Skip to ContentGo to accessibility page
OpenStax Logo
Principles of Finance

Key Terms

Principles of FinanceKey Terms

Key Terms

balance sheet
a financial statement that reflects a firm’s asset, liability, and equity account balances at a given point in time
cash deficit
an excess of cash outflows over cash inflows for a given period
cash forecast
a financial statement that estimates a firm’s future cash inflows and outflows
cash surplus
an excess of cash inflows over cash outflows for a given period
common-size
describes a financial statement in which each element is expressed as a percentage of a base amount
financing activities
cash business transactions reported on the statement of cash flows that reflect the use of financed funds
forecast
an estimate of future performance based on historical performance and other contextual information
income statement
a financial statement that measures a firm’s financial performance over a given period of time
investing activities
cash business transactions reported on the statement of cash flows that reflect the acquisition or disposal of long-term assets
operating activities
cash business transactions reported on the statement of cash flows that relate to ongoing day-to-day operations
pro forma
in the context of financial statements, forward-looking
scenario analysis
analysis of how various situations and circumstances would impact the financial forecast
sensitivity analysis
analysis of the sensitivity of an output variable to a change in an input variable
statement of cash flows
a financial statement that lists a firm’s cash inflows and outflows over a given period of time
statement of stockholders’ equity
a financial statement that reports the difference between the beginning and ending balances of each of the stockholders’ equity accounts during a given period
PreviousNext
Order a print copy
Citation/Attribution
Reuse and redistribution of this content in digital or print format:
  • This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's prior written permission.
  • This book uses the Creative Commons Attribution-NonCommercial-ShareAlike License, which means that you can reuse and modify the material only for noncommercial purposes, must attribute OpenStax, and must distribute any derivative works under the same license.
  • Any commercial printing of this textbook, including using a local or custom printer, must be approved by OpenStax, and proper citation provided.
  • OpenStax-copyrighted images, activities, assessments, and similar components of this book are subject to the same licensing – CC-BY-NC-SA. They can be used for noncommercial purposes with attribution. Commercial use requires permission.
  • Permission requests: Anyone who intends to incorporate this content (including text, images, and other components) into large language models, use it in AI offerings, use it commercially (including in print), and/or has questions about another use case is welcome to complete our reuse request form.
Attribution information
  • If you are redistributing all or part of this book in a noncommercial print format, then you must include on every physical page the following attribution:

    Access for free at https://openstax.org/books/principles-finance/pages/1-why-it-matters

  • If you are redistributing all or part of this book in a noncommercial digital format, then for every page that includes OpenStax content, you must license the derivative work under the same CC-BY-NC-SA license as the original, and include on every digital page view the following attribution:

    Access for free at https://openstax.org/books/principles-finance/pages/1-why-it-matters

Citation information

The information below includes the information needed to generate citations in most major styles (APA, MLA, etc.); you must reformat and organize the information as needed to fit the requirements of the style. Use the information below to generate a citation. We recommend using a citation tool such as this one.

© Apr 23, 2026 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License. The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo, and Rice University name, and Rice University logo trademarks, or wordmarks are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.