Organisations and the financial system
Organisations and the financial system

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

Organisations and the financial system


Browse the glossary using this index

Special | A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | ALL

Page:  1  2  (Next)



An asset that a lender accepts as security for a loan. In event that the borrower defaults on their loan payments, the lender can seize the collateral and resell it to recoup the losses suffered.

Credit rating

A credit rating is a score which reflects the opinion of a credit rating agency or a credit reference agency about the credit worthiness of an individual, a corporation, a financial obligation or even a country. The rating is intended to provide the market with an evaluation of a potential borrower's ability to service and repay its obligations in the future. The rating is prepared either by a rating agency typically on a solicited basis, i.e. at the request of the lender and/or debt issuer, or by a reference agency on an unsolicited basis, i.e. without consultation using publicly available information.

Current assets

Current assets are assets which remain in a business only a short time or change over time. A good example would be raw materials purchased for manufacture, which would be used up in a production process and replaced.

Current liabilities

Current liabilities are amounts owed by a business to others that are payable within one year at the end of an accounting period. There are several different types of items which could be included in current liabilities, but trade payables, accruals and short-term loans are common examples.



Dividends are the payments to shareholders. They are usually paid on an annual or half-yearly basis.  The size of dividend payments is usually linked to the financial performance of the company that issues the shares. It is at the discretion of companies, subject to approval by its shareholders, whether dividends should be paid.


Gross domestic product

Gross domestic product is the measure of the value of final goods and services produced within a given country's borders.


Market capitalisation

Market capitalisation refers to the value of a company traded on the stock market. It is calculated by multiplying a company's outstanding shares by the current share price. 


Non-current assets

Non-current assets are assets for long-term use, generally speaking, for more than one year. Capital expenditures that have been capitalised (i.e. recognised in the balance sheet) appear on the face of the balance sheet as non-current assets.


Opportunity cost

A key concept in economics, an opportunity cost is the cost related to the second best choice available to someone who has chosen from several mutually exclusive options. Thus it is a measure of what has been foregone by a particular course of action and expresses the basic relationship between scarcity and choice. Opportunity costs are not restricted to monetary or financial costs: the real cost of output foregone, lost time, pleasure or any other benefit that provides utility should also be considered an opportunity cost.


Outsourcing is the contracting out by an organisation of a business function, typically previously carried out inside the organisation.



The difference between the price paid by a shareholder for a share and the share's nominal value, that is, the excess above the nominal value.


Privatisation is the process of transferring the ownership of a company or industry from the public to the private sector.


A prospectus is a formal document that details a financial security, such as stocks and bonds, intended for public offering. The aim of the prospectus is to help investors make more informed investment decisions.


Rate of interest

The cost of borrowing money over a period of time.


Start-up company

A start-up company, often simply referred to a 'start-up', is a company in the early stages of its operations. The classification is mainly used to identify companies operating in innovative sectors characterised by high growth potential, but also high risk.

Page:  1  2  (Next)


Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371