Financial Vocabulary

#121

Operating cash flow

Example sentences

1. Strong sales created positive operating cash flow.
2. The company used operating cash flow to pay workers.
3. Operating cash flow comes from normal business activities.

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#122

Investing cash flow

Example sentences

1. Buying new equipment created negative investing cash flow.
2. The sale of a building improved investing cash flow.
3. Investing cash flow shows cash used for long-term assets.

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#123

Financing cash flow

Example sentences

1. The new bank loan increased financing cash flow.
2. Paying dividends reduced financing cash flow.
3. Financing cash flow includes borrowing and owner payments.

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#124

Notes to financial statements

Example sentences

1. The notes to financial statements explain the accounting methods.
2. Investors read the notes to financial statements for more detail.
3. A major legal case appeared in the notes to financial statements.

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#125

Auditor's opinion

Example sentences

1. The auditor's opinion said the statements were fairly presented.
2. The bank reviewed the auditor's opinion.
3. A negative auditor's opinion can worry investors.

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#126

Capital budgeting

Example sentences

1. The company used capital budgeting to choose a new factory.
2. Capital budgeting helps managers study long-term projects.
3. The finance team reviewed the project during capital budgeting.

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#127

Capital expenditure

Example sentences

1. Buying a new machine is a capital expenditure.
2. The company increased capital expenditure this year.
3. A large capital expenditure needs careful planning.

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#128

Operating expenditure

Example sentences

1. Employee salaries are an operating expenditure.
2. The manager reduced operating expenditure to save money.
3. Operating expenditure supports daily business activities.

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#129

Cost of capital

Example sentences

1. The project must earn more than the cost of capital.
2. A high cost of capital can make borrowing expensive.
3. The finance team calculated the company's cost of capital.

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#130

Weighted average cost of capital

Example sentences

1. The analyst calculated the weighted average cost of capital.
2. The project return must exceed the weighted average cost of capital.
3. More expensive debt raised the weighted average cost of capital.

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#131

Net present value

Example sentences

1. The project has a positive net present value.
2. Managers used net present value to compare two investments.
3. A negative net present value may lead to rejection.

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#132

Internal rate of return

Example sentences

1. The project's internal rate of return is 12%.
2. The company compared the internal rate of return with its target.
3. A higher internal rate of return may make a project more attractive.

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#133

Payback period

Example sentences

1. The machine has a payback period of three years.
2. A shorter payback period can reduce risk.
3. The manager calculated the payback period before buying equipment.

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#134

Discount rate

Example sentences

1. The analyst used a discount rate of 8%.
2. A higher discount rate lowers the present value.
3. The company changed the discount rate in its model.

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#135

Discounted cash flow

Example sentences

1. The analyst used discounted cash flow to value the business.
2. Discounted cash flow considers future money in today's terms.
3. The discounted cash flow model showed a fair value of $1 million.

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#136

Time value of money

Example sentences

1. The time value of money means $100 today is worth more than $100 later.
2. She studied the time value of money before investing.
3. Loan calculations use the time value of money.

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#137

Present value

Example sentences

1. The present value of the future payment is $900.
2. A high discount rate reduces present value.
3. The analyst calculated the present value of the cash flows.

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#138

Future value

Example sentences

1. The future value of her savings may reach $10,000.
2. Compound interest increases future value.
3. He calculated the investment's future value after five years.

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#139

Annuity

Example sentences

1. She bought an annuity for regular retirement payments.
2. The annuity pays $500 every month.
3. An annuity can provide income for a fixed period.

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#140

Perpetuity

Example sentences

1. The model treats the payments as a perpetuity.
2. A perpetuity continues making payments forever.
3. The analyst calculated the value of the perpetuity.

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