| Face value | The public price of a good or service. Items are generally sold at or below this price. |
| Facilitation | In business, employers use facilitation to build teams and shape leaders. The main role of a facilitator is to add value to a group planning session or meeting by keeping a group on task and making progress, which saves the employer valuable time and money. Facilitators can also help resolve conflict and manage employee concerns. Facilitation can be done in individual sessions, or a facilitator may participate in a group event or meeting. |
| Factor rate | A factor rate is typically used for merchant cash advances and short-term business loans to determine how much you will owe in interest. Instead of a percentage, like with APRs, the interest rate for invoice factoring is expressed in decimal form. Your factor rate is determined by the industry your business is in, how long you’ve been in business, the stability of your business, and your monthly credit card payment revenue. With factor rates, you generally pay more in interest than with loans that use APRs. |
| Factors of production | The labor, machinery, and equipment (usually referred to as capital), land, and other inputs to a production process. |
| Fair market value | Fair market value is the price that the property, services or assets would sell for in an open market. If no reliable price quotes are available, then the fair market value is based on a good-faith estimate of the value. |
| Fairness | A way to evaluate an allocation based on one’s conception of justice. |
| Fairtrade | An organised movement enabling producers in developing countries to receive a fair price for the items they produce. Fairtrade certification is becoming much more common in many sectors, particularly food, with several large brands now stating that their products are ‘certified Fairtrade’ on their packaging. |
| Fallacy of composition | Mistaken inference that what is true of the parts (for example a household) must be true of the whole (in this case the economy as a whole). See also: paradox of thrift. |
| Fear of missing out | A need to ensure that one does not forgo an opportunity (often for profit). This can often be used to push buyers to make irrational decisions. |
| Feasible frontier | The curve made of points that defines the maximum feasible quantity of one good for a given quantity of the other. See also: feasible set. |
| Feasible set | All of the combinations of the things under consideration that a decision-maker could choose given the economic, physical or other constraints that he faces. See also: feasible frontier. |
| Fee | A quantity of money that is demanded in exchange for value. |
| Fees | Compare origination and underwriting fees along with closing costs. If you’re getting an SBA loan, expect an SBA loan guarantee fee. The lender pays this fee and has the option to pass it along to you at closing. Note that lenders can’t charge a separate origination fee on an SBA 7(a) loan, though they can charge packaging fees that are reasonable and customary for the services performed. Other fees associated with a small-business loan include late payment fees, check processing fees and prepayment fees, which are charged if you make early payments. |
| Ferengi Rules of Aquisition | A set of 285 business guidelines used by the mercantile race of Ferengi in the Star Trek franchise. |
| Fica tax payable | This current liability account reports the amount a company owes (must remit) for its employees’ Social Security and Medicare taxes as of the date of the balance sheet. |
| FICO scoring system | Excellent Credit: 750+ Good Credit: 700-749 Fair Credit: 650-699 Poor Credit: 600-649 Bad Credit: below 600 |
| Fictitious name | A name used by a business that is not its personal or legal name. A business can legally do business under a fictitious name if the proper requirements are met. |
| Fiduciary duty | Requirement or responsibility to work in the best interest of a person or organization |
| Final good | A product intended to be consumed, rather than to be used in the creation of another good. |
| Final income | A measure of the value of goods and services a household can consume from its disposable income. This is equal to disposable income minus VAT paid, plus the value of public services received. |
| Financial accelerator | The mechanism through which firms’ and households’ ability to borrow increases when the value of the collateral they have pledged to the lender (often a bank) goes up. |
| Financial deregulation | Policies allowing banks and other financial institutions greater freedom in the types of financial assets they can sell, as well as other practices. |
| Financial management | Planning, analysing, monitoring, organising, reviewing and controlling an organisation’s monetary resources. Responsibility for financial management often falls to the finance director, and by extension the financial department. |
| Financial statements * | The balance sheet reports information as of a date (a point in time). The income statement, statement of cash flows, statement of retained earnings, and the statement of stockholders’ equity report information for a period of time (or time interval) such as a year, quarter, or month. |
| Financial year | A year as reckoned for taxing or accounting purposes. |
| Fire sale | The sale of something at a very low price because of the seller’s urgent need for money. |
| Firm | Economic organization in which private owners of capital goods hire and direct labour to produce goods and services for sale on markets to make a profit. |
| Firm-specific asset | Something that a person owns or can do that has more value in the individual’s current firm than in their next best alternative. |
| First copy costs | The fixed costs of the production of a knowledge-intensive good or service. |
| First mover advantage | The strategic benefit acquired from acting before any potential rival. The term is typically used when referring to the entrance into a new market or the offering of a new class of product. |
| Fiscal capacity | The ability of a government to impose and collect substantial taxes from a population at low administrative and other costs. One measure of this is the amount collected divided by the cost of administering the tax system. |
| Fiscal multiplier | The total (direct and indirect) change in output caused by an initial change in government spending. See also: fiscal stimulus, fiscal policy, aggregate demand. |
| Fiscal policy | Changes in taxes or government spending in order to stabilize the economy. See also: fiscal stimulus, fiscal multiplier, aggregate demand. |
| Fiscal stimulus | The use by the government of fiscal policy (via a combination of tax cuts and spending increases) with the intention of increasing aggregate demand. See also: fiscal multiplier, fiscal policy, aggregate demand. |
| Fiscal year | Also known as a financial year, the fiscal year is a set period used to calculate financial statements. The period used differs between countries and between businesses, although in the UK the year between 6th April and 5th April is most often used for personal taxation. The ‘official’ period for corporation tax runs from 1st April to 31st March, however companies can adopt any yearly period for corporation tax. |
| Fiscal year | A 12-month period used for accounting purposes and preparing a business’s financial documentation. Please note: the fiscal year does not always revolve around the calendar year. |
| Fiscal year (llc) | A fiscal year is any 12-month period used by an LLC as its accounting period. For example, the fiscal year could begin on July 1 and end on June 30. Many fiscal years follow the calendar year of January 1 through December 31. |
| Fisher equation | The relation that gives the real interest rate as the difference between the nominal interest rate and expected inflation: real interest rate = nominal interest rate – expected inflation. |
| Five finger discount | A 100% reduction in the purchase price of an item. This is necessarily the result of shoplifting. |
| Fixed assets | A term used when referring to property, plant, and equipment. Fixed assets other than land are depreciated. |
| Fixed cost | Any cost that remains the same in the short-term, despite changes in volume. Fixed costs usually include, for example, rent, interest and salaries. |
| Fixed costs | Costs of production that do not vary with the number of units produced. |
| Fixed field | Organization of a tape or data file in which each group of data (such as name, address, city, zip) has a fixed location and length within the file. |
| Fixed liabilities | Usually a type of payable debt (like mortgages, business loans, etc.) which carry a term that exceeds one year. |
| Flat file | Another name for a sequential name file. Contrasted with a database file (not flat because of the indexes). |
| Fleece | To trick someone out of a lot of money. |
| Flexible budget | A budget that flexes with volume. Under a flexible budget the budgeted amount of manufacturing overhead will increase if the company produces more units than planned. The flexible budget will decrease if the company actually produces fewer units than planned. |
| Float | The time between when a check is written and when the check clears the bank account on which it is drawn. |
| Flow | A quantity measured per unit of time, such as annual income or hourly wage. |
| Focus group | A group of customers who are assembled together by an advertising agency in a conference room to discuss a particular product. Useful for learning what the public thinks of your product or message or company. |
| Forced bundling | A requirement that customers purchase multiple products in order to receive a desired item. For instance, many laptop manufacturers bundle copies of Microsoft Windows (even if customers do not want the operating system installed). |
| Foreign direct investment (fdi) | Ownership and substantial control over assets in a foreign country. See also: foreign portfolio investment. |
| Foreign portfolio investment | The acquisition of bonds or shares in a foreign country where the holdings of the foreign assets are not sufficiently great to give the owner substantial control over the owned entity. Foreign direct investment (FDI), by contrast, entails ownership and substantial control over the owned assets. See also: foreign direct investment. |
| Format | The way data (name and address) is organized on a disk or tape. There is no standard format. Every company has their own. |
| Fractional reserve lending | A system that allows banks to lend an amount in excess of its deposits. While a minority of economists consider this to be a form of fraud, it is the foundation of modern banking. |
| Franchise loans | Franchise loans can be used for standard business opening expenses and franchise-specific costs, such as marketing fees or the franchise fee, which you pay upfront to open a franchise. Some franchisors may offer funding to help you establish your franchise |
| Fraud | The use of intentional deception to derive benefit from a transaction. |
| Free cash flow to equity (fcfe) | FCFE represents the cash that’s available after reinvestment back into the business (capital expenditures). |
| Free good | An offering that is available in unlimited quantity at no cost (for example: sunlight). |
| Free ride | Benefiting from the contributions of others to some cooperative project without contributing oneself. |
| Free rider | A person who receives the benefits from a good or service without being required to pay. |
| Freeloader | A market participant who extracts value from a product without paying the vendor for the privilege. |
| Freemium | A pricing tier with zero cost to the user. Common goals for freemium models are to 1) increase the size of the user base 2) lower the barriers to entry for users. Many businesses utilize the strategy with the hope that freemium customers will convert into paying customers. Producers offering freemium products should be careful to provide significantly greater value at more expensive tiers, lest no user has reason to upgrade to a paid tier. |
| Frequency | A term for how many times a person buys from you. |
| Friction | The costs associated with a transaction that are not included in the purchase price. Examples include: taxes, fees, research and switching costs. |
| Friendliness | Friendliness is an important communication skill and helps others receive your message more readily. An example of practicing friendliness in the workplace is including personalized messages, such as wishing someone a good evening, when communicating. |
| FSI | Free Standing Insert. Usually a coupon or other promotion found in a magazine or newspaper. The least expensive way to distribute coupons. |
| Ftse 100 index | This list is made up of the 100 most highly capitalised blue-chip companies on the London Stock Exchange. |
| FUD | An acronym for “fear, uncertainty and doubt.” An effective, though ethically questionable means of selling products. Rather than focusing on the benefits of a given product, sales materials focus on the negative emotions of the buyers. |
| Fulfillment | The process of responding to a customer request with literature or product. Fulfillment us usually outsourced to a fulfillment house. |
| Fundamental value | See also: fundamental value of a share. |
| Fundamental value of a share | The share price based on anticipated future earnings and the level of risk. |
| Funding gap | A measure of the shortfall a company has to overcome (how much more cash it needs) |
| Futures | These are financial contracts that secure a predetermined future date and price for an asset. The assets used in futures contracts include commodities, stocks, and bonds. |
