Financial Marketplace

Glossary 

Select a category below to view explanations of terms used in the Financial Marketplace. French and Spanish translations of the terms used in the Financial Marketplace can be found in the Translation Table.

If there is a term that should be but is not listed in the Financial Marketplace, please suggest it in the Financing Search, or by sending the suggestion by email to marketplace [at] fastinternational [dot] org.

General

Collateral

Assets pledged as security for the repayment of the financing. Potential collateral ranges from fixed assets to contracts for goods.

Financial Service Provider

The organization providing the financing and any related services.

Interest Rate

The annual interest rate charged on the financing. Different formulae may be used to apply the interest rate depending on the loan type and repayment structure.

Related Party
  1. A person or a close member of that person's family is related to the business if that person:

    1. has control or joint control over the business;
    2. has significant influence over the business; or
    3. is a member of the key management personnel of the business or of a parent of the business.
  2. An entity is related to the business if any of the following conditions applies:

    1. The entity and the business are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).
    2. One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member).
    3. Both entities are joint ventures of the same third party.
    4. One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
    5. The entity is a post-employment defined benefit plan for the benefit of employees of either the business or an entity related to the business. If the reporting entity is itself such a plan, the sponsoring employers are also related to the business.
    6. The entity is controlled or jointly controlled by a person identified in (a).
    7. A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

For more information see http://www.iasplus.com/standard/ias24.htm.

Supplementary Services

Services apart from financing offered by a financial service provider to complement the financing.

Sustainability Practices and Certifications

Practices and certifications related to the sustainable character of the business. All financing options listed in the Marketplace have some sustainability-related criteria.

Term

The expected time between receiving the financing and completing its repayment - the length of time for which the funds are borrowed.

Sustainability Practices and Certifications

4C

Active participation in the 4C Association. The 4C code of conduct covers all parts of the green coffee supply chain and includes 10 unacceptable practices to be avoided and 28 principles to be encouraged that reflect basic social, environmental, and economic sustainability practices, such as right to childhood and education, conservation of biodiversity, and better market access for producers.

Bird Friendly

Current product certification issued by the Smithsonian Migratory Bird Center. Applied only to coffee production and supply chain, the certification may include requirements for: forest preservation, avoidance of synthetic chemical inputs, and other labour and environmental standards.

BRC Global Standard (Any Standard)

A collection of standards developed by the British Retail Consortium certifying a wide variety of products. Certification may be based on any number of standards including food safety, packaging standards, and distribution and storage standards.

C.A.F.E. Practices

Current product certification under Starbucks' Coffee and Farmer Equity Practices (C.A.F.E. Practices). Applied only to coffee production and supply chain, the certification may include standards for product quality, economic accountability, social responsibility, and environmental leadership in coffee growing or environmental leadership in coffee processing.

Fair Trade (FLO)

Current Fair Trade product certification from FLO-CERT. Such certification may include requirements for: democratic decision making, producer or labour input into the investment of premiums, union and collective bargaining rights for hired labour, and safety standards.

Fair Trade (WFTO)

Current organizational membership in good standing in the World Fair Trade Organization. Such membership may include requirements for: accountability, pricing, gender equity, safety standards, environmental standards, and trade relations.

GLOBALGAP

Current product certification from GLOBALGAP, formally known as EUREPGAP, based on Good Agricultural Practices (GAP). Covering a wide range of production, the certification may include requirements for minimizing detrimental environmental impacts of farming operations, reducing the use of synthetic chemical inputs, worker health and safety standards, and animal welfare.

Locally Processed

The case in which the product is processed primarily within the local area.

Locally Traded

The case in which the product is traded primarily within the local area.

Organic
Organic (Any Certification)

Current organic product certification issued by any number of government bodies, non-profit organizations, and corporations. Such certification may include requirements for: avoidance of synthetic chemical inputs, time elapsed since any use of synthetic chemicals on farmland, detailed record keeping, and separation of non-certified products. Examples of organic certification agencies include organizations compliant with norms set by the Organic Crop Improvement Association (OCIA) or the International Federation of Organic Agriculture Movements (IFOAM) and related national organic regimes.

Supplementary Services

Commercial Contacts

Contacts with potential buyers or other business partners.

Technical Assistance

General assistance in improving production practices and quality, governance, strategic planning, and policy development capacity.

Collateral Types

Deposit Certificates

Proof of money deposits held at bank or other financial institution.

Guarantees

Security provided by specific third parties for financing taken by a business.

Keyman Insurance

An insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the member of the business specified on the policy.

Personal Property

Any property that can be moved from one location to another. In the common law systems, personal property may also be called chattels or personalty. In civil law systems, personal property is often called movable property or movables. Personal property is in contrast with real or immovable property, such as land and buildings.

Real Property

Land and land improvements resulting from human effort, including buildings and machinery fixed on land, and various property rights over the preceding. It may also be called heritable property or, in civil law systems, immovable property.

Sales Contracts

Security provided through the financial service provider acting as an intermediary in secure sales contracts to ensure repayment.

Statement of Financial Position

Accruals classified as current

Obligations for goods and services provided to the business for which the business has not yet been billed. The payment to settle these obligations is expected within the reporting period. Examples include accrued wages payable, accrued sales tax payable, and accrued rent payable.

Accruals classified as non-current

Obligations for goods and services provided to the business for which the business has not yet been billed. The payment to settle these obligations is not expected to be due within one year.

Assets

An asset is a resource controlled by the business as a result of a past event and from which future economic benefits are expected to flow to the business. The asset must have a cost or value that can be measured reliably. If it is not probable that economic benefits will flow to the business beyond the current reporting period then the expenditure incurred to acquire the asset must be recognized as an expense in the statement of comprehensive income or in the income statement.

Cash and cash equivalents

Cash or short-term, highly liquid investments held to meet short-term cash commitments rather than for investment or other purposes. Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition. Some examples of cash and cash equivalents are currency, deposit accounts, money orders, cheques, and bank drafts, among others. For more information, see http://wiki.ifrs.com/Statement-of-Cash-Flows paragraph 7.2.

Current assets

Current assets are cash, cash equivalents and other assets that are held primarily for trading which are expected to be converted to cash, sold, or consumed as part of the normal operations of a business either within a year or in the reporting period in question, whichever is longer.

Current biological assets, at cost

Living animals or plants that fulfill the conditions to be recognized as assets, as described above, and whose fair value cannot be reliably estimated is carried at cost less accumulated depreciation and impairment losses. The absence of a fair value can arise if the asset does not have a quoted market price in an active market. For more information see http://www.iasplus.com/standard/ias41.htm.

Current biological assets, at fair value

Living animals or plants that fulfill the conditions to be recognized as assets, as described above, and whose fair value can be reliably estimated are measured at a reasonable estimate of its market price less estimated costs to sell at the point of harvest.

Current liabilities

A business' debts or obligations that are due within one year. These include accounts payable, accrued liabilities and other debts.

Current portion of long-term borrowings

The portion of long-term borrowings that must be paid back within one year.

Current provisions

Liabilities of uncertain timing or amount due within one year. An entity shall recognize a current provision only when:

  1. the entity has an obligation at the reporting date as a result of a past event;
  2. it is probable (i.e. more likely than not) that the entity will be required to transfer economic benefits in settlement; and
  3. the amount of the obligation can be estimated reliably.
  4. the obligation will be due within one year.

Provisions should be measured at the best estimate of the amount required to settle the obligation at the end of the reporting period. For more information see http://wiki.ifrs.com/Provisions-and-Contingencies.

Current tax assets

The amount a business expects to recover from taxes paid in a previous period once certain requirements have been met. For example, an income tax refund a business expects to receive for taxes paid in the previous year once it completes its tax return.

Current tax liabilities

The total amount of tax that the business is legally obligated to pay within one year.

Deferred income classified as current

Deposits and other cash receipts expected within the reporting period and collected prior to the completion of a sale. For example, a payment received for work that has not yet been performed, a sale that is subject to customer acceptance, or situations where significant post-delivery obligations exist.

Deferred income classified as non-current

Deposits and other cash receipts collected prior to the completion of a sale that is not expected within one year. For example, a payment received for work that has not yet been performed, a sale that is subject to customer acceptance or situations where significant post-delivery obligations exist.

Deferred tax assets

An asset on a business' balance sheet that may be used to reduce any subsequent period's income tax expense. Deferred tax assets can arise due to losses that aren't deductible for the current tax year but can be carried over into future tax years, which are only recorded as assets if it is deemed more likely than not that the asset will be deducted in future fiscal periods. See http://www.investopedia.com/terms/d/deferredtaxasset.asp for more information.

Deferred tax liabilities

A tax liability that a business owes and does not pay at that current point, although it will be responsible for paying it at some point in the future. This is often caused by a difference in a business's balance sheet, due to the differences between accounting practices and tax regulations. Occasionally, a business will have a difference in their taxable income and income before tax due to these differences, resulting in a deferred tax liability.

Donated equity

Grants and donations received.

Equity

Equity is the residual interest in the assets of an entity after deducting all its liabilities.

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services. Inventories are measured using the lower of the cost to produce, or the estimated selling price minus costs to complete and sell. For more information see http://wiki.ifrs.com/Inventories.

Investments in subsidiaries, joint ventures and associates
  1. An associate is an entity, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

    Significant influence is the power to participate in the financial and operating policy decisions of the associate but is not control or joint control over those policies.

    1. If an investor holds, directly or indirectly (e.g. through subsidiaries), 20 per cent or more of the voting power of the associate, it is presumed that the investor has significant influence, unless it can be clearly demonstrated that this is not the case.
    2. Conversely, if the investor holds, directly or indirectly (e.g. through subsidiaries), less than 20 per cent of the voting power of the associate, it is presumed that the investor does not have significant influence, unless such influence can be clearly demonstrated.
    3. A substantial or majority ownership by another investor does not preclude an investor from having significant influence.

    See http://wiki.ifrs.com/Investments-in-Associates for more information.

  2. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the venturers).

    A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Joint ventures can take the form of jointly controlled operations, jointly controlled assets, or jointly controlled entities.

  3. A subsidiary is an entity, including an unincorporated entity such as a partnership, which is controlled by another entity known as the parent.
Issued capital

The portion of a business' equity that has been obtained by selling shares for cash or an equivalent item of capital value. For cooperatives, this includes both shares offered to the cooperative members and any to outside investors.

Liabilities

A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

Long-term borrowings

Financial liability that obligates the business to repay cash or another financial asset to another entity, after a period longer than a year.

Non-current assets

Assets that cannot be easily converted into cash as well as any assets not recorded as current assets in this period.

Non-current biological assets, at cost

Living plants or animals that fulfill the conditions of non-current assets and whose fair value cannot be reliably estimated is carried at cost less accumulated depreciation and impairment losses. The absence of a fair value can arise if the asset does not have a quoted market price in an active market.

Non-current biological assets, at fair value

Living plants or animals that fulfill the conditions of non-current assets and whose fair value can be reliably estimated are measured at fair value (reasonable estimate of market price) less estimated costs to sell at the point of harvest. An example of a non-current biological asset would be livestock intended for breeding for a period longer than a year or the reporting period.

Non-current liabilities

A business' debts or obligations that are not due within one year.

Non-current payables

Liabilities of a certain amount and specific timing that will not become due within one year.

Non-current payables to related parties

Amount the business owes to related parties, which must be paid at a specific time and is not due within one year. See https://marketplace.fastinternational.org/en/node/1426 for a definition of related parties.

Non-current payables to trade suppliers

Amount the business owes to its suppliers, which must be paid at a specific time and is not due within one year.

Non-current provisions

Liabilities of uncertain timing or amount that are not due within one year. An entity shall recognize a non-current provision only when:

  1. the entity has an obligation at the reporting date as a result of a past event;
  2. it is probable (i.e. more likely than not) that the entity will be required to transfer economic benefits in settlement; and
  3. the amount of the obligation can be estimated reliably.
  4. payment is not due within one year.

Provisions should be measured at the best estimate of the amount required to settle the obligation when it becomes due. For more information see http://wiki.ifrs.com/Provisions-and-Contingencies.

Non-current receivables arising from accrued income not yet billed

Earned revenues and other receivables for which the party that received the goods or services has not yet been billed and are not to be collected in this reporting period.

Non-current receivables due from other parties

Money owed to the business by a party other than a related party that is not to be collected within the reporting period.

Non-current receivables due from related parties

Money owed to the business by a related party that is not to be collected within the reporting period. For a definition of related parties, see https://marketplace.fastinternational.org/en/node/1426.

Other current financial assets

Value, at the end of the reporting period, of current equity or debt assets such as stocks, bonds, and mutual fund accounts. Values of these assets should be based upon fair market value where efficient secondary markets exist and otherwise at historic cost. A non-cash financial asset can be:

  1. an equity instrument (share) of another entity;
  2. a contractual right:
    1. to receive cash or another financial asset from another entity; or
    2. to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or
  3. a contract that will or may be settled in the business’ own shares and that:
    1. the business is or may be obliged to receive a variable number of its shares; or
    2. will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the business’ shares. For this purpose the business' shares do not include instruments that are themselves contracts for the future receipt or delivery of the business’ shares.
Other current financial liabilities

Other obligations that the business must repay with interest within a year.

Other current non-financial assets

An asset with a physical value such as land, property, or some type of object, excluding inventories and biological assets.

Other current non-financial liabilities

A liability that the business will settle by delivering goods or rendering services, not cash, within one year, excluding obligations recorded as deferred revenue.

Other equity interest

Value of other ownership interest in the business.

Other non-current financial assets

Value, at the end of the reporting period, of non-current assets that represent debt and equity such as stocks, bonds, and mutual funds accounts. Values of assets should be based upon fair market value where efficient secondary markets exist and otherwise at historic cost. Interest rate derivatives, currency options and forward contracts are all examples of non-current financial assets.

Other non-current financial liabilities

Other obligations that the company must repay with interest not within the reporting period.

Other non-current non-financial assets

An asset with a physical value such as land, property or some type of object, excluding inventories and biological assets, that fulfills the conditions of a non-current asset as described above.

Other non-current non-financial liabilities

A liability that the business will settle by delivering goods or rendering services, not through cash, after a period longer than one year.

Other reserves

Part of retained earnings set-aside for a specified purpose and, hence, unavailable for disbursement as dividends.

Property, plant and equipment

Property, plant and equipment are tangible assets that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and are expected to be used during more than one reporting period. Biological assets and mineral reserves are not included in this category. The value of property, plant and equipment is typically depreciated over the estimated life of the asset, because even the longest-term assets become obsolete or useless after a period of time. Property, plant and equipment is recorded at acquisition cost minus accumulated depreciation. See http://wiki.ifrs.com/Property-Plant-and-Equipment for more information.

Retained earnings from current year

The operating profit or loss from this reporting period.

Retained earnings from prior years

Accumulated earnings from prior years only.

Share premium

Excess amount received over the nominal value of its shares by the business upon their issue.

Short-term borrowings

A financial liability that obligates the business to repay cash or another financial asset to another entity within a year.

Trade and other current payables to members

Money owed by a cooperative to its members that is due within the reporting period.

Trade and other current payables to related parties

Money owed by the business to related parties that is due within the reporting period. For a definition of related parties, see https://marketplace.fastinternational.org/en/node/1426.

Trade and other current payables to trade suppliers

Money owed to suppliers due within this reporting period for the acquisition of products or services.

Trade and other current receivables arising from accrued income not yet billed

Revenues that have been earned, usually when goods are transferred or services rendered, and that are realizable, meaning it is almost certain that the party who received the goods or services will make the payment, but have not yet been billed to the receiving party.

Trade and other current receivables due from customers

Earned revenues and other money owed to the business by its clients that will be collected within a year, including any accrued interest.

Trade and other current receivables due from members

Earned revenues and other money owed to a cooperative by its members that will be collected within a year, including any accrued interest.

Trade and other current receivables due from other parties

Earned revenues or other money, which will be collected within a year, that is owed to the business by an entity that is neither a member, nor a client, nor a related party.

Trade and other current receivables due from related parties

Earned revenues and other money owed to the business by related parties that will be collected within a year, including any accrued interest. For a definition of related parties, see https://marketplace.fastinternational.org/en/node/1426.

Treasury shares

Value of shares that the business keeps in its own treasury. Treasury shares arise when the business repurchases shares from stockholders. Or, they arise as shares that were never been issued to the public. These shares do not pay dividends, have no voting rights and should not be included in shares outstanding calculations.

Income Statement

Administrative expenses

Administrative costs are all executive, organizational, and clerical costs associated with the general management of the business, including: salaries of senior executives, costs of general services (such as accounting, contracting, secretarial services and industrial relations), rent, insurance, and utilities.

Cost of sales from purchases from members

Expenses incurred by a cooperative organization purchasing from its members raw materials or goods used to produce and sell its products and services.

Depreciation and amortisation expense

Expense to keep track of the decline in value of an asset over its estimated useful life down to the recoverable amount and to allocate the cost of assets to periods in which the assets are used. It does not represent cash actually paid. For more information see http://en.wikipedia.org/wiki/Depreciation.

Distribution costs

A cost incurred to transport, store, or deliver a good or service.

Donation Income

Income from donations and government grants.

EBITDA

Earnings before interest, taxes, depreciation and amortization. It is equal to a business' gross profit less its operating expenses.

Finance costs

Interest paid and other costs of borrowing.

Finance income

The revenue generated from invested funds and marketable securities. This includes, but is not limited to, dividends received, interest received and foreign exchange gains (e.g. on debt). For more information see http://www.vernimmen.com/html/glossary/definition_financial_income.html.

Other cost of sales

All of the other expenses a business incurs in order to produce and sell its product or service. This includes but is not limited to: goods or materials purchased from non-members, labor costs of employees who are directly involved in the production process, marketing expenses, sales expenses, and promotional expenses.

Other expense

Other expenses incurred by activities that do not relate to the core operations of the business. These include expenses from restructuring or reorganizing the business and charges on obsolescence of inventory. Expenses relating to employee benefits, such as pension contributions would also be considered as a non-operating cost.

Other income

Income from activities other than normal business operations, such as income from the sale of non-inventory assets, including land or machinery.

Other operating expense

Other costs associated with the operation of an organization, including maintenance and repair expenses.

Other revenue

Income that the business receives, usually in the form of cash or cash equivalents, from activities that are ordinary for the business but cannot be categorized as sales of products or rendering of services. For example, income received from renting machinery to other organizations.

Profit (loss) from discontinued operations

Profit or loss from a part of the business that is not included in the above categories because it has either been disposed of or is being held for sale.

Revenue from rendering of services

Income that the business receives, usually in the form of cash or cash equivalents, from rendering services. For example, income received by a business for delivering technical assistance or training.

Revenue from sales of main product

Income that the business receives, usually in the form of cash or cash equivalents, from selling the main good(s) it produces.

Revenue from sales of other products

Income that the business receives, usually in the form of cash or cash equivalents, from selling goods that are not its main products. For example, income from the sales of honey by a cooperative that defines its primary business as coffee.

Statement of Cash Flows

Cash advances and loans made to other parties

Cash disbursed as loans to other parties.

Cash flows from losing control of subsidiaries or other businesses

The net cash flows arising from losing control of subsidiaries or other businesses. Generally results from mergers and acquisitions.

Cash flows used in obtaining control of subsidiaries or other businesses

The aggregate cash flows arising from obtaining control of subsidiaries or other businesses. Generally results from mergers and acquisitions.

Cash receipts from repayment of advances and loans made to other parties

Cash received from other parties repaying the cash advances and loans made by the business.

Dividends paid

Cash spent in payment of dividends to the business' shareholders.

Dividends received

Cash received from dividends paid by the business' equity investments in other companies.

Income taxes refund (paid)

The net income tax paid by or refunded to the business.

Interest paid

Cash paid to creditors for interests due.

Interest received

Cash received from interest on the business' bank deposits, bonds purchased by the business, and any loans made by the business.

Other cash payments to acquire equity or debt instruments of other entities

Cash paid to buy shares or debt instruments of other organizations. This item should not include cash paid for instruments considered to be cash equivalents and held for trading purposes.

Other cash receipts from sales of equity or debt instruments of other entities

Cash received from the selling of shares or debt instruments of other organizations. This item should not include cash received from sales of instruments considered to be cash equivalents and held for trading purposes.

Payments of finance lease liabilities

Cash used to make payments on lease contracts.

Payments to acquire or redeem entity's shares

Cash spent to repurchase shares in the business.

Payments to and on behalf of employees

Cash paid to employees in the form of wages and cash payments made by the employer to a third party for whom the employee is legally responsible. This is the sum of all costs associated with employing people including, but not limited to, wages, salaries, insurance, and payroll taxes.

Payments to suppliers for goods and services

Cash paid to suppliers for goods and services. For example, cash paid for fuel or for transport.

Proceeds from borrowings

Loan disbursements received from creditors such as banks and other financial institutions.

Proceeds from issuing shares

Cash received from the issuance and sale of shares.

Proceeds from sales of property, plant and equipment

Cash received from the sale of fixed assets, or real property, such as land, processing plants, and machinery. See https://marketplace.fastinternational.org/en/node/430 for more information about real property.

Purchase of property, plant and equipment

Cash spent in acquiring fixed assets, or real property, such as land, processing plants, and machinery. For more information about real property, see https://marketplace.fastinternational.org/en/node/430.

Receipts from rendering of services

Cash received from rendering services. For example, cash received by a business for delivering technical assistance or training.

Receipts from sales of main product

Cash received from sales of the business' main product.

Receipts from sales of other products

Cash received from selling goods that are not the business' main product. For example, cash received from the sales of honey by a cooperative that sells primarily coffee.

Repayments of borrowings

Cash spent repaying the principal of debt incurred by the business.