Financial Glossary

Below is a list of common financial terms and their definitions to help you understand the context better:

• Net Worth: The total value of your assets minus liabilities.
• SWP (Systematic Withdrawal Plan): A strategy to withdraw a fixed amount from your investments periodically.
• ICWD Scheme: Income and Capital Withdrawal Scheme, typically used in mutual funds to generate periodic income.
• EMI (Equated Monthly Installment): A fixed payment amount made by a borrower to a lender at a specified date each month.
• SIP (Systematic Investment Plan): A method of investing in mutual funds at regular intervals.
• Debt: Money borrowed and due to be paid back, typically with interest.
• Assets: Resources owned by an individual or business that have economic value.
• Liabilities: Debts or obligations that an individual or business owes to others.
• Equity: The value of an owner's interest in an asset or company after deducting liabilities.
• Revenue: Income generated from normal business operations, such as sales.
• Expenses: Costs incurred in the process of earning revenue.
• Net Income: The profit remaining after all expenses have been deducted from revenue.
• Gross Margin: Revenue minus the cost of goods sold (COGS), divided by revenue, expressed as a percentage.
• Depreciation: The allocation of the cost of a tangible asset over its useful life.
• Amortization: The gradual reduction of a debt or the allocation of the cost of an intangible asset over time.
• Liquidity: The ability to quickly convert assets into cash without significant loss in value.
• Solvency: The ability of an entity to meet its long-term financial obligations.
• Cash Flow: The net amount of cash being transferred into and out of a business.
• Working Capital: Current assets minus current liabilities, indicating the short-term financial health of a business.
• Return on Investment (ROI): A measure of the profitability of an investment, calculated by dividing net profit by the cost of the investment.
• Earnings Before Interest and Taxes (EBIT): An indicator of a company's profitability, calculated as revenue minus expenses, excluding interest and taxes.
• Dividend: A portion of a company's earnings distributed to shareholders.
• Interest: The cost of borrowing money, typically expressed as a percentage of the principal amount.
• Principal: The original sum of money borrowed or invested, excluding interest.
• Credit: The ability to borrow money or access goods and services with the understanding that payment will be made in the future.
• Debit: An entry recording an amount owed, reducing the balance in an account.
• Balance Sheet: A financial statement that summarizes an entity's assets, liabilities, and equity at a specific point in time.
• Income Statement: A financial statement that shows a company's financial performance over a specific period, including revenue, expenses, and net income.
• Statement of Cash Flows: A financial statement that provides a summary of the cash inflows and outflows for a business over a specific period.
• Budget: A financial plan that outlines expected income and expenses over a period.
• Forecasting: The process of predicting future financial performance based on historical data and trends.
• Taxation: The process by which a government collects money from individuals and businesses to fund public services.
• Capital: Wealth in the form of money or assets, used to invest in business operations.
• Investment: The act of allocating resources, usually money, to generate income or profit.
• Portfolio: A collection of investments held by an individual or institution.
• Financial Statement: Official records that outline the financial activities and condition of a business or individual.