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Glossary of Important Financial Terms

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Term Definition
Negative Assurance

This is usually an assurance issued by auditors or boards, which says to the effect that they are not aware of information which would adversely affect the accuracy of a set of financial statements. The implication is that a negative assurance does not guarantee that the said statements are correct.

Negative Equity

Refers to a situation in which the value of an asset is below the outstanding loans taken to pay for it. This mostly occurs in times of falling asset prices during an economic downturn. The implication of negative equity is that asset owners may find it more worthwhile for the asset to be foreclosed, leading to banks having to write-off the negative-equity as a loss.

Net Asset Value (NAV)

The value of a company assets, less its liabilities. It is the theoretical value of a firm if it is sold at book value and its liabilities paid off.

Net Tangible Asset (NTA)

NTA is Net Asset Value (NAV) subtracting intangible assets (such as patents and concessions) and is a more conservative way of measuring a company’s intrinsic value. In reality, actual value realizable from a company’s liquidation is usually lower than NTA or NAV (converse may be also be true)

Nil-Paid Rights

Rights which have not been exercised and for which no payment has yet been made. Investors who are entitled to nil-paid rights can generally sell them during a brief period after the declaration of the rights. Buyers of the rights will be able to subscribe to shares under the terms of the rights.

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