There may not be anything more terrifying than sitting in a meeting as you frantically type into Google the acronym your boss is going on and on about, but you are secretly blanking on. It’s the beauty and curse of finance: The acronyms are never ending. In the spirit of new beginnings for a new year, we’ve pulled together a refresher.
Regulators: Let’s start with the regulating bodies, since even the most seasoned of CFOs can lose track of what their reporting managers are saying. If you’re brand new to the game, we’ll remind you that the Securities and Exchange Commission is the SEC, or the regulating body in charge of preventing market manipulation and that has a part-time YouTube influencer as its chairman.
The Fed, or the Federal Reserve Board, is more of a nickname than a straight up acronym; the logical acronym, FRB, isn’t commonly used. It might be hard to forget the board who has made its interest rate hikes impossible to ignore, but if you see FRB, know it’s really the Fed. And while we’re on the topic of federal agencies, don’t forget the FDIC—the Federal Deposit Insurance Corporation—which keeps your money safe(ish).
But, the SEC and the Fed aren’t the only financial agencies in Washington; some lesser known regulators (but no less important!) include the Consumer Financial Protection Bureau (CFPB), Office of the Comptroller of the Currency (OCC), National Credit Union Administration (NCUA), and the Conference of State Bank Supervisors (CSBS).
And just because some are not household acronyms, that doesn’t discount their might. The CFPB, which was formed after the 2008 recession, works to protect consumers by chasing banks for abuses, for example. Neither do they work in silos: The FDIC and OCC recently teamed up with the Fed to warn banks about crypto risks.
Earnings call lingo: Tuning into earnings calls can feel like listening to a foreign language with all the acronyms thrown around—usually at a fast pace—as CFOs reassure analysts, and the markets, that all the numbers are actually great, despite what the pesky balance-sheet specifics might show.
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EBITDA—earnings before interest, taxes, depreciation, and amortization—is probably ingrained in your memory if you’ve ever taken a finance class (but don’t worry, it’s probably safe to assume that you’re not the only one who gets stuck on what the “A” stands for). P&L, profit and loss, is essential for investment and accounting professionals quickly perusing a balance sheet. ROE, return on equity, is not to be confused with the Supreme Court case, and is what investors are eyeing as it’s what they’re expecting to land in their pockets.
If the chief accounting officer speaks on the earnings call, they might talk about the GAAP, or generally accepted accounting principles (not the clothing store, obvs). One of the nitty-gritty accounting rules, GAAP also ruffles investors’ feathers from time to time: think Warren Buffet blaming accounting changes for a $25 billion loss in 2019.
The past few earnings seasons, FOREX—which stands for foreign exchange market—has been all the buzz as the US dollar has been strong, to some companies’ dismay. Analysts often are looking for the earnings per share, or EPS, as a measure of corporate profitability (not a sixth sense, which is ESP) and is the line item on a company’s income statement on which an analyst is most likely to zero in first. And while it’s not an acronym, margins are also a hot topic on earnings calls recently.
Job titles: How would finance feel prestigious without fancy titles tacked on at the end of email signatures? Accountants will add CPA, or certified public accountants, to their titles, which requires 150 credit hours and a series of tests (don’t remind EY). Chartered financial analysts, or CFAs, take tests through the CFA Institute, which has chapters across the world. The institute also offers ESG—environmental, social, and governance—and CIPM, Certificate in Investment Performance Measurement, certification classes.
Are you OK with all these acronyms, CFOs? Tell us the new ones you’re using—we know you finance pros can’t help yourselves.—KT