economic & business glossary
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Absolute MonopolyAbsolute MonopolyAbsolute MonopolyAbsolute MonopolyAbsolute Monopoly
Means the control of the entire output of a
commodity or service, for which there exists no
substitute, by a single producer or supplier. This
kind of situation rarely arises in real life. It is also
known as pure monopoly or perfect monopoly.
AdministerAdministerAdministerAdministerAdministered Pricesed Pricesed Pricesed Pricesed Prices
A price set not by the force of demand and supply
but by some authority like the government or a
regulatory authority.
Ad VAd VAd VAd VAd Valoraloraloraloralorem Tem Tem Tem Tem Taxaxaxaxax
A duty, which is imposed on commodities in
proportion to their value i.e., a duty, which is
expressed as a percentage and not a flat amount.
ApprApprApprApprAppreciationeciationeciationeciationeciation
An increase in the value:
(1) of stocks and shares when their prices rise
on the stock exchange;
(2) of a currency when its value increases in
terms of other currencies;
(3) of stocks held by manufacturers and
merchants during a period of rising prices.
ArbritragArbritragArbritragArbritragArbritrageeeee
It is a speculative activity. It seeks to make profit
out of differences in prices of a security in two
markets. If the price of a certain share is higher
in one market than in another, the speculator will
purchase them in the cheaper market and sell in
the dearer market.
Economic & Business GlossaryBackwBackwBackwBackwBackward Integard Integard Integard Integard IntegrationrationrationrationrationThe expansion of a business which takes the form
of acquiring control over firms supplying it with
its raw materials.
BackwBackwBackwBackwBackward Linkagard Linkagard Linkagard Linkagard Linkageeeee
Refers to the relationship between an industry or
firm and the suppliers of its inputs. A change in
the output of the industry will get transmitted
backwards to the suppliers of its inputs by
changing the demand for inputs.
Balanced BudgBalanced BudgBalanced BudgBalanced BudgBalanced Budgetetetetet
A budget is said to be a balanced budget when
current income equals to current expenditure.
Balance of PaymentsBalance of PaymentsBalance of PaymentsBalance of PaymentsBalance of Payments
Refers to the relation between the payments of
all kinds made from one country to the rest of the
world and its receipts from all other countries.
Balance of TBalance of TBalance of TBalance of TBalance of Traderaderaderaderade
Refers to the relationship between the values of a
countrys imports and exports, i.e., the visible
balance. These items only form a part of the balance
of payments, which also get influenced by
(1) invisible items and
(2) movement of capital.
BarterBarterBarterBarterBarter
Refers to the method of exchanging goods and
services directly for other goods and services
without employing a separate unit of account or
medium of exchange.
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ECONOMIC& BUSINESSGLOSSARY
BearBearBearBearBear
A bear is a speculator who sells securities in
anticipation of a fall in prices of securities.
Black MarketBlack MarketBlack MarketBlack MarketBlack Market
Any illegal market which has been established in
a context where prices have been fixed at
minimum or maximum level, usually by
government. Thus, when maximum prices have
been fixed, trading may occur at prices above the
maximum.
Blue ChipBlue ChipBlue ChipBlue ChipBlue Chip
A consistently growing company both in terms
of profit as well as market share is called a blue-
chip company.
Blue Collar JobsBlue Collar JobsBlue Collar JobsBlue Collar JobsBlue Collar Jobs
Persons who are unskilled and depend upon
manual labour are said to be engaged in blue collar
jobs.
Blue Chip RateBlue Chip RateBlue Chip RateBlue Chip RateBlue Chip Rate
Refers to the lowest interest rate payable by
borrowers having the highest credit rating.
Book VBook VBook VBook VBook Valuealuealuealuealue
In its balance sheet a company may value assets
in the form of asset investments at the prices
shown in its books, namely the prices at which
they were purchased, even though their currentprice on the stock exchange may be higher or
lower.
BoomBoomBoomBoomBoom
Refers to a period of expansion of business
activity. It is opposite of slump or recession. A
boom reaches a peak when the economy has been
working at full capacity.
Brain DrainBrain DrainBrain DrainBrain DrainBrain Drain
Means the migration of educated and skilled
labour from poorer to richer countries.
BrandBrandBrandBrandBrand
A brand is a name, term, sign, symbol, or design,
or a combination of them, intended to identify
the goods or services of one seller or group of
sellers and to differentiate them from those of
competitors.
BrBrBrBrBreak-Eveak-Eveak-Eveak-Eveak-EvenenenenenCarrying on business in which neither profit nor
loss is made.
BrBrBrBrBrokerokerokerokeroker
One who buys and sells bonds and other financial
assets. He is employed by other people on account
of his knowledge of market conditions and
procedures and because of his expert knowledge
of the commodity dealt in. A Broker is usually
paid commission for his services, known as
brokerage.
BrBrBrBrBrokeragokeragokeragokeragokerageeeee
A fixed cost which is charged by the broker for
arranging investments, encashment of bonds and
other financial assets.
BudgBudgBudgBudgBudgetetetetet
A budget is a financial statement showing the
estimates of receipts and expenditure. The budget
is divided into two parts : (a) revenue budget and
(b) capital budget.
BudgBudgBudgBudgBudget Deficitet Deficitet Deficitet Deficitet Deficit
Budget deficit is the difference between total
revenues and total expenditure.
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BullBullBullBullBull
A bull is a speculator who purchases securities in
anticipation of a rise in prices of securities.
BullionBullionBullionBullionBullion
Precious metals like gold or silver which have
been held in bulk in the form of ingots or bars.
Business cycleBusiness cycleBusiness cycleBusiness cycleBusiness cycle
Fluctuations in business conditions/economy like
prosperity recession depression and recovery.
Buyers marketBuyers marketBuyers marketBuyers marketBuyers marketA situation favouring buyers where supply
exceeds demand and there is an abundance of
goods and services.
Call OptionCall OptionCall OptionCall OptionCall Option
Refers to a contract giving the option for buying
shares at a future date within a prearranged time
limit.
CapitalCapitalCapitalCapitalCapital
Capital is one of the factors of production and
has been defined as wealth used in the production
of further wealth. For business purposes, capital
generally has to be considered in terms of money.
Capital Employed, Return OnCapital Employed, Return OnCapital Employed, Return OnCapital Employed, Return OnCapital Employed, Return On
The relation of profit to the estimate of average
capital employed to yield a ratio, commonly called
the primary ratio, as follows:
CapitalPrimary ratio =
Profit
Capital GainCapital GainCapital GainCapital GainCapital Gain
Refers to the difference between the purchase
price of an asset and its resale price at some later
date, where that difference has been positive.
Capital GoodsCapital GoodsCapital GoodsCapital GoodsCapital Goods
Goods which are made for the purpose of
producing consumer goods and other capital
goods, e.g. machinery of all kinds. This term is
synonymous with producers goods.
Capital MarketCapital MarketCapital MarketCapital MarketCapital Market
A market comprising institutions which are
involved in the purchase and sale of securities,
e.g., the new issue market and the stock exchange.
Cash MarketCash MarketCash MarketCash MarketCash MarketThe term used for a market for the immediate
delivery of, and payment for, commodity.
Central Excise DutiesCentral Excise DutiesCentral Excise DutiesCentral Excise DutiesCentral Excise Duties
These duties are levied by the Central
Government on commodities, which are produced
within the country. But commodities on which
State Governments impose excise duties (as for
instance, on liquor and drugs) are exempted from
Central Excise Duties.
C.I.F (Cost, Insurance and FC.I.F (Cost, Insurance and FC.I.F (Cost, Insurance and FC.I.F (Cost, Insurance and FC.I.F (Cost, Insurance and Frrrrreight)eight)eight)eight)eight)
Term used of goods shipped where the price
includes shipping and insurance charges. A C.I.F.
quotation implies that the seller must ship the
goods, meeting all charges upto on board and
paying insurance and freight.
Closed EconomyClosed EconomyClosed EconomyClosed EconomyClosed EconomyA concept which is used mainly in theoretical
models to describe an economy having no external
trade, which is completely self-sufficient and
insulated from external processes.
CompanyCompanyCompanyCompanyCompany
A joint stock company is a legal entity set up for
the purpose of conducting commercial or
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industrial operations, and with a capital divided
into shares, held by members.
ConglomerateConglomerateConglomerateConglomerateConglomerate
A group of companies making different types of
products. Ex: Tata Group
Consumer DurableConsumer DurableConsumer DurableConsumer DurableConsumer Durable
A commodity of relatively long life, like a
refrigerator or a washing machine, as distinct
from, say foodstuffs.
Consumer GoodsConsumer GoodsConsumer GoodsConsumer GoodsConsumer GoodsProducts in the actual form in which they reach
domestic consumers.
ConsumerConsumerConsumerConsumerConsumers Surpluss Surpluss Surpluss Surpluss SurplusMeans the excess of the price which a person
would be willing to pay rather than go without an
article over that which he/one actually pays; it
may be termed as consumers rent.
ConsumptionConsumptionConsumptionConsumptionConsumptionMeans the act of using goods and services to
satisfy current wants.
ContangContangContangContangContangoooooA stock exchange term meaning carry-over. A broker
who wishes to postpone settlement of a transaction
to the following account may do so on payment of
interest on the sum due. The term Contango is
also used to mean the extra payment itself.
ContrabandContrabandContrabandContrabandContrabandGoods brought into a country illegally without
paying customs duty.
ContractContractContractContractContractAn agreement, oral or written whereby one party
undertakes to do or not to do something for the
other party to the contract.
ConvConvConvConvConvertibilityertibilityertibilityertibilityertibility
Refers to the freedom to exchange any currency
for another currency at the current exchange rate.
Corporation TCorporation TCorporation TCorporation TCorporation Taxaxaxaxax
It is a tax on the companys profit. It is a direct
tax which is calculated on profits after interest
payments and allowance (i.e., capital allowance)
have been deducted but before dividends are
allowed for.
Corporate PaperCorporate PaperCorporate PaperCorporate PaperCorporate PaperNotes which are sold by large corporations in the
money market as a means of getting funds.
CorporationCorporationCorporationCorporationCorporation
The term used for a contemporary form of business
having two distinct characteristics: it is a legal entity
separated from its owners, the stockholders; and it
is usually on a scale much larger for the sole
proprietor or partnership to manage or fund.
CooperationCooperationCooperationCooperationCooperation
Cooperation refers to the collective efforts of
people who associate voluntarily to achieve
specified objective.
CountervCountervCountervCountervCountervailing Dutyailing Dutyailing Dutyailing Dutyailing Duty
A duty imposed on imported goods where there
is evidence of an export subsidy in the country of
origin which may adversely affect the domestic
producers in the importing country.
CumCumCumCumCumulativulativulativulativulative Pre Pre Pre Pre Preferefereferefereference Sharence Sharence Sharence Sharence Shareeeee
A preference share which entitles the holder to
receive not only the current dividend but also any
unpaid arrears, before any dividend has been paid
to ordinary shareholders.
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CurrCurrCurrCurrCurrent Assetsent Assetsent Assetsent Assetsent Assets
Items such as cash, accounts receivable,
marketable securities, and inventories assets that
could be turned into cash at a reasonable
predictable value within a relatively short time
period (typically, one year).
CurrCurrCurrCurrCurrent Liabilitiesent Liabilitiesent Liabilitiesent Liabilitiesent Liabilities
Debts, such as accounts payable, short-term loans,
and unpaid taxes, that will have to be paid off
during the current fiscal period.
Customs DutiesCustoms DutiesCustoms DutiesCustoms DutiesCustoms Duties
These are taxes on imports.
DebenturDebenturDebenturDebenturDebentureeeee
It is a long term loan taken by a company
DeficitDeficitDeficitDeficitDeficit
Refers to a situation where outgoings exceed
income on an ongoing basis, or where liabilities
exceed assets at a specific point in time.
DeflationDeflationDeflationDeflationDeflation
Deflation is the reverse case of inflation. Deflation
is that state of falling prices which occurs at that
time when the output of goods and services
increases more rapidly than the volume of money
in the economy. In the deflation the general price
level falls and the value of money rises.
DemandDemandDemandDemandDemandBy demand is meant the quantity of a commodity
that will be bought at a particular price and not
merely the desire for a thing. Generally at a high
price, less will be bought than at a low price.
DemDemDemDemDemurragurragurragurragurrageeeee
A penalty imposed for delay in taking delivery of
goods.
DepositoryDepositoryDepositoryDepositoryDepository
An organization which holds securities and settles
trade by recording change of ownership.
DeprDeprDeprDeprDepressionessionessionessionession
A severe and prolonged recession leads to a
depression. Ex: The 1929 Great Depression in
the USA.
DeprDeprDeprDeprDepreciationeciationeciationeciationeciation
Reduction in the value of good by wear and tear.
DerivDerivDerivDerivDerivativativativativativesesesesesAny form of security such as option contracts
which are derived from ordinary bonds and shares.
Derivative instruments can be bought or sold on
stock exchanges or future exchanges.
It is a generic term for options, futures and swaps.
Most of the business is over the counter and
involving a lot of risk.
DirDirDirDirDirect sellingect sellingect sellingect sellingect sellingSelling directly from the producer/manufacturer
to the end user eliminating middlemen.
DisinflationDisinflationDisinflationDisinflationDisinflation
A mild form of deflation. A policy adopted to
check inflation by restricting demand.
Disposable IncomeDisposable IncomeDisposable IncomeDisposable IncomeDisposable Income
Earnings which remain after paying income and
other taxes and other mandatory payments. It can
be regarded as similar to Take home pay.
DividendDividendDividendDividendDividend
In the case of limited companies, the rate of
dividend is the amount of distributed profit as a
percentage of the nominal value of the share
capital to which it relates. Dividends are usually
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declared annually but many companies pay
something on account as an interim dividend.
Dividend WDividend WDividend WDividend WDividend Warrantarrantarrantarrantarrant
A draft issued by a limited company and made
payable to a shareholder for the amount of
dividend due to him for a stated period.
Dock WDock WDock WDock WDock Warrantarrantarrantarrantarrant
A receipt for goods stored in a warehouse; it
entitles the holder to take possession of the goods.
DownsizingDownsizingDownsizingDownsizingDownsizingReducing the number of employees to increase
profits or for survival.
DumpingDumpingDumpingDumpingDumping
Means the sale of a good in a foreign market at a
price below its marginal cost. Selling below cost
price to capture a market.
DuopolyDuopolyDuopolyDuopolyDuopoly
A form of imperfect competition where there are
only two producers of a commodity. Such a
situation can be given to cut-throat competition
of a particularly irrelevant type, and to prevent
both parties being ruined by it, they may agree to
share the market, perhaps on a territorial basis,
each agreeing not to compete against the other in
its share of the market.
DuopsonyDuopsonyDuopsonyDuopsonyDuopsony
Refers to a market situation in which there are
only two buyers of a particular goods/service.
Economic GrEconomic GrEconomic GrEconomic GrEconomic Growthowthowthowthowth
The rate of expansion of the national income or
total value of production of goods and services
of a country.
Economies of ScaleEconomies of ScaleEconomies of ScaleEconomies of ScaleEconomies of Scale
Refers to the reduction in the average cost of a
product in the long run, resulting from an
expanded level of output. They are also known
as long run increasing returns.
ElasticityElasticityElasticityElasticityElasticity
The degree of responsiveness of demand or supply
to a change of price. Elasticity may be defined as a
measure of the percentage change in one variable in
respect of a percentage change in another variable.
Elasticity of DemandElasticity of DemandElasticity of DemandElasticity of DemandElasticity of Demand
Means the response of demand to a change in the
price of commodity. If the price rises, the amount
demanded normally decreases.
Elasticity of SupplyElasticity of SupplyElasticity of SupplyElasticity of SupplyElasticity of Supply
Means the response of supply to a change in the
price of commodity. If the price rises, the quantity
demanded normally increases.
EntrEntrEntrEntrEntrepreprepreprepreneureneureneureneureneur
The term used for the organizing factor in
production. Entrepreneurs are responsible for such
economic decisions as what to produce, how much
to produce and what method of production to adopt.
EntrEntrEntrEntrEntrepotepotepotepotepot
Importing goods for the purpose of exporting. Ex:
Singapore
EquityEquityEquityEquityEquity
Another name for ownership; often used to
describe a share in a company.
ExchangExchangExchangExchangExchangeeeee
Exchange is the act of obtaining a desired product
from someone by offering something in return.
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Excise DutiesExcise DutiesExcise DutiesExcise DutiesExcise Duties
Taxes on home produced goods to raise revenue,
as distinct from customs duties which are taxes
on imports not primarily imposed to raise revenue.
Excise duties may be imposed either to raise
revenue or to check the consumption of the
commodities on which they are imposed.
ExportExportExportExportExport
The term used for a goods/service which is
produced in one country and sold to a consumer
in another.
FFFFFace Vace Vace Vace Vace Valuealuealuealuealue
Means the nominal value, as distinct from the
market value, of a security (bond/share). The
value written on a coin or a bank note is also
termed as face value.
FFFFFactors of Practors of Practors of Practors of Practors of Productionoductionoductionoductionoduction
The resources required for production. The four
factors of production are Land, Labour, Capital
and Entrepreneur (Organization). Factors of
production are resources required for production.
FFFFFiduciaryiduciaryiduciaryiduciaryiduciary
A person or a legal body acting on behalf of others
who have a beneficial interest in investment or
other property Ex: the executor of a will.
FFFFFinished Goodsinished Goodsinished Goodsinished Goodsinished Goods
Refers to the goods, which are used for the
purpose of consumption and not utilized as inputs
by the firms in the process of production.
FFFFFiscal Deficitiscal Deficitiscal Deficitiscal Deficitiscal Deficit
This is the gap between the Governments total
spending and the sum of its revenue receipts and
non-debt capital receipts. It represents the total
amount of borrowed funds required by the
Government to completely meet its expenditure.
FFFFFiscal Piscal Piscal Piscal Piscal Policyolicyolicyolicyolicy
Generally refers to the use of taxation and
government expenditure for regulating the
aggregate level of economic activity.
FFFFFixixixixixed Assetsed Assetsed Assetsed Assetsed Assets
Includes the monetary value of the companys
plant, equipment, property, patents, and other
items used on a continuing basis to produce its
goods and services.
FFFFFixixixixixed Costed Costed Costed Costed Cost
Refers to the production costs which tend to be
unaffected by variations in the volume of output.
Floor PriceFloor PriceFloor PriceFloor PriceFloor Price
The minimum price level below which a firm can
no longer realise a profit.
FFFFF.O.B. (F.O.B. (F.O.B. (F.O.B. (F.O.B. (Frrrrree on Board)ee on Board)ee on Board)ee on Board)ee on Board)
Term used of goods shipped where the price does
not include shipping and insurance charges;
opposite to C.I.F. An F.O.B. quotation implies that
the exporter will deliver the goods free on board
a ship in accordance with the contract at the port
named; he pays all expenses up to that point. From
there on, the buyer must take responsibility,
paying for freight, insurance, and all subsequent
expenses
FFFFForworworworworward Marketard Marketard Marketard Marketard Market
A Forward market transaction involves a contract
to buy or sell commodities, or securities at a fixed
future date at a price agreed in a contract.
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FFFFForororororeign direign direign direign direign direct invect invect invect invect investment (FDI)estment (FDI)estment (FDI)estment (FDI)estment (FDI)
The investment made to acquire lasting interest
in enterprises operating outside of the economy
of the investor. The FDI relationship consists of
a parent enterprise and a foreign affiliate which
together form a transnational corporation.
FFFFForororororeign Institutional Inveign Institutional Inveign Institutional Inveign Institutional Inveign Institutional Investor (FII)estor (FII)estor (FII)estor (FII)estor (FII)
FII means an entity established or incorporated
outside India which proposes to make investment
in the financial markets in India.
FFFFFranchiseranchiseranchiseranchiseranchise
A type of licensing arrangement in which an
organization sells a package containing a
trademark, equipment, materials, services owned
by another organization.
FFFFFranchisingranchisingranchisingranchisingranchising
In general, franchising may be regarded as a
vertical marketing system in which a manufactureror service organization confers upon an individual
or firm the privilege of a marketing a product or
service.
FFFFFrrrrree Marketee Marketee Marketee Marketee Market
Refers to a market in which there is an absence
of intervention by government and where the
process of demand and supply are permitted to
operate freely.
FuturFuturFuturFuturFutureseseseses
Trading in shares or commodity for delivery at a
later date. A futures contract is for a purchase of
commodities for delivery at a date in the future.
A fixed and binding contract for a standard
amount to be bought at a fixed price at a fixed
future date.
GDPGDPGDPGDPGDP
(Gross Domestic Product) measures the total final
outputs of goods and services produced by the
countrys economy, i.e., within the countrys
territory by residents and non residents.
GoodGoodGoodGoodGood
This term is used of any commodity or service
for which there is a demand, irrespective of
whether it is in any sense good or bad.
GrGrGrGrGrey marketey marketey marketey marketey marketA market in shares which are yet to be issued.
HDI - HUMAN DEVELOPMENT INDEXHDI - HUMAN DEVELOPMENT INDEXHDI - HUMAN DEVELOPMENT INDEXHDI - HUMAN DEVELOPMENT INDEXHDI - HUMAN DEVELOPMENT INDEX
Was developed by UNDP in 1996 and
measures physical quality of life in a country
along 3 key parameters
Life expectancy at birth
No. of years in school
Per capita income
India ranks 134 out of 182 countries in 2009.
HierarHierarHierarHierarHierarchychychychychy
The line of authority in an organization that runs
in order of rank from top management to the
lowest level of the enterprise.
Horizontal IntegHorizontal IntegHorizontal IntegHorizontal IntegHorizontal Integrationrationrationrationration
With reference to the structure of an industry it is
the tendency to specialize in single processes
instead of undertaking the entire production of
the commodity from start to finish.
HypermarketHypermarketHypermarketHypermarketHypermarket
A hypermarket is a multi-brand, multi-department
store under one roof meant to offer cost-effective
shopping for household requirements.
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Income TIncome TIncome TIncome TIncome Taxaxaxaxax
Personal income tax is levied on individuals by
the Central Government and the proceeds are
shared between the Centre and the States. The
income tax is progressive; that is, the tax rate is
not uniform but rises progressively with the rise
in money income.
InflationInflationInflationInflationInflation
A situation of a steady and sustained rise in general
prices is usually known as inflation. Inflation is a
state in which the value of money is falling i.e.,
prices are rising.
InfrastructurInfrastructurInfrastructurInfrastructurInfrastructureeeee
Services which are regarded as essential for the
creation of a modern economy; e.g.; power,
transport, housing, education, health services.
Intermediate GoodsIntermediate GoodsIntermediate GoodsIntermediate GoodsIntermediate Goods
The goods which find use at some point in the
production process of other goods, rather than
final consumption.
InvInvInvInvInventoryentoryentoryentoryentory
The raw materials, work in progress and finished
goods in organization maintained to meet its
operational needs. A term used for the quantity
of stock held by a business.
InvInvInvInvInvoiceoiceoiceoiceoiceA document used in business giving a complete
summary of a transaction involving the sale of
goods.
Issued CapitalIssued CapitalIssued CapitalIssued CapitalIssued Capital
The actual amount of capital issued by a company
and allotted in shares to investors. It may be the
same or less than the authorised capital.
JobberJobberJobberJobberJobber
A jobber is an independent dealer in securities. He
purchases and sells securities in his own name. He
is not allowed to deal with non-members directly.
LabourLabourLabourLabourLabour
All human resources which are available to
society for use in the process of production.
Laissez FLaissez FLaissez FLaissez FLaissez Fairairairairaireeeee
Refers to a policy of non-interference by the State
in economic affairs.
Lateral IntegLateral IntegLateral IntegLateral IntegLateral Integrationrationrationrationration
This occurs when a firm branches or absorbs other
businesses engaged in producing commodities
related in same way to its own main products.
LIFO (Last In, FLIFO (Last In, FLIFO (Last In, FLIFO (Last In, FLIFO (Last In, First Out)irst Out)irst Out)irst Out)irst Out)
This is a method of costing adopted by firms which
carry many items of stock of the same kind bought
at different times and at different prices as shown inthe books. Under the more common FIFO system,
it is assumed that whenever an item is sold it was
the first to be purchased, whereas under the LIFO
system it is assumed to have been purchased last.
Limited LiabilityLimited LiabilityLimited LiabilityLimited LiabilityLimited Liability
Means the restriction of an owners loss in a
business to the extent of the capital that he has
invested in it.
Line OrLine OrLine OrLine OrLine Orggggganisationanisationanisationanisationanisation
Line organisation refers to a direct chain of
command from top to bottom. Here, the lines of
direction are straight and vertical. Every superior
has complete command over his subordinates and
every subordinate is directly accountable to only
one superior immediately above him.
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Liquidation (Winding Up)Liquidation (Winding Up)Liquidation (Winding Up)Liquidation (Winding Up)Liquidation (Winding Up)
Refers to the process where-by the existence of a
company gets terminated, its property having been
realized and distributed among its creditors and
in the event of a surplus, among its members.
LiquidationLiquidationLiquidationLiquidationLiquidation
It refers to the termination (or winding up) of a
registered company. Liquidation takes place
because of companys insolvency. In liquidation,
assets are turned into cash for settling outstanding
debts and for apportioning the balance, if any,
amongst the owners.
ManagManagManagManagManagementementementementement
The process of planning, organizing, leading, and
controlling the work of members of an
organization and of using all available
organizational resources to reach stated
organizational goals.
ManpowManpowManpowManpowManpowererererer
In ordinary language, manpower means the
working population of a country. In economics,
manpower means the organisation of work force
for its utilization in different sectors of the
economy.
MarketMarketMarketMarketMarket
A market consists of all the potential customerssharing a particular need or want who might be
willing and able to engage in exchange to satisfy
that need or want. In non-marketing terms the
function of a market is to enable an exchange of
goods or services to take place, a means by which
buyers and sellers are brought into contact with
one another.
Market LeaderMarket LeaderMarket LeaderMarket LeaderMarket Leader
A company which has a major market share of a
product/service. Ex: LIC is the market leader in
life insurance.
MarketingMarketingMarketingMarketingMarketing
Marketing is a social and managerial process by
which individuals and groups obtain what they
need and want through creating, offering and
exchanging products of value with others.
Market EconomyMarket EconomyMarket EconomyMarket EconomyMarket EconomyMeans an economy in which crucial economic
decisions and choices are made in a decentralized
manner by private individuals and firms operating
through a free price-and-market mechanism.
Equilibrium of prices and quantities are
determined in a market economy through the laws
of supply and demand. An economy based on free
enterprise in which forces of demand and supplyare allowed to operate freely, without any
restriction.
Market FMarket FMarket FMarket FMarket Forororororcescescescesces
Refers to pressures by the free play of market
supply and demand, which induce adjustment in
prices and / or quantities traded.
Market PriceMarket PriceMarket PriceMarket PriceMarket Price
Means the price determined by the equilibrium
between demand and supply in a market period
(or very short period).
Marketing MixMarketing MixMarketing MixMarketing MixMarketing Mix
The blending of variables like product pricing
promotion and distribution to form a marketing
strategy.
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Matrix StructurMatrix StructurMatrix StructurMatrix StructurMatrix Structureeeee
An organizational structure in which each
employee reports to both a functional or division
manager and to a project group manager.
MaturityMaturityMaturityMaturityMaturity
Means the date on which a loan or bond or
debenture becomes due and is to be paid off i.e.,
the capital refunded.
MerMerMerMerMergggggererererer
Means a union of two or more firms in a
transaction by which one absorbs the other(s), or
a new firm gets created utilising the assets of the
absorbed firms.
MixMixMixMixMixed Economyed Economyed Economyed Economyed Economy
It refers to that economic system in which both
private and public sector co-exist. Indian economy
is an example of a mixed economy.
Most FMost FMost FMost FMost Favavavavavourourourouroured Nationed Nationed Nationed Nationed Nation
An agreement between two countries that each
will offer the best possible trade terms in
commercial contracts.
MNC (Multi National Corporation)MNC (Multi National Corporation)MNC (Multi National Corporation)MNC (Multi National Corporation)MNC (Multi National Corporation)
A large corporation with operations and decisions
spread over several countries but controlled by a
central headquarters.
National IncomeNational IncomeNational IncomeNational IncomeNational Income
In the simplest way it can be defined as factor
income accruing to the national residents of a
country. It is the sum of domestic factor income
and net factor income earned from abroad. Net
national product at factor cost is called National
Income.
NANANANANAV (Net Asset VV (Net Asset VV (Net Asset VV (Net Asset VV (Net Asset Value)alue)alue)alue)alue)
The value of a funds investment. For a mutual
fund, the net asset value per share usually
represents the funds market price.
Net Book VNet Book VNet Book VNet Book VNet Book Valuealuealuealuealue
A statement of the value of fixed assets which is
used in accounting. The appropriate amount of
depreciation is deducted from the original cost
of purchase of the asset to give its net book value.
Net PrNet PrNet PrNet PrNet ProfitofitofitofitofitMeans gross profit minus deduction of tax
payments and depreciation provisions.
Net National PrNet National PrNet National PrNet National PrNet National Product (NNP)oduct (NNP)oduct (NNP)oduct (NNP)oduct (NNP)
When depreciation is deducted from GNP i.e.,
Gross National Product, we get Net National
Product (NNP).
NicheNicheNicheNicheNiche
A narrow specialized market.
OptionOptionOptionOptionOption
An option to sell or purchase within a period.
Open EconomyOpen EconomyOpen EconomyOpen EconomyOpen Economy
An economy, which is engaged in international
trade. The degree of openness of an economy is
appreciated by the rise of its foreign trade sector
relative to its gross domestic product.
OvOvOvOvOver Drafter Drafter Drafter Drafter Draft
A loan limit in a current account.
OvOvOvOvOverheadserheadserheadserheadserheads
Costs which are not directly chargeable to any
unit produced. They include rent of premises,
salaries of salesmen, research, etc.,
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Paid Up CapitalPaid Up CapitalPaid Up CapitalPaid Up CapitalPaid Up Capital
That part of the issued capital, which is paid upby the shareholders. The actual amount of capital
that shareholders have subscribed. It may be less
than the authorised capital.
Paid Up SharPaid Up SharPaid Up SharPaid Up SharPaid Up Shareseseseses
Shares are fully paid up when the full amount
has been paid. Sometimes shares are only partly
paid up, the company being able to call for the
balance to be paid whenever it requires this
additional capital.
Paradox of VParadox of VParadox of VParadox of VParadox of Valuealuealuealuealue
Means paradox on which an essential to life item,
such as water is normally valued little, but a luxury
item, such as diamonds, carry a high price.
Par VPar VPar VPar VPar Valuealuealuealuealue
Means the nominal or face value of a share or
security.
Planned EconomyPlanned EconomyPlanned EconomyPlanned EconomyPlanned Economy
An economy where crucial economic processes
are determined to a large extent not by market
prices, but by an economic planning body.
PlanningPlanningPlanningPlanningPlanning
Planning, a primary function of management,
implies looking ahead and deciding in advance
what to do, when to do it, how to do it and who is
to do it.
Planned obsolescencePlanned obsolescencePlanned obsolescencePlanned obsolescencePlanned obsolescence
A marketing strategy to encourage replacement
of old models or styles by introducing new models
or styles.
PPPPPoint of puroint of puroint of puroint of puroint of purchase displaychase displaychase displaychase displaychase display
A display at a place closely associated with
purchase decisions like check out counter. The
display stimulates impulse buying.
PrPrPrPrPredatory Pricingedatory Pricingedatory Pricingedatory Pricingedatory Pricing
Means the practice of diminishing prices down
to unprofitable levels for a period, so as to weaken
or eliminate existing competitors.
PrPrPrPrPremiumemiumemiumemiumemium
Securities are said to be at a premium when theystand above par on the stock exchange.
PricePricePricePricePrice
Refers to the value of a commodity or service in
terms of money. Also it is the amount of money
that has to be paid for a commodity or service.
Price DiscriminationPrice DiscriminationPrice DiscriminationPrice DiscriminationPrice Discrimination
Refers to the charging of different prices to
different groups of individuals for the same goods
or services for reasons not associated with
difference in costs.
Primary DeficitPrimary DeficitPrimary DeficitPrimary DeficitPrimary Deficit
The primary deficit is the fiscal deficit minus
interest payments. It tells how much of the
Governments borrowings are going towards
meeting expenses other than interest payments.
Primary IndustryPrimary IndustryPrimary IndustryPrimary IndustryPrimary Industry
Refers to the production of goods from
agriculture, forestry and fishing, mines that
constitute the natural wealth of a nation.
PrPrPrPrProducers Goodsoducers Goodsoducers Goodsoducers Goodsoducers Goods
Refers to goods made for the purpose of
producing consumer goods and other capital
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goods e.g. machinery of all kinds. This is
synonymous with capital goods.
PrPrPrPrProductoductoductoductoduct
A product can be defined as anything that can be
offered to satisfy a need or want. The term
Product can be used to cover both goods and
services.
PrPrPrPrProductivityoductivityoductivityoductivityoductivity
Means output per unit of input employed.
PrPrPrPrProfit Marofit Marofit Marofit Marofit MarginginginginginRefers to profit per unit of output which is
expressed as a percentage of price.
P NotesP NotesP NotesP NotesP Notes
A system by which certain overseas entities can
invest in Indias capital markets. Also termed as
overseas derivative instruments [ODIS].
PrPrPrPrProfitofitofitofitofit
Total Revenue less all costs and expenses.
PrPrPrPrPromotion mixomotion mixomotion mixomotion mixomotion mix
Using advertising, publicity, sales promotion and
personal selling to communicate, inform and sell
goods and services to the consumer.
PurPurPurPurPurchasing Pchasing Pchasing Pchasing Pchasing Powowowowower Parity (PPP)er Parity (PPP)er Parity (PPP)er Parity (PPP)er Parity (PPP)
An exchange rate between two currencies such
that the same basket of goods and services couldbe bought in each country if the cost were
converted at that exchange rate.
It is often used to compare the standards of living
between countries.
Pyramid/PPyramid/PPyramid/PPyramid/PPyramid/Ponzionzionzionzionzi
An illegal system of paying off old investors with
new investments. A constant stream of new
investments is needed for the success of this
model.
Rate of ReturnRate of ReturnRate of ReturnRate of ReturnRate of Return
Refers to the basis of earnings from the investment
of capital, where earnings are expressed as a
proportion of the outlay.
Rate of TRate of TRate of TRate of TRate of Turnovurnovurnovurnovurnovererererer
The number of times the value of the average
stock of a business is sold during a period.
RecessionRecessionRecessionRecessionRecession
Slowing down of the economy over a period of
two to three quarters. [Many countries are
currently in Recession]
ReinsuranceReinsuranceReinsuranceReinsuranceReinsurance
Insurers passing on parts of the risk to other
parties in return for a proportional share of
premium
Sandwich BoardsSandwich BoardsSandwich BoardsSandwich BoardsSandwich Boards
Boards carried in front of and behind a person to
carry advertisements
Sandwich ManSandwich ManSandwich ManSandwich ManSandwich Man
A man who carries sandwich boards to carry
advertisements.
Scab (also called blackleg)Scab (also called blackleg)Scab (also called blackleg)Scab (also called blackleg)Scab (also called blackleg)
A scab is a worker who goes on working when
there is a strike.
ScheduleScheduleScheduleScheduleSchedule
A schedule specifies time limits within which
activities are to be completed. It is the process of
establishing a time sequence for the work to be
done.
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Scientific ManagScientific ManagScientific ManagScientific ManagScientific Managementementementementement
It is the art of knowing exactly what you want
men to do and then seeing that they do it in the
best and cheapest way. (F.W. Taylor)
Sellers marketSellers marketSellers marketSellers marketSellers market
Demand exceeds supply. The situation favours a
seller.
Shell CompanyShell CompanyShell CompanyShell CompanyShell Company
A company listed in the stock exchange but which
does not trade.
Span of ContrSpan of ContrSpan of ContrSpan of ContrSpan of Contrololololol
The number of subordinates reporting directly to
a given
Spin OffSpin OffSpin OffSpin OffSpin Off
A secondary product developed from the main
product. superior. Also called span of
management control.
SpotSpotSpotSpotSpot
One common meaning is immediate or now.
Buying something for immediate delivery. Ex: a
spot market for oil Other variations of the use of
spot are spot cash, spot price and spot rate.
Spot Price or rateSpot Price or rateSpot Price or rateSpot Price or rateSpot Price or rate
Price or rate for something which is delivered
immediately.
StaffingStaffingStaffingStaffingStaffing
Staffing is the process of filling all positions in
the organisation with adequate and qualified
personnel. It consists of manpower planning,
recruitment, selection, training, compensation,
integration and maintenance of employees.
StagStagStagStagStag
A speculator who buys a large amount of a new
issue of shares or stock if he thinks the price is
likely to rise above the offer price when dealings
in it begin on the stock exchange, so that he hopes
to sell soon at profit.
A person who buys new shares and sells them
immediately to make a profit.
Start-UpStart-UpStart-UpStart-UpStart-Up
Business founded by individuals intending to
change the environment of a given industry by
the introduction of either a new product or a new
production process.
Stock ExchangStock ExchangStock ExchangStock ExchangStock Exchangeeeee
A highly organised market for dealings in stocks
and shares. Only members are admitted and
business is transacted according to a prescribed
set of rules. An investor who wishes to sell or
buy securities must act through a broker.
StrategyStrategyStrategyStrategyStrategy
A strategy may be defined as an administrative
course of action designed to achieve success in
the face of difficulties.
Strategic PlanningStrategic PlanningStrategic PlanningStrategic PlanningStrategic Planning
Strategic planning is long term in nature. Strategic
planning is formulated mainly at the top level of
management. It has mainly an external focus as it
is designed to achieve the organisational
objectives in the face of challenges and
opportunities.
SynerSynerSynerSynerSynergygygygygy
The situation in which the whole is greater than
its units. In organizational terms, synergy means
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the departments that interact cooperatively are
more productive than they would be if they
operated in isolation.
TTTTTax havax havax havax havax havensensensensens
A financial off shore centre that offers a more
favourable tax environment to non-residents. One
of the attractive features is the maintenance of
strict secrecy regarding the name of the account
holder.
TTTTTaxaxaxaxaxeseseseses Direct Taxes
Direct incidence of tax on the person who pays
the tax. liability to pay tax is NOT passed on
to someone else. e.g. INCOME TAX,
CORPORATION TAX, WEALTH TAX,
LAND REVENUE, GIFT TAX etc.
Indirect Taxes
Levied on goods and services. traders /
producers pay it. Liability passed on to end
customer. e.g. VAT, EXCISE TAX,
CUSTOMS DUTY, SERVICE TAX
TTTTTraded Optionsraded Optionsraded Optionsraded Optionsraded Options
Options to buy or sell shares at a certain price at
a certain date in the future which themselves can
be bought or sold.
TTTTTurnovurnovurnovurnovurnovererererer
Total sales of a business during a particular period.
UnivUnivUnivUnivUniversal Service Obligersal Service Obligersal Service Obligersal Service Obligersal Service Obligationationationationation
A fund created by imposing a cess on telecom
companies to recover part of the costs incurred
by the Government for extending telecom network
in rural areas.
VVVVV.A.T (V.A.T (V.A.T (V.A.T (V.A.T (Value Added Talue Added Talue Added Talue Added Talue Added Tax)ax)ax)ax)ax)
A tax levied on the value of each of the processes
carried out by a business.
VVVVVariable Costsariable Costsariable Costsariable Costsariable Costs
Expenses that vary directly with the amount of
work being performed.
VVVVVendorendorendorendorendor
Commonly known as supplier. An individual or
business who sells goods to other business.
WWWWWash Salesash Salesash Salesash Salesash SalesIt is a transaction in which a speculator sells a
security and then buys it at a higher price through
another broker. This will create an impression that
there is great demand for that security. As a result,
people may be induced to purchase them at a very
high price.
WWWWWear and Tear and Tear and Tear and Tear and Tearearearearear
The depreciation of the value of a thing as a result
of ordinary usage as distinct from damage
resulting from negligence or accidental causes.
Wind UpWind UpWind UpWind UpWind Up
To bring a limited company to an end either
voluntarily or by order of the court.
YYYYYieldieldieldieldield
The return on a security, based on its currentearnings in relation to its current price on the stock
exchange. Money produced as a return on an
investment.
80-20 Principle80-20 Principle80-20 Principle80-20 Principle80-20 Principle
A rule of thumb stating that 80% of a firms
business is generated by approximately 20% of
its customers.
ECONOMIC& BUSINESSGLOSSARY