may also be slang for ‘convict’ or ‘conservative.’ Con is the opposite of ‘pro’ when talking about advantages vs. disadvantages.
Conference – an event with lots of people who get together to discuss a specific topic. The people at the conference confer, i.e., exchange ideas and information.
Conglomerate – a corporate group consisting of several different companies. In most cases, the companies operate in different markets. Berkshire Hathaway, for example, is a conglomerate; it wholly owns or has a significant stake in dozens of companies.
Consolidation – combining two separate companies (merger) and creating a new entity, a process of maturation in the market, when a company reduces the number of outstanding shares (reverse share split), in information technology when resources are shared among several users and applications, to get stronger, to show the financial results of a group of companies in one set of figures, a loan that is used to combine all the payments on other loans.
Consortium – an alliance of individuals, companies, organizations or even governments that get together to achieve a common objective that benefits them all. The plural is consortia or consortiums. In the travel industry, consortia are formed so that each member can get better deals and prices and offer their clients more than they could on their own.
Consumer – a person, organization or economic entity that buys or hires goods or services. The consumer purchases the product or service, and does not sell it on or use it to manufacture something else.
Consumer behavior – the study of the process involved when people, groups, or other economic entities buy and dispose of goods. Consumer behavior also applies to behaviors when purchasing services. In other words, it is the process we go through when we buy and discard something.
Consumer Confidence – an economic indicator that measures how optimistic/pessimistic consumers are regarding the state of the economy and their own financial situation. Consumer confidence is closely monitored by most sectors of the economy.
Consumer Goods – products that consumers buy and consume. We buy consumer goods for our own use – we do not make other things with them that we then sell. We also call them final goods.
Consumer Price Index (CPI) – an index that represents changes in the price level of a market basket of consumer goods and services bought by households. The aim is to measure the change in the prices of goods and services.
Consumer Surplus – the difference between how much a consumer paid for a product (market price) and how much he or she would be willing to pay (his/her highest acceptable purchasing price). Along with Producer Surplus, it forms part of the Economic Surplus. Consumer surplus is a measure of the welfare that consumers gain from buying products and services.
Consumption – the process of buying/using goods and services. It is the basic foundation of economics. The consumption of a car refers to how many miles per gallon it does. Consumption used to mean tuberculosis. The term has many meanings.
Content Marketing – an innovative approach to marketing that focuses on creating and distributing content that online viewers find useful, engaging and interesting. The aim is to engage potential customers with material that answers or addresses their questions. The brand is woven into the material, thus boosting brand awareness, and ultimately sales.
Contract – a written agreement between two or more parites. The agreement may be oral (spoken) or in written form. Written contracts are easier to enforce.
Contrarian Investing – refers to behaving like a bear in a market full of bulls, and like a bull in a market full of bears. Going against the herd in the investing world.
Control Group – a group of people who are matched as closely as possible with the experimental group. However, the control group is not exposed to any experimental treatment. Researchers then compare the results of the two groups.
Conversion Rate – the percentage of visitors to a website who end up taking a desired action such as buying something, filling in a form, adding their signature to a petition, subscribing to a newsletter, becoming members of an association, downloading software, or requesting a free sample. The term is also used in exchange rates, meaning how many units of one currency you’d get if you converted it into another currency.
Cookies – tiny tracking devices with bits of data that are sent from a website’s server to your browser and deposited in your hard drive. It tracks you browsing habits. Cookies do not gather sensitive information from your computer such as your bank details, contact list, email correspondences, etc.
Coronavirus – a family of viruses consisting of several strains. Some of these strains can be fatal for birds and mammals, including humans. In December 2019, Chinese authorities reported some cases of human infection of the Wuhan-nCoV (novel coronavirus), which has spread rapidly.
Corporate Strategy – strategies designed to help companies achieve their goals. There is a difference between a business-level strategy and corporate-level strategy.
Corporate Tax – tax that companies in the United States and Canada pay their governments on their profits. Known as corporation tax in the UK and Ireland and company tax in Australia. Also known in the US/Canada as corporate income tax. Many people complain that corporate tax rates in the US are too high.
Corporation Tax – tax that limited companies, cooperatives, clubs and some other entities in the United Kingdom and Republic of Ireland have to pay on their profits. In the USA/Canada it is called corporate tax. Corporation tax in the UK now stands at 21% – there is talk of reducing it further.
Corporation – a company or group of companies that is authorized to act as a single entity, just like you or me, and recognized as such in law. Corporations are owned by shareholders (stockholders) who share in profits and losses, and whose liability is limited to the money invested in the entity’s shares (stocks). The meaning of corporation is not the same in the US and UK. In the UK it generally means a large company or a state-owned company, such as the BBC (British Broadcasting Corporation).
Cost – the resources used to make a product, expressed in monetary terms. The word has several meanings. It also means the amount of money required or spent to acquire/buy something. Cost, unlike price, does not include the mark-up.
Cost of Living – how much money an individual needs to spend to maintain a specific standard of living. Economists and lawmakers use the measurement to compare different countries, towns, and regions.
Council of Economic Advisers (CEA) – a body consisting of economy experts that advises the US President on domestic and international economic policy. The Chairman is nominated by the President and approved by the Senate, and other members are appointed by the President.
Council of the European Union – the voice of the governments of the EU member states. People commonly refer to it as simple the ‘Council.’ The Council adopts the new policies and laws of the EU.
Coupon – can mean the annual interest on a bond, a voucher/ticket that you can redeem for a discount, rebate or free purchase, or a form in a newspaper, magazine or printed advert that you cut out, fill in, and send off for information, a purchase or a sample. In metallurgy, a coupon is a sample of metal or metalwork that is submitted to a customer or testing agency for approval or confirmation.
Coupon Rate – the sum of a bond’s annual coupon payments divided by the bond’s face value, i.e. the interest rate on the payments of a bond. In most cases, payment is done twice a year.
Court of Justice of the European Union – or the European Court of Justice, ensures that every EU nation interprets EU law in the same way. It is the supreme court of the European Union regarding EU law. It has no jurisdiction over the national laws of the EU Member States.
Creative Accounting – a slightly ironic term for imaginative ways to make a company’s accounts reflect it in a better light; make it look financially healthier than it really is. The practice, although frowned upon, is legal. The creative accountant works within the law, taking advantages of loopholes. Also known as innovative accounting, aggressive accounting, or window dressing
Credit – money (loan) lent to a person or business, a positive balance in somebody’s bank account (‘his account is in credit’), or to add money into a bank account. The loan may also be in the form of goods or services.
Credit Bureau – firms that specialize in gathering people’s and companies’ payments and credit histories. They sell this information to lenders, who then decide whether to offer customers credit and how much interest to charge. Also known as a credit agency.
Credit Card – a plastic card that consumers use to purchase goods and services on credit. They can also use it to get cash, and pay back later. The arrangement is that the issuer pays for the purchase, and the cardholder pays back at a later date. This article helps you decide how to choose one.
Credit Card Loan – whenever you make a purchase using your credit card, the issuer is lending you money, which if you pay back by the ‘grace period’ deadline, will incur no interest charges (as long as you don’t carry a balance). Also called credit card debt.
Credit Control – a department in a company under a credit controller that chases overdue invoices and decides whether to offer customers trade credit. The term also refers to the department’s activities.
Credit Crunch – when banks and investors become more apprehensive about lending money because economic conditions or political problems have worsened. In other words, available credit shrinks considerably. Also called a credit squeeze or credit crisis.
Credit Default Swap – a type of insurance protection against a third-party borrower defaulting. A credit default swap contract states that the issuer will pay the buyer if a third party defaults. It is also known as a credit derivative contract.
Credit Easing – a strategy central banks use to improve credit conditions (increase liquidity) in the economy by purchasing private sector assets. The aim is to get banks to increase lending and boost economic activity.
Credit Freeze – refers to either when governments force their banks to stop lending money, or individuals stopping credit bureaus from selling their personal data. Also known as a credit report lock down, security freeze, or credit lock down.
Credit History – forms part of a credit report. It contains a record of how promptly an individual pays back loans, credits, etc., over time.
Creditor – the party that is owed money. When you take out a bank loan, the bank is the creditor and you are the debtor. The creditor might be a person, company, financial institution, or government.
Credit Score – a score that tells lenders whether you are a good or bad credit risk. Depending on your score, lenders decide whether to offer you credit, and what the interest rate will be on the loan.
Credit Union – a mutual financial organization that is owned by depositors, i.e. people who have an account. To be accepted, you usually need to have a common bond with the other members, such as belonging to a trade union, church, company or organization. Members save money and borrow at competitive interest rates. Credit unions are not-for-profit institutions.
Creditworthiness – an entity’s ability to borrow money and pay back on time. Also written as credit worthiness, it might refer to a person, company, organization, or country. Banks check applicants’ creditworthiness before deciding whether to lend them money.
Cross Holding – when one publicly-listed corporation owns shares in another company that is listed in the same stock exchange. Also called cross shareholding.
Crowdfunding – using online platforms to get contributions to help fund business ideas or other projects. With crowdfunding, many people contribute a small amount of money each.
Cryptocurrency – a type of digital money, i.e., it exists only electronically. It is an online currency that is encrypted. The encryption makes it secure, cryptocurrency creators claim. It operates without a central bank, unlike traditional currencies.
Cryptocurrency Exchange – an exchange where people can trade (buy and sell) cryptocurrencies. People trade them using fiat currencies, other cryptocurrencies, or other digital assets. Most cryptocurrency exchanges work 24/7. We also call them digital currency exchanges (DCEs).
Cryptocurrency Mining – the validation of cryptocurrency transactions, i.e., transactions using digital money. Some people refer to it as cryptomining. ‘Miners‘ carry out cryptomining. The process adds transactions to the blockchain and releases new currency. When miners have successfully completed the process, they receive a reward in the form of new currency units.
Cyprocurrency Wallet – a digital wallet or virtual wallet for cryptocurrencies. It is a software program that stores public and private keys. By using the keys, owners can use cryptocurrency to pay for things. They can also use the keys to receive payment. The cryptocurrency wallet allows owners to monitor their balance.
Current Assets – cash, cash equivalents and other things a company owns that could be turned into cash easily (within 1 year). Also known as current accounts in the UK.
Current Ratio – a calculation that tells us whether a company might find it difficult to meet its short-term debt obligations, i.e. debts that need to be paid back over the next 12 months. Current Ratio = Current Assets ÷ Current Liabilities.
Custom Made – made according to a customer’s specifications. If I produce a custom made item, I know who the customer is. If I make an off the rack or off the peg item, I don’t know who the customer is (or will be).
Customer – a person who buys goods or a service. It could also be a company or organization. It has virtually the same meaning as consumer, in that the customer is the end user (not always). The words customer and client have similar meanings, but the vendor tries to build a relationship with the client – this is less the case with a customer. When the seller receives the money from the customer and hands over the purchased item, he or she immediately focuses on the next one.
Customer Experience – also known as CX, the term refers to how customers perceive and feel about all their interactions with a seller. It includes their impressions regarding the product, service, brand, and company.
Customer Service – the interactions between customers and sellers of goods or services. The conversations occur before, during, and after a purchase. It is crucial for customer loyalty and the company’s or product’s brand image.
Customer Loyalty – the likelihood that current customers keep coming back. In other words, how often existing and past customers come back for more again and again.. It is not the same as brand loyalty.
Customization – the action of adapting a product or service according to what the customer needs, wants, or prefers. It also refers to altering something for a specific function.
Custom Made – made according to a customer’s instructions or preferences. The term contrasts with mass produced, off the rack, or off the peg. We can also use the term bespoke or made to order with the same meaning as custom made.
Customs Union – or EU Customs Union is a union of countries that allows goods to move freely internally with no tariffs or quotas. Twenty-eight countries are members of the Customs Union.
Cyber – originally, the word was short for cybernetic. Today, we use it as an adjective (cyber crime) and prefix (cybercrime). There are hundreds of terms with the word ‘cyber.’ It means relating to or characteristic of the culture of virtual reality, technology, and computers.
Cyberbullying – or cyber bullying (one or two words) refers to bullying using electronic means, which in most cases is via the Internet. It has become a serious problem in many parts of the world.
Cyber Security – the practice of protecting a company’s or any organization’s computer systems, programs, and networks from digital or cyber attacks. Cyber is short for cybernetic or cybernetics.
Cyclical Share – a company share whose performance closely follows how well or badly a country’s economy is doing. When GDP is expanding strongly cyclical shares appreciate. Conversely, when there is a recession their prices decline. Also known as cyclical stock.