Category: Financial Terms

Brand Loyalty Brand loyalty is a consumer’s ongoing preference for and repeat purchase of a particular brand, often regardless of price. Firms that build strong brand loyalty spend less on acquiring new customers, rely on repeat purchases for revenue growth, and can benefit from positive word-of-mouth and higher lifetime customer value. Key takeaways Brand loyalty…

Brand Identity What is brand identity? Brand identity is the collection of visible and experiential elements that shape how customers perceive a company. It includes visual assets (logo, colors, typography), verbal elements (voice, messaging), and experiential touchpoints (service, product design, digital interfaces). A strong brand identity aligns perception with what a company actually delivers. Why…

Brand Extension Explained: Definition, Examples, Risks, and Best Practices What is brand extension? Brand extension is a growth strategy where a company uses an established brand name to launch new products or enter new categories. It leverages existing brand equity, recognition, and customer loyalty to reduce marketing costs and increase the likelihood of acceptance for…

Brand Equity: Definition, Importance, and Impact on Profitability What is brand equity? Brand equity is the added value a company gains from a recognizable, trusted, or admired brand name compared with a generic equivalent. It reflects consumers’ perceptions and emotional associations with a brand and translates into tangible advantages such as higher prices, stronger sales,…

Brand Awareness: Definition, Importance, and How to Build It What is brand awareness? Brand awareness measures how well consumers recognize a product or company by name, logo, or other identifying features. High brand awareness means consumers not only recognize the brand but associate it with a favorable value proposition compared with competitors. Why brand awareness…

Brand: Definition, Identity, Types, and How to Build One What is a brand? A brand is the unique identity a company, product, or person presents to the market. It includes names, logos, slogans, design, packaging, messaging, and the experiences associated with the offering. A strong brand differentiates products and services from competitors, communicates value to…

Branch Manager: Role, Responsibilities, Qualifications, and Pay Definition A branch manager oversees the operations of a single physical location for a financial institution (commonly a bank). They act as the onsite leader, responsible for staff, customer relationships, sales targets, compliance, and the branch’s overall performance. Key Responsibilities Manage day-to-day branch operations and ensure service quality….

Branch Banking What branch banking is Branch banking is the operation of retail bank locations that function as extensions of a bank’s main office. Branches provide deposit, withdrawal, loan, and advisory services in person, offering convenience and face-to-face interaction that digital channels cannot fully replicate. Historical context and current landscape Deregulation in the 1990s (notably…

Branch Accounting: Definition, Methods, and Practical Guide Key takeaways * Branch accounting maintains separate bookkeeping for each geographically distinct operating location to enhance transparency and control. * Each branch is treated as a profit or cost center; branch accounts are typically temporary and consolidated into head-office accounts at period end. * Common methods include the…

Brain Drain: Causes, Consequences, and How to Reduce It Key takeaways * Brain drain (also called human capital flight) is the migration of skilled individuals from one place, industry, or organization to another in search of better opportunities. * It appears geographically (between regions or countries) and within the economy (between companies or entire industries)….

Box Spread: Definition, Example, Uses & Risks What is a box spread? A box spread is an options arbitrage strategy that combines a bull call vertical spread with a matching bear put vertical spread using the same strikes and expiration. Because the payoff at expiration is always the difference between the two strike prices, a…

Boundary Conditions: What They Are and How They Work Boundary conditions define the theoretical minimum and maximum prices an option can have based on the current price of the underlying asset, the strike (exercise) price, time to expiration, and whether the option is American or European. They provide intuitive limits and simple sanity checks for…

Bounced Check Key takeaways * A bounced check (returned for non-sufficient funds, NSF) occurs when the account lacks enough money to cover the payment. * Consequences include bank NSF/overdraft fees, merchant fees, reporting to deposit-monitoring services, difficulty opening accounts, and possible legal charges if fraud is suspected. * Overdraft protection (linked savings or a credit…

Bottom-Up Investing What it is Bottom-up investing is a stock-picking approach that begins with detailed analysis of individual companies rather than starting from macroeconomic or sector trends. Investors using this method evaluate company fundamentals — revenue, earnings, cash flow, management, products and competitive position — to identify businesses with durable advantages and attractive long‑term prospects….

Bottom Line The “bottom line” is a business term for a company’s net income, net profit, or earnings per share (EPS). It appears at the bottom of the income statement and represents the amount remaining after subtracting all expenses from revenues for a reporting period. Investors, managers, and analysts use the bottom line to assess…

Understanding Bottlenecks A bottleneck is any point of congestion in a process—such as an assembly line, supply chain, or service workflow—that slows or stops overall throughput. The term comes from a bottle’s neck, the narrow part that limits how quickly liquid can flow out. In production settings, bottlenecks increase lead times, raise costs, and reduce…

Both-to-Blame Collision Clause Definition A both-to-blame collision clause is a provision in marine insurance policies and bills of lading that requires the parties affected by a ship collision to share financial responsibility when negligence is found on both sides. Losses are apportioned between the vessels’ owners and cargo interests according to agreed terms—often in proportion…

Borrowing Base A borrowing base is the maximum amount a lender will extend to a borrower based on the value of pledged collateral. Lenders apply a discount—often called an advance rate or margin—to the collateral’s reported value to account for risk and volatility, creating a secured credit limit tied to asset performance. Key takeaways *…

Bootstrapping Your Business: Strategies, Benefits, and Challenges Key takeaways Bootstrapping means starting and growing a business using personal funds and operating revenue rather than outside equity or institutional capital. It preserves founder control and encourages cost discipline but increases personal financial risk and can limit growth speed. Common tactics include using personal savings, taking on…

Boom-and-Bust Cycle What it is The boom-and-bust cycle describes recurring phases of economic expansion (boom) followed by contraction (bust). It is a central feature of capitalist economies and is often used interchangeably with the business cycle. Booms feature rising output, strong employment, and high returns for investors; busts bring falling output, layoffs, and asset-price declines….

What Is a Bookie? A bookie (short for bookmaker) is an individual or organization that facilitates gambling—most commonly on sporting events. Bookies set odds, accept bets, and pay out winnings. Their core role is managing bets so the business remains profitable while complying with applicable laws. Key Takeaways Bookies set odds, accept wagers, and pay…

Book Value Per Common Share (BVPS) What it is Book value per common share (BVPS) measures the per-share accounting value of a company’s equity available to common shareholders. It represents the residual dollar amount that would theoretically remain for common shareholders if a company liquidated its assets and paid its creditors and preferred shareholders. Formula…

Book Value Per Share (BVPS) What is BVPS? Book value per share (BVPS) measures a company’s net asset value on a per-share basis. It represents the amount attributable to common shareholders if the company sold its tangible assets and paid all liabilities. Formula BVPS = (Total Equity − Preferred Equity) / Total Shares Outstanding Explore…

Book Value Key takeaways * Book value (shareholders’ equity) equals a company’s total assets minus its total liabilities. * Book value per share (BVPS) and the price-to-book (P/B) ratio help investors assess whether a stock may be undervalued or overvalued. * Market value often exceeds book value because it reflects intangible assets, future earnings expectations,…

Book-to-Market Ratio The book-to-market ratio compares a company’s accounting (book) value to its market value to help assess whether a stock may be undervalued or overvalued. What it measures Book value (shareholders’ equity) = total assets − total liabilities (sometimes excluding preferred shares and certain intangibles, depending on the analyst). Market value (market capitalization) =…

Book-to-Bill Ratio: Definition, Calculation, and Use What it is The book-to-bill ratio compares orders received (bookings) to units shipped and billed over a specified period (typically a month or quarter). It’s a widely used indicator of demand versus supply in industries with volatile order cycles—most notably semiconductor equipment, technology, aerospace, and defense. Explore More Resources…

Book Runners A book runner (or bookrunner) is the lead underwriter or lead manager that organizes and manages the issuance of new securities—equity, debt, or other instruments. As the primary coordinator, the book runner sets offering terms, compiles the order book, forms syndicates with other banks, and takes on the greatest share of responsibility and…

Book Building Book building is the process underwriters use to determine the offering price of an initial public offering (IPO) by soliciting bids from institutional investors. It’s the preferred, market-driven method for pricing shares on major exchanges because it gauges investor demand before finalizing the issue price. How book building works Engagement and preparation The…

Bonus Issue of Shares A bonus issue (also called a scrip or capitalization issue) is when a company issues additional shares to existing shareholders for free, in proportion to their current holdings. It increases the number of outstanding shares without changing each shareholder’s percentage ownership. Key takeaways Bonus shares raise a company’s share capital but…

Bonus Depreciation Key takeaways Bonus depreciation lets businesses immediately deduct a large portion of the cost of eligible assets in the year they are placed in service, instead of spreading the deduction over the asset’s useful life. The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualifying property; that 100%…

What Is a Bonus? A bonus is additional financial compensation paid on top of an employee’s base salary. Employers use bonuses to reward performance, encourage desired behaviors, attract or retain talent, and share company success. Bonuses can be paid in cash, equity (stock or stock options), gift cards, time off, or other rewards. Common Types…

Bondholder A bondholder is an investor who owns bonds—debt securities issued by governments, municipalities, or corporations. By buying a bond, the bondholder lends money to the issuer in exchange for the return of principal at maturity and, in most cases, periodic interest (coupon) payments. Bondholders are creditors of the issuer and generally have priority over…

Bond Yield What is bond yield? Bond yield is the return an investor realizes from holding a bond. It reflects the interest payments (coupon) received and, depending on the measure, any gain or loss if the bond is purchased at a price different from face value. Yields change as a bond’s market price and prevailing…

Bond Valuation Bond valuation determines the present value of a bond’s future cash flows: the periodic coupon payments and the principal (face) value repaid at maturity. It helps investors compare a bond’s expected return with other investment opportunities. Key points Bonds pay periodic coupons and return face (par) value at maturity. Fair value = present…

Bond Rating Agencies Bond rating agencies evaluate the creditworthiness of debt securities and their issuers. Their ratings signal the likelihood that interest and principal will be repaid, and they influence borrowing costs, investor decisions, and regulatory treatment of different bonds. Key points Major U.S. agencies: Standard & Poor’s (S&P) Global Ratings, Moody’s, and Fitch Ratings….