R
R&D (Research and Development)
R&D (Research and Development) refers to the activities undertaken by companies to innovate and introduce new products and services. It involves investing in new technologies, improving existing products, and exploring new market opportunities.
For example, a pharmaceutical company might allocate significant resources to R&D to develop new drugs and medical treatments.
Raise Capital
Raise Capital means obtaining funds from investors or financial institutions to finance business operations, growth, or new projects. This can be done through equity, debt, or hybrid financing methods.
For example, a startup might raise capital by issuing shares to venture capitalists to fund its expansion plans.
Rate of Return
Rate of Return is the gain or loss on an investment over a specific period, expressed as a percentage of the investment’s initial cost. It measures the profitability and efficiency of an investment.
For example, if an investment of $1,000 grows to $1,100 in one year, the rate of return is 10%.
Ratification
Ratification is the formal approval or confirmation of a decision, contract, or agreement that was made or signed by another party. It validates and makes the act officially binding.
For example, a company’s board of directors might ratify a contract signed by the CEO to ensure it is legally binding and enforceable.
Ratio Analysis
Ratio Analysis is a tool used to evaluate a company’s financial performance by comparing various financial metrics. Common ratios include liquidity ratios, profitability ratios, and leverage ratios.
For example, an investor might use ratio analysis to compare a company’s current ratio, debt-to-equity ratio, and return on equity to industry benchmarks.
Real Estate Investment Trust (REIT)
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate. REITs allow individual investors to earn a share of the income generated from commercial real estate without directly owning property.
For example, an investor might buy shares in a REIT to gain exposure to the real estate market and receive regular dividend payments.
Recapitalization
Recapitalization is a corporate restructuring strategy that involves changing a company’s capital structure by replacing equity with debt or vice versa. It aims to stabilize the company’s finances or achieve specific financial objectives.
For example, a company might undergo recapitalization by issuing new debt to buy back shares and reduce equity.
Receivables
Receivables, also known as accounts receivable, are amounts owed to a company by customers for goods or services provided on credit. They represent an asset on the company’s balance sheet.
For example, if a company sells products on credit, the amounts billed to customers but not yet paid are recorded as receivables.
Recession
A Recession is a significant decline in economic activity that lasts for an extended period, typically characterized by falling GDP, high unemployment, and reduced consumer spending. It is officially declared after two consecutive quarters of negative GDP growth.
For example, the global financial crisis of 2008 led to a recession with widespread economic downturn and job losses.
Redemption
Redemption is the process of repurchasing or paying off a financial instrument, such as a bond or preferred stock, before its maturity date. It can be initiated by the issuer or the holder of the instrument.
For example, a company might redeem its bonds early to take advantage of lower interest rates and reduce interest expenses.
Regulation D (Reg D)
Regulation D (Reg D) is a set of SEC rules that govern private placement exemptions, allowing companies to raise capital without registering the securities with the SEC. It provides guidelines for different types of exempt offerings.
For example, a startup might use a Reg D exemption to raise funds from accredited investors without going through the full registration process.
Regulation Fair Disclosure (Reg FD)
Regulation Fair Disclosure (Reg FD) is an SEC rule that requires publicly traded companies to disclose material information to all investors simultaneously, preventing selective disclosure to certain investors.
For example, a company must announce significant financial results or major developments through a public platform accessible to all investors, such as a press release or SEC filing.
Regulation S-K
Regulation S-K is an SEC regulation that outlines reporting requirements for various SEC filings used by public companies. It provides detailed instructions on the content and format of disclosures, including financial statements and risk factors.
For example, a company preparing its annual report must follow Regulation S-K guidelines to ensure comprehensive and compliant disclosures.
Regulation S-X
Regulation S-X is an SEC rule that prescribes the form and content of financial statements required in various SEC filings. It ensures consistency and transparency in the presentation of financial data.
For example, a company must prepare its financial statements in accordance with Regulation S-X when filing its annual report with the SEC.
Reinsurance
Reinsurance is a practice where an insurance company transfers part of its risk to another insurance company to reduce its exposure to large claims. It helps insurers manage risk and maintain financial stability.
For example, a primary insurance company might purchase reinsurance to cover potential losses from natural disasters, spreading the risk with a reinsurer.
Return on Assets (ROA)
Return on Assets (ROA) is a financial ratio that measures a company’s profitability relative to its total assets. It indicates how efficiently a company uses its assets to generate profit.
For example, if a company has a net income of $200,000 and total assets of $2 million, its ROA is 10%.
Return on Equity (ROE)
Return on Equity (ROE) is a financial ratio that measures a company’s profitability relative to shareholders’ equity. It indicates how effectively a company uses equity investments to generate profit.
For example, if a company has a net income of $300,000 and shareholders’ equity of $3 million, its ROE is 10%.
Return on Investment (ROI)
Return on Investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment. It is calculated by dividing the net profit from the investment by the initial cost of the investment.
For example, if an investment of $1,000 generates a net profit of $200, the ROI is 20%.
Revenue Recognition
Revenue Recognition is an accounting principle that determines when revenue should be recorded and reported. Revenue is recognized when it is earned and realizable, regardless of when payment is received.
For example, a company might recognize revenue when it delivers goods to a customer, even if payment is received later.
Revolving Credit
Revolving Credit is a type of credit that allows borrowers to withdraw, repay, and re-borrow funds up to a specified limit. It provides flexibility for managing cash flow and financing short-term needs.
For example, a business might use a revolving credit line to cover seasonal inventory purchases, repaying the borrowed amount as sales revenue comes in.
Rights Issue
A Rights Issue is a method of raising capital in which a company offers existing shareholders the right to purchase additional shares at a discounted price, typically to finance expansion or pay down debt.
For example, a company might conduct a rights issue to raise funds for a new product line, offering shares to current shareholders at a 10% discount.