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FACTORING
The buying and selling of invoices or accounts receivables.
FAIR MARKET VALUE
The price for which property can be sold in an "arms length" transaction; that is, between informed, unrelated, and willing parties, each of which is acting rationally and in its own best interest.
FIDUCIARY
A person or company entrusted with assets owned by another party (beneficiary), and responsible for investing the assets until they are turned over to the beneficiary.
FINANCE LEASE
A lease used to finance the purchase of equipment; not a true lease. Finance leases are generally considered to be capital leases from an accounting perspective and non-tax leases from a tax perspective.
FINANCIAL STATEMENT
Also known as financial report.
• Balance Sheet -A report of the status of assets, liabilities and equity at a given time.
• Income Statement -A report of revenue and expense which shows the results of business operations or net income for a specified period of time.
• Cash Flow -A report which analyzes the actual or projected source and disposition of cash during a past or future accounting period.
FINANCING
New funds provided to a business, by either loans or purchase of debt securities or capital stock.
FISCAL YEAR
Any 12-month period used by a company or government as an accounting period.
FIXED COST
A production cost which does not vary significantly with the volume of output. An example would be administrative costs. (Also see VARIABLE COST.)
FLOW CHART
A graphical representation for the definition, analysis, or solution of a problem, in which symbols are used to represent operations, data, flow, equipment, etc.
FORECLOSURE
The act by the mortgagee or trustee upon default, in the payment of interest or principal of a mortgage of enforcing payment of the debt by selling the underlying security.
FRANCHISE
A franchise is a form of licensing. The franchiser provides their services through a series of franchisees. Before investing in any franchise, check with the International Franchise Association at 1 800 543 1038 to see if the franchise is a member in good standing.
FRANCHISING
A continuing relationship in which the franchisor provides a licensed privilege to the franchisee to do business, and offers assistance in organizing, training, merchandising, marketing and managing in return for a consideration. Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisees). The product, method or service being marketed is usually identified by the franchisor's brand name, and the holder of the privilege (franchisee) is usually given exclusive access to a defined geographical area.
FREE ON BOARD (FOB)
Commercial term in which the seller's obligations are fulfilled when the goods reach a point specified in the contract.
FUTURE VALUE
The compounded value of a payment or stream of payments made previously [see PRESENT VALUE].
Since money has time value [see TIME VALUE OF MONEY] investors expect future value to be greater than present value. The difference between the two depends on the nature of the investment including factors such as the number of compounding periods, risk and inflation.
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