Corporate treasury involves building relationships with a wide range of people from lenders to investors, credit-rating agencies to regulators as well as colleagues and partners less versed in finance’s complex lexicon and anacronym soup. It leaves treasury often responsible for explaining technical terms with clarity and ensuring all partners are on the same page. None more than when working with people in a different language and across different cultures, where divergent understanding of a shared term can seriously complicate communication.
Indeed, those taking their first step into treasury can often feel like they are learning a whole new language. Treasury’s vocabulary is constantly growing as the profession evolves; add in the fact some important financial words have multiple meanings in different contexts, and we thought it was time to help!
Back by popular demand after a ten-year absence, Treasury Today is dusting off the mothballs of Calculator Corner and re-launching our quick guide to treasury terminology. Every month, we’ll explain either a financial term in Calculator Corner or an abbreviation in the Abbreviation Arena via motion graphic. From calculating working capital to the different ways to measure the average rate of return on an investment; from an explanation of EAR to clarity on EBITDA, treasury’s complex terms, all will become clear. First up will be next week’s explanation of how to calculate the debt-to-equity (D/E) ratio.