FINANCIAL GLOSSARY








Below is a glossary of financial terms written by us.
Simply click on a term to access its definition.
[For a correct use of this glossary, please consult these "notes"]

puce 4Fs (Founders, Family, Friends and Fools)

Founders, family, friends and fools : the very first individuals willing to invest in an entrepreneurial project because they have generally close relationships with the entrepreneur and want to help him.

puce Factoring

The selling of a company's accounts receivable, at a discount, to a firm ( "Factor"), who then assumes the credit risk of the account debtors and receives cash as the debtors settle their accounts.
Also called accounts receivable financing.

puce Fair Market Value

In the absence of a closing price on the market the price for a share on which two duly informed parties would agree in order to conclude a transaction.

puce Feasibility Study

A study which analyses the technical and economic feasability of a project.

puce Fee

A fixed amount or a percentage of an underwriting or principal.

puce Feeder Fund

A fund that invests through another fund, called the Master Fund.
This is similar to a fund-of-fund with the exception that the manager of the master fund is in charge of the underlying investments.

puce FIFO

[First In First Out]
Inventory cost accounting method by which the first item to leave the inventory is assumed to be the first one to have entered the inventory.
Default treatment for homogeneous or interchangeable inventory [IAS 2.21].

puce Final Prospectus

The final version of an issue prospectus which includes the final terms ( price, delivery date, the underwriting spread); it is given to all interested investors.

puce Fire Sale

The sale of a company or its assets which takes place under the pressure of financial difficulties and lack of available alternatives(sell at any price).

puce Firm Commitment Underwriting

An underwriting arrangement in which an underwriter agrees to purchase all of the securities being offered for resale to public, thereby assuming the risk of finding buyers.
See also All-or-none and Best Efforts Underwriting for comparison.

puce First Preferred Stock

Preferred stock which takes precedence over other preferred and common stock with regard to dividends and liquidation proceeds.

puce First Refusal

See Right of First Refusal.

puce First Round Phase

Financing of the first stage of a company ( setting up of production facilities and distribution network, market entrance).

puce Fiscal Allowance

A fiscal discount offered as a result of specific circumstances.

puce Fixed Assets

Long-lived property owned by a firm that is used in the production of its income.
Tangible fixed assets include real estate, plant, and equipment.
Intangible fixed assets include patents, trademarks, and customer recognition.

puce Fixed Cost

A cost that is fixed in total for a given period of time no matter what the production level.

puce Fixed-term deposit

puce Float or Free Float or Public Float

The number of shares not held by corporate insiders that are freely tradable in the public market on which the company's securities are listed.

puce Floatation

Term used to describe the entry of a company to the stock market.

puce Flowback (USA)

Term used to describe securities initially offered outside the USA, that are subsequently resold to USA residents.
Such sale may be in violation to US registration requirements.

puce Follow-on Investment

An additional investment by existing investors; may be provided for in the documentation relating to the initial investment.

puce Form 10-K (USA)

A form required to be filed annually with the SEC by any public company with a class of securities registered under the Securities Exchange Act of 1934.

puce Form 10-Q (USA)

Same as Form 10-K, but abbreviated and filed quaterly.

puce Form 20-F (USA)

The form filed with the SEC by most foreign companies under the Securities Exchage Act of 1934 to either register securities or file annual reports.

puce Form 6-K (USA)

The form filed with the SEC by foreign companies subject to the USA public company reporting rules for the filing of information that:

  • the company is required to make public under the laws of its jurisdiction of incorporation,
  • it files with the securities exchange on which its securities are traded and which was made public by that exchange, or
  • it distributes to its stockholders.
    puce Form 8-A (USA)

    The form filed with the SEC to register a company's class of securities under the Securities Exchange Act of 1934.

    puce Form 8-K (USA)

    A form required to be filed with the SEC by any public company upon the occurrence of certain events such as a change in control of the company, significant acquisitions or disposals of assets, bankruptcy or receivership, change of auditors and certain resignations of directors.

    puce Form S -1 (USA)

    The most complete version, required for initial public offerings (IPO).

    puce Form S-2 (USA)

    Short version, used for public companies already registered under the Securities Exchange Act of 1934 which are up to date with their filings and with payments to security holders.

    puce Form S-3 (USA)

    Short version, used for public companies already registered under the Securities Exchange Act of 1934 which meet certain additional conditions;

    puce Form SB-2 (USA)

    Similar to Form S-1, but somewhat abbreviated, for small and medium sized companies.

    puce Form U–7 (USA)

    A form of registration at the state level for offerings by small business who have not to register at federal level.
    Requires somewhat less disclosure.

    puce Forms

    See Registration Statement and Reporting Company Forms.

    puce Forms 3 , 4 and 5 (USA)

    Reports to the SEC by directors, executive officers and certain other insiders of a public company, reporting their personal trades in securities of that company or its subsidiaries.
    See also Section 16.

    puce Forms F-1, 2 and 3 (USA)

    For foreign companies; corresponds with Forms S-1, S-2 and S-3.

    puce Forward contract

    puce Forward Pricing (USA)

    The SEC requirement that open-end investment companies, (popularly called mutual funds) set their share price based on net asset value (NAV) and base all incoming buy and sell orders on the immediately subsequent net asset value.

    puce Founder’s Stock

    Stock issued to the founders of a company, usually at a lower price than the price paid by investors.

    puce Franchise

    A form of business organisation in which a firm with a successful product or service enters into a continuing contractual relationship with other businesses which operate under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee.

    puce Free Cash Flow

    After-tax operating earnings of the company, plus non-cash charges (i. e. depreciation), less investment in working capital, property, plant and equipment.

    puce Free Float

    See Float.

    puce Freeze-out

    After-tax operating earnings of the company, plus non-cash charges (i. e. depreciation), less investment in working capital, property, plant and equipment.

    puce FT-SE

    The period of time that certain stockholders have agreed to waive their right to sell their shares of a public company.
    Investment banks that underwrite initial public offerings generally insist upon lockups of at least 180 days from large shareholders (1% ownership or more) in order to allow an orderly market to develop in the shares.
    The shareholders that are subject to lockup usually include the management and directors of the company, strategic partners and such large investors.
    These shareholders have typically invested prior to the IPO at a significantly lower price to that offered to the public and therefore stand to gain considerable profits.
    If a shareholder attempts to sell shares that are subject to lockup during the lockup period, the transfer agent will not permit the sale to be completed.

    puce FTSE 100

    An index based on the stock of the top 100 companies traded on the London Stock Exchange.See also Index.

    puce Full Ratchet

    Anti-dilution provisions that apply the lowest sale price for any shares of common stock (or equivalents) sold by the company after the issuing of an option or convertible security with anti-dilution protection as the adjusted option price or conversion ratio.
    As an example, if a prior round of financing raised capital at €2.00 per share with investors receiving full ratchet anti-dilution protection, and a subsequent round of financing was completed at €1.00 per share, the prior round investors would have the right to convert their shares at the €1.00 price, thereby doubling the number of shares they would receive.

    puce Fully Diluted Earnings Per Share

    Earnings per share calculated assuming that all warrants and stock options were exercised and all convertible bonds and preferred stock were converted.
    The figure is an accurate reflection of the company's real earning power.

    puce Fund of Funds

    An investment fund that does not invest directly in companies but only in other investment funds, i. e. in the field of private equity.

    puce Futures market





     

    OÙ CHERCHER