Joint and several liability
An undertaking by a group of two or more parties to be responsible, either individually or jointly, for any liability which may exist after any member or members have failed to meet their obligations.
Management accounting technique enabling cost allocations through examining time, materials and all other expenses involved in creating a project.
Equal ownership of property by two or more people.
Co-operation between two or more individuals/businesses in the undertaking of a specific enterprise, sharing risks, control, expertise, revenues and costs.
Legal liability of two or more parties for claims against or debts incurred by them jointly.
Bonds which offer high rates of interest but with correspondingly higher risk attached.
Insurance policy providing cover for a company should a key figurehead pass away which would cause significant loss.
Situation in which a property is sold by its owner to another person/company on condition that the purchaser leases the property back to the original owner for an agreed rent over a set term.
The use of financial instruments to increase the return on an investment, or the amount of debt used to finance a business’ assets.
The right of a creditor to take possession or control of the property of a debtor upon them failing to satisfy a debt.
Parts of national income which are not used for consumptions purposes, including net taxes, savings and imports.
Legal contract in which the owner of an asset, e.g. a property, agrees to another individual/business utilising that asset in return for a consideration, such as rental payments.
The principle that a shareholder’s liability for company debts is limited to the nominal value of their shares and therefore that their personal assets are not at risk should the company become insolvent.
The level of ease with which an asset can be converted into cash.
A person who grants a lease, also known as a landlord.
A book in which the accounts of a business are kept. The main types of ledger are the nominal ledger, containing the nominal accounts which list revenue and costs, the sales ledger which lists the sales accounts of customers, and the purchase ledger which lists the purchase accounts of suppliers.
A person to whom a lease is granted, also known as a tenant.
The takeover of a company by investors who use the company’s own assets as collateral to raise the money that finances the bid.
LIBOR (London Inter Bank Offered Rate)
Interest rate at which banks lend money to each other.
A market in which large quantities of securities are being bought and sold daily with relative ease.
The process of a person or company taking legal action against another.
The sale of the assets of a bankrupt company to pay creditors.
An official appointed to supervise the liquidation of a company.
See ‘acid test ratio’.
An independent assessor called in by an insurance company to check the validity of claims.
The part of a company’s capital structure which is raised by loans, e.g. debentures, which usually pay fixed interest over a fixed period.
A security bearing a fixed rate of interest and where the capital is repaid after a given period of time.
Long term liabilities
Debts of a person or company not due for repayment within the next accounting period.
The place where you normally live and consider to be your home.
A tradable equity that is classified as a current asset.
The principle that costs/liabilities are matched with corresponding income/assets.
Date at which an asset or liability becomes repayable.
The purchase of a company by outside investors who bring in new management.
The purchase of some or all of a company’s shares by its managers in order to run the company independently.
The incremental cost attributable to one extra unit of production.
Married couples allowance
An extra tax allowance you are entitled to if you are married.
Calculated by multiplying share price as quoted on an exchange by the number of shares in issue. This gives the market value of a company.
The general direction of overall price movements in a market.
The price which you can obtain for an asset if you sold it freely on the open market.
The manipulation of money, usually originating from an illegal source, so as to seem to have originated from a lawful one.
Memorandum of association
Company document containing items such as name, objects and powers, and original share capital.
The process of two companies becoming one.
The control of the money supply and interest rates by a government or central bank.
Money Purchase Scheme
Pension scheme in which benefits are dependent on contributions and growth of the fund.
Scheme enabling investment by small private investors in shares, bonds and other securities.
Contributions paid by employees, self-employed individuals and employers based on income earned for the provision of the benefits such as the state pension. The contributions are administered by HM Revenue & Customs.
Can be a cheque or security that represents money that is payable and which can be transferred from one entity to another.
Assets which are readily convertible into cash without running the risk of causing significant losses in value.
The absence of bias when handling financial information.
Net current assets
Calculated by subtracting current liabilities from current assets.
The return on an investment after deducting tax, commission and other expenses.
Means the action/payment is mandatory and is not up to the individual or company to change.
Net realisable value
Generally equal to the selling price of goods or assets less the selling costs incurred.
Arises when the fair value of the net assets of a business exceed the price paid on acquisition.
Net present value
The total series of expected cash flows discounted over the time period in which they are incurred/earned less the initial dividend. NPV calculations are primarily used to appraise long-term projects by accounting for the time value of money.
Net profit margin
Calculated as net profit as a percentage of sales, indicating a company’s ability to control its costs and overheads and generate an underlying return.
Notice of coding
The notification of your PAYE code that you receive from the Inland Revenue.
A ledger account used to itemise/analyse revenue, expenditure, assets and liabilities.
Non contributory pension plan
An employer funded employee pension scheme to which employees do not make contributions.
Tax treated as having been paid and not repayable. Applicable to, for example, life insurance policy gains and foreign income dividends.