Understanding Finance Vocabulary With This Easy Worksheet

Personal Finance Vocabulary Cloze worksheet from www.liveworksheets.com

Understanding Finance Vocabulary with this Easy Worksheet

Financial Lingo Can be Confusing

If you're new to the world of finance, you might feel a little overwhelmed. Suddenly, there are all these new words and phrases thrown around, and it's difficult to know what they mean. This can make it hard to follow conversations, make decisions, and even understand the news. That's why we've created this finance vocabulary worksheet. We'll break down the most commonly used terms, so you can better understand the financial world.

Balance Sheet

A balance sheet is a document that shows the financial position of a company at a given point in time. It includes all of a company's assets, liabilities, and equity. Assets are resources owned by the company, such as cash, inventory, and equipment. Liabilities are the debts and obligations of the company, such as loans and accounts payable. Equity is the net worth of the company, which is calculated by subtracting liabilities from assets.

Cash Flow

Cash flow is the amount of cash that is flowing into and out of a business. It is calculated by subtracting all of the cash outflows from all of the cash inflows. Cash inflows are the sources of money entering the business, such as revenue from sales, loans, and investments. Cash outflows are the payments the business makes, such as salaries, rent, and taxes.

Income Statement

An income statement is a document that shows the revenues, expenses, and net income of a business over a given period of time. It is often referred to as a profit and loss statement. Revenues are the total amount of money earned by the company, such as sales and investments. Expenses are the costs incurred by the company, such as wages, rent, and taxes. Net income is the amount of money left after all expenses are deducted from revenues.

Debt-to-Income Ratio

The debt-to-income ratio is a measure of a person's financial health. It is calculated by dividing total debt payments by total gross income. The higher the ratio, the more debt a person has relative to their income. A high debt-to-income ratio can make it difficult to obtain credit. It is important to keep this ratio as low as possible.