Definition A Fixed Asset Register (FAR) is a comprehensive record that outlines all the fixed assets owned by a business. This includes tangible assets such as buildings, machinery and equipment, as well as intangible assets like patents and trademarks. The register is not just a list; it is a vital tool for tracking the acquisition, depreciation and disposal of these assets, ensuring compliance with financial regulations.
Components of a Fixed Asset Register When you look at a Fixed Asset Register, you will find several key components:
Definition Foreign Direct Investment (FDI) refers to an investment made by a company or individual in one country in business interests in another country. This investment involves establishing business operations or acquiring assets in the foreign country. Unlike portfolio investment, where investors only buy stocks and bonds, FDI implies a lasting interest and significant influence over the business operations.
Components of FDI Equity Capital: This is the investment amount directly associated with ownership in foreign enterprises, usually exceeding a 10% stake.
Definition Foreign Exchange, commonly known as Forex, is the marketplace for trading the world’s currencies. It’s one of the largest financial markets globally, with a daily trading volume exceeding $6 trillion. This decentralized market allows traders to buy, sell, exchange and speculate on currencies, which can be influenced by various factors like economic indicators, geopolitical events and market sentiment.
Components of Forex Currency Pairs: In Forex, currencies are traded in pairs.
Definition Foreign Exchange Reserves, often referred to as FX reserves, are the assets held by a country’s central bank or monetary authority in foreign currencies. These reserves are crucial for managing a country’s currency value, participating in international trade and addressing economic challenges such as currency volatility.
Components of Foreign Exchange Reserves Foreign exchange reserves consist of various components, including:
Foreign Currency Deposits: These are bank deposits held in a foreign currency.
Definition Forward Rate Agreements (FRAs) are financial derivatives that allow two parties to lock in an interest rate for a future date, typically to hedge against interest rate fluctuations. In simpler terms, an FRA is like a bet on what the interest rate will be at a specific point in the future. If you think rates will rise, you might enter into an FRA to secure a lower rate now.
Definition A forwards contract is a financial derivative that represents an agreement between two parties to buy or sell an asset at a predetermined price on a specified future date. Unlike futures contracts, which are standardized and traded on exchanges, forwards contracts are customized agreements that can be tailored to meet the specific needs of the parties involved.
Components of Forwards Contracts Underlying Asset: The asset that is being bought or sold, which can be anything from commodities, currencies or financial instruments.
Definition Free Cash Flow (FCF) is one of those golden metrics in finance that really shines a light on a company’s financial health. Simply put, FCF is the cash generated by a company’s operations after subtracting the necessary capital expenditures required to maintain or expand its asset base. It’s a crucial indicator that tells investors how much cash is available for the company to distribute to its shareholders, pay off debt or reinvest in the business.
Definition The FTSE 100 Index, often referred to as the “Footsie,” is a stock market index that represents the 100 largest companies listed on the London Stock Exchange (LSE) by market capitalization. It is a crucial indicator of the performance of the UK stock market and the economy as a whole.
Components The FTSE 100 is comprised of various sectors, including:
Financial Services: This sector includes major banks and insurance companies, significantly influencing the index’s movements.
Definition A Fund of Funds (FoF) is an investment vehicle that pools capital from multiple investors to invest primarily in other investment funds, rather than directly in stocks, bonds or other securities. This structure allows investors to achieve greater diversification and access to a variety of investment strategies, often managed by seasoned professionals.
Components of Fund of Funds Underlying Funds: The core components of a Fund of Funds are the various underlying funds it invests in, which can include hedge funds, mutual funds, private equity funds or venture capital funds.
Definition A Futures Contract is a standardized legal agreement to buy or sell a specific asset at a predetermined price on a set future date. These contracts are traded on exchanges and are used by investors to hedge against risk or to speculate on price movements. Futures contracts can be based on various underlying assets, including commodities, currencies and financial instruments.
Components of a Futures Contract Underlying Asset: This is the asset that the contract is based on, such as crude oil, gold or an index like the S&P 500.