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Sale and leaseback transaction

The sale of an asset and the leasing back of the same asset. The lease payment and the sale price are usually interdependent because they are negotiated as a package.

Sarbanes-Oxley

• The Sarbanes Oxley(SOX) Act of 2002 is a piece of US legislation
• It was introduced in response to high profile financial scandals like the Enron and WorldCom
• It aims to protect shareholders and the general public from accounting errors and fraudulent practises
• it is administered by the Securities and Exchange Commission(SEC)
• The Act defines what company records must be stored and for how long. It set rules for the certification of financial reports by CEOs and CFOs, who are then personally responsible for the statements made, in addition to a number of other provisions.

Solvency

The availability of cash over the longer term to meet financial commitments as they fall due.

Subsidiary

An entity, including an unincorporated entity such as a partnership, that is controlled by another entity (known as the parent).

Substance over form

The principle that transactions and other events are accounted for and presented in accordance with their substance and economic reality and not merely their legal form.

Share capital

o the amount raised from the shareholders of the business

Shareholders’ funds

o the total of ordinary and preference issued capital plus the total of revenue and capital reserves

Share premium

o a capital reserve owned by the shareholders arising when a company issues shares at a price in excess of the nominal value.

Sources and uses of funds

o see funds statement

Standard cost

o a predetermined cost, ie what it ought to cost to produce something.

Standard hour

o a hypothetical hour that measures the amount of work that ought to be carried out in the hour.

Stock turnover

o ratio of cost of sales to stocks. This measures the number of times stocks are turned over in the course of a year.

Swap

• a financial transaction in which two counterparties agree to exchange streams of payment over time according to a predetermined rule. A swap is normally used to transform the market exposure associated with a loan or bond borrowing from one interest rate base(fixed term or floating rate) or currency of denomination to another.

Securization

• often used narrowly to mean the process by which the assets, mainly loans or mortgages of traditinal banks or thrift institutions are converted into negotiable securities which may be purchased either by depository institutions or by non-bank investors.

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