Thursday, April 18, 2024

Finance Acronyms

After doing this for twenty years, I find it sometimes amazing that we can have so many acronyms. It must also be frustrating and confusing for people not in tuned with them. This is an attempt to put down a non-exhaustive list for everyone since I use them a lot myself and will direct new readers here in the future.

AML = Anti-money laundering

ALM = Asset Liability Management

BRICs = Brazil, Russia, India and China which led the growth in emerging market economies

BS = Balance Sheet

Capex = Capital Expenditure

CF = Cashflow (from CF statement

COGS = Cost of Goods Sold

DE Ratio = Debt-to-Equity Ratio

DM = Developed Markets

DVD = Dividend

EBIT = Earnings before interest and tax

EBITDA = Earnings before interest and tax, depreciation and amortization

EM = Emerging Markets

ESG = Environment, Social and Governance

EV = Enterprise Value

FAANGs = Refers to the Facebook, Apple, Amazon, Netflix and Google but that has now evolved in the Magnificent Seven: Microsoft, Apple, Nvidia, Amazon, Alphabet, Meta and Tesla

FCF = Free Cashflow

FOMO = Fear of Missing Out

FX or Forex = Foreign Exchange

FY = Financial Year or Fiscal Year

GFC = Great Financial Crisis of 2008-2009

GIGO = Garbage In Garbage Out

HHI = Herfindahl-Hirschman Index, common measure of market concentration

IRR = Internal Rate of Return, an important return calculation methodology in the PE world

IV = Intrinsic Value

LIFO = Last In First Out, one of the accounting terms

MOS = Margin of Safety

NAV = Net Asset Value, often used used in conjunction with IRR calculation.

NI = Net Income

OP = Operating Profits which is similar to EBIT

OPEX = Operating Expenses

PBR = Price-to-Book Ratio

PE = Private Equity

PER = Price Earnings Ratio

PL = Profit and Loss Statement

RE = Real Estate

ROE = Return on Equity

ROIC = Return on Invested Capital

SGA = Sales, General and Administrative Expenses

TMT = Tech, Media and Technology, often used to described the 1999-2000 IT bubble, a.k.a. the TMT bubble

That's all for now, but this will be updated as new acronyms come along.

Huat Ah!

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