Glossary of Terms

Abbreviation for Weighted Average Cost of Capital.

Payment in return for work or services, especially that made to workers on a daily, hourly, weekly, or piece-work basis.

The voluntary and intentional surrender of a known right or claim. Often applies to loan agreements when a minor covenant breach has occurred and, potentially, a default might result.

Abbreviation for Weighted Average Maturity.

Abbreviation for Weighted Average Maturity.

Wide Area Network.

Economics. An individual's desire for goods and services without regard to the ability to pay for these goods and services.

An attachment to a debt security which gives a right, normally to purchase another financial instrument, for a specified price under specified conditions. The financial instrument is often an ordinary share.

Documentation. See Representations and warranties.

A term in a contract containing the statement of a fact (or occasionally an opinion) by the warrantor which reflects an important basis upon which the parties to the agreement have entered into that agreement.

UK Tax. A chattel with an expected life of less than 50 years.

Credit rating. See Credit Watch.

UK tax. Writing Down Allowance.

One form of the Efficient Market Hypothesis (EMH). The EMH is the general hypothesis that markets operate efficiently. In other words that assets are fairly priced to incorporate available information. There are three forms of potential efficiency: the weak form, the semi-strong form and the strong form. The weak form states that past prices are no guide to future prices, so charting techniques cannot be used to make excess returns.

Applies in some (non UK) countries to pay a percentage tax based on the difference of a taxpayer’s assets and liabilities.

(WACC). The average cost of capital of a firm, taking into account all sources of capital, weighted by their current market values.

For a firm with both equity and debt capital, the WACC would be calculated as:

WACC = Ke x E/[D+E] + Kd(1-t) x D/[D+E]

Where:
Ke = cost of equity.
Kd(1-t) = after tax cost of debt.
E = market value of equity.
D = market value of debt.

(WAM). The average maturity of securities held in a fixed income or money market fund.

Same as Average weighted maturity.

1. Pensions. The statutory duty (in the UK) imposed on the Scheme Actuary, the Scheme Auditor, trustees, the employer and various other named parties to advise the Pensions Regulator (formerly OPRA) immediately in writing if they have reasonable cause to believe there is a material problem with an Occupational Pension Scheme. Others may do so, but have no statutory duty to do so. The duty was originally introduced under the Pensions Act 1995 and extended under the Pensions Act 2004.

2. More generally, disclosing misconduct to the relevant authorities, especially when disclosed by an insider.

See Whistle blowing.

A worker who performs non-manual tasks.

Same as Large-Value Funds Transfer System.

Lockboxes characterised by a moderate number of large cash remittances, usually from corporate payors.

Corporate and government public debt and money markets.

(WAN). A network that connects computers and LANs in several locations.

An additional tax levied on businesses in a selected industry for a limited period, following a period of above-normal profits in that industry.

Same as Winding-up.

1. A process whereby a company prepares for dissolution – the assets of the company are applied to discharge its liabilities and any surplus is returned to those who are entitled to it provided there is any excess remaining.

2. Pensions. The process of terminating a pension scheme, usually by applying the assets to the purchase of individual insurance contracts for the beneficiaries, or by transferring the assets and liabilities to another pension scheme.

Term widely used in North America. Synonym for same-day value electronic credit transfer.

Economics. See Leakage.

A tax deducted at source on earnings, including employment income, dividends and interest payments, and can also include intangible services.

A phrase followed by the signature of a drawer or endorser of a negotiable instrument, whereby liability is disclaimed to subsequent holders in the event of non-payment.

Wholesale Markets Brokers Association.

Partly completed manufactured goods, or the cost of work done to date.

1. Working capital is usually defined as the excess of current assets over current liabilities. This working capital requirement for a company has to be financed by company borrowings or by shareholders' funds.

2. Some practitioners define 'working capital' more widely, to include fixed assets (in addition to the other working capital items included in the more usual definition in 1. above). This - more broadly defined - working capital requirement similarly has to be financed by borrowings or by shareholders' funds.

See Working capital management.

Working capital operates as a continuous cycle. At its simplest, a creditor provides stock, the stock is then sold on credit, creating a debtor. In due course, the debtor pays, thus providing the firm with cash resources which are then used to pay the creditor and the surplus cash is retained in the firm. Companies can increase their financial efficiency by minimising the length of time this cycle takes. A company that reduces its working capital cycle will reduce its working capital levels.

However, there are practical, operational and commercial limitations on how low working capital levels can fall without adversely affecting company business. As a result, the management of working capital is essentially a compromise between levels high enough for smooth commercial operation and levels low enough to be financially efficient.

(WDA). The annual UK tax allowance given to a trader/company in respect of capital allowances for their qualifying expenditure.

Where a director allows the company to continue trading when he knows or ought to have concluded that the company could not settle its debts.