Finance acronyms

A measure of how much profit or value is generated relative to the cost of an investment. ROI is used across marketing, finance, and operations.

Example: The campaign delivered a strong ROI.

A machine that lets customers withdraw cash and perform basic banking tasks.

Example: I stopped at the ATM to get twenty dollars.

A numeric code used to verify identity for cards and devices.

Example: Enter your PIN before completing the purchase.

A measurable value used to track progress toward an important business objective. KPIs help teams monitor financial and operational health.

Example: Monthly revenue is a core KPI for the board.

A financial statement that summarizes revenues, costs, and expenses over a period of time. P&L reports show whether a business operated at a profit or loss.

Example: The CFO reviewed the monthly P&L.

The yearly value of subscription revenue normalized across customers and contracts. ARR is a major metric for SaaS and recurring-revenue businesses.

Example: Investor updates focused on ARR growth.

The process through which a private company offers shares to the public for the first time. An IPO transitions a firm into a publicly traded company.

Example: Rumors suggest the startup is eyeing an IPO.

The executive responsible for managing a company's financial strategy, reporting, and risk. CFOs oversee budgeting, fundraising, and capital allocation.

Example: The CFO presented the forecast to investors.

The monthly value of predictable subscription revenue generated by a business. MRR is a key metric for subscription companies.

Example: The startup crossed $50K in MRR.

The average cost of acquiring a new customer, including marketing and sales expenses. CAC is commonly compared with LTV to assess growth efficiency.

Example: Paid ads pushed CAC higher this quarter.

A company’s profit allocated to each outstanding share of stock.

Example: EPS came in higher than analysts expected.

An estimate of the total revenue or profit a customer will generate over the duration of their relationship with a business. LTV helps guide pricing and marketing spend.

Example: Healthy LTV made the channel sustainable.

An electronic network used in the US for bank-to-bank transfers such as payroll and bill payments. ACH transfers are common for low-cost domestic payments.

Example: Payroll was sent by ACH.

The mean annual growth rate of an investment or metric over a period of time.

Example: Investors liked the startup’s five-year CAGR.

The US federal agency that regulates securities markets and protects investors. Public companies interact with the SEC through filings and compliance requirements.

Example: The company submitted its SEC filing.

Best known for the FICO credit score, a widely used measure of consumer credit risk. Lenders often rely on FICO scores in lending decisions.

Example: Her FICO score improved after paying down debt.

Policies, laws, and controls designed to detect and prevent the movement of illicit funds. AML programs are required across many regulated financial sectors.

Example: The bank flagged the transfer for AML review.

An investment fund that trades on stock exchanges like a stock. ETFs often track indexes, sectors, or themes and are popular for diversification.

Example: She bought a broad-market ETF for retirement.

A US agency that insures eligible bank deposits up to specified limits. FDIC insurance helps protect depositors if a bank fails.

Example: Their checking account is FDIC insured.

A financial metric used to evaluate operating performance before certain non-cash and financing expenses. It is often used in valuation and comparison across companies.

Example: The pitch deck highlighted EBITDA growth.

A compliance process used to verify customer identity and assess risk. KYC requirements help institutions prevent fraud and financial crime.

Example: The exchange asked for KYC documents.

A professional accounting credential in the United States. CPAs often provide auditing, tax, and advisory services.

Example: Their CPA prepared the year-end returns.

The yearly cost of borrowing, including interest and certain fees, expressed as a percentage. APR helps borrowers compare loan offers.

Example: The loan's APR was lower than expected.

A common framework of accounting standards used in the United States. GAAP helps ensure consistency and comparability in financial reporting.

Example: The statements were prepared under GAAP.

A global messaging network used by financial institutions to securely send payment instructions. SWIFT is central to many international transfers.

Example: The wire was routed using SWIFT details.

The effective annual rate of return on savings or investment accounts, including compounding. APY helps compare interest-bearing products.

Example: That savings account advertises a high APY.

A method for evaluating an investment by comparing present value of cash inflows and outflows. Positive NPV generally suggests a worthwhile project.

Example: Finance approved the project based on NPV.

A metric used to estimate the profitability of an investment by calculating the discount rate that sets net present value to zero. IRR is common in capital budgeting.

Example: The deal cleared the firm's IRR target.