Factoring The selling of a company’s accounts receivable at less than their full paper value. The purchasing firm is called a factor, and makes its profits by collecting at full value.

Failure Going out of business because the business cannot be run at a profit. Not always equivalent to bankruptcy.

Fair market value The price a commodity can command on a free market, one in which there is no compulsion on buyer or seller to accept or reject a certain amount.

FAQ A Web site document summarizing frequently asked questions.

FAS (Free Along Side) The price of goods to delivery on the docks during loading. The buyer becomes responsible for the goods once they are on the docks alongside the ship.

Feasibility study The study of a project to see if it is technically possible and commercially profitable.

FIFO (First In, First Out) A method of valuing inventory where the merchandise acquired earliest is assumed to be first and the stock acquired more recently is assumed to be still on hand in inventory (see also LIFO).

Financial analysis The interpretation of financial statements and knowing how to prepare and understand comparative and percentage analysis, and the use of ratios and break-even analysis.

Financial planning The analysis of the future and the preparation of forecasts. Pro forma statements and cash forecasts are important tools for this planning and should be prepared before starting any new venture or expansion. See Pro forma.

Financial statements Documents that show your financial situation. Two major statements are needed to cover the information necessary to run a business and get financing (income statement and balance sheet).

Financing Obtaining money resources. Businesses usually have to obtain financing at some time, either to go into business or expand operations.

Firefighting Dealing with the day-to-day problems and crises of running a business. Can get in the way of planning and control.

First refusal The right of a party to have the first option to buy shares or property. The right usually has a specific time period attached to it.

Fiscal year An accounting cycle of 12 months that could start at any point during a calendar year. The government uses April 1 to March 31.

Fixed assets Those things that a firm owns and uses in its business and that it keeps for more than one year (including machinery, equipment, fixtures, vehicles, etc.).

Fixed costs or expenses Those costs that don’t vary from one period to the next and usually are not affected by the volume of business (e.g., rent, salaries, telephone, etc.).

Fixed interest Interest payments that remain constant despite changes in the profitability of the invested capital, or in the official prime interest rate. Floating rate A floating rate in currency exchange or interest set in response to changing external forces in the market, such as prime rate, risk, demand, etc. The vendor or creditor is not bound to any particular rate.

FOB (Free On Board) The prices of goods on board a vessel at a port of shipment. From this point all transportation, insurance, and other charges are payable by the customer. If you have quoted FOB prices, you are responsible for the shipment until it is loaded on board.

Forecast income statement A financial document that estimates income and expenses for a future period of time.

Foreclose To sell or cause to be sold a property when the owner fails to meet mortgage, tax or other debt payment on it. Must be approved by the courts.

Form of business organization The legal structure that is established and registered at the appropriate level(s) of government in order to carry on a business. The three most common forms are proprietorships, partnerships, and limited companies.

Franchisee The person (or firm) who has purchased a franchise and is responsible for managing the business.

Franchising A way of starting a business whereby an already established firm supplies the product, trademark, techniques, materials and expertise, and sets standards in exchange for purchase price and ongoing benefit.

Franchisor The person (or firm) granting a franchise.

Fraudulent conveyance An illegal transfer of ownership from one person to another for the purpose of cheating creditors.

Freeware A computer program that has been created for free distribution and can be used with no remuneration paid to the program creator.

Freight forwarder An export agent who moves goods through customs.

Fringe benefits Benefits, other than salary, that employees get from their employer (e.g., medical, dental or group insurance plans, bonuses, etc.).

Frozen assets An asset that cannot be used or sold (usually by court or government decision), pending outcome of a dispute over ownership or indebtedness.