See FEDERAL HOME LOAN MORTGAGE CORPORATION.

Fraud is intentional misrepresentation and has long been a major problem both for businesses and consumers. In 17th-century England, a law on oral contracts prohibited parties to a lawsuit from testifying on their own behalf. This frequently led to third parties offering false testimony about the existence of an oral CONTRACT.

Franchising is a contractual agreement between a manufacturer or business-idea owner—the franchiser—and a WHOLESALER or retailer—the franchisee. The franchiser sells to the franchisee the right to market its products or ideas and to use its TRADEMARKs and brand names.

The term 401(k) comes from a section of the Internal Revenue Code allowing special tax consideration to help people save for retirement. Americans, particularly “baby boomers,” have relatively low savings rates. The 401(k) plan was created to induce Americans to increase their savings.

Foreign-trade zones (FTZs), also known as free-trade zones, are facilities, usually established in enclosed areas near U.S. ports of entry that receive special treatment with regard to taxation of imported of goods.

Immunity can be defined as being exempt from or not responsible for things such as illness, problems, or gover- nance. Specifically, the Foreign Sovereign Immunities Act states that foreign countries are immune to the U.S. judicial system, with the exception of certain limitations.

Foreign investment includes both portfolio INVESTMENT and DIRECT INVESTMENT; these two investment types vary in the degree of RISK and control.

Foreign exchange is the trading of one country’s currency for another’s. There are many reasons why this must be done in the normal course of business. For example, a company may need a foreign currency to purchase items priced and sold in another currency.

The Foreign Corrupt Practices Act (FCPA, 1977) makes it illegal for any U.S. firm to offer, promise, or make payments or gifts of anything of value to foreign officials. The FCPA was a response to a 1970s investigation documenting that over 400 American companies had given bribes or made otherwise questionable payments in excess of $300 million to foreign officials for the purpose of obtaining or keeping business.

Forced-ranking systems are employee performance review systems where workers within groups or departments are rated best to worst with the lowest ranked workers either terminated or considered for termination.

The U.S. Food and Drug Administration (FDA) is a federal agency charged to protect public health.

Focus groups are small groups of individuals brought together by market researchers to discuss a particular topic. Most focus groups include 8–12 people and a moderator. Individuals are chosen based on interest or involvement with the subject to be discussed and are often paid $50–$100 to participate in the session. A typical focus group will last 1–2 hours, be taped for later detailed review, and observed by market researchers and the client through a one-way mirror.

See FREE ON BOARD.

The term flow of funds has both business and economic meanings. In business, flow of funds refers to a statement of the sources and application of funds in the organization. In this context it is often referred to as a funds-flow statement or cash-flow statement. More often flow of funds refers to data showing the movement of savings and the sources and uses of funds through the economy.

A flowchart is a graphic illustration of the steps to follow in the process of production. Flowcharts are important in understanding a project and the different sequences to follow. They are also important for decision making, helping people better understand a project, the possible outcomes, and possible solutions to consider.

The five Cs of credit are character, capacity, CAPITAL, collateral, and conditions. To analyze the risk of DEFAULT by a borrower, lenders typically evaluate a customer’s five Cs. Character refers to a borrower’s integrity, credit history, and past relationships with the lender.

In the United States most CORPORATIONs are legally required to report the results of their business activities at least once a year. In their initial INCORPORATION documents, companies define when their business year starts and ends; this is their fiscal year.

Fiscal policy is the use of the federal tax and spending process to influence the level of economic activity. In its simplest form, fiscal policy involves changing taxes and/or government spending in order to expand or contract aggregate DEMAND towards a targeted level of equilibrium national INCOME.

First-mover advantage, also called first-to-market, is the benefit a company gains by being first to market with a new PRODUCT or service. First-mover advantage is part of MARKETING STRATEGY—the coordination of product, pricing, promotion, and distribution decisions for each target market.

First in, first out (FIFO) and last in, first out (LIFO) are inventory-costing methods. Inventory costing methods are used to assign values to a firm’s ending inventory and to COST OF GOODS SOLD. For tax purposes, a firm will use the inventory-costing method that maximizes its cost of goods sold and minimizes the value of its ending inventory.

FINANCIAL ACCOUNTING is the system of collecting, processing, and periodically reporting a firm’s financial information; thus, its ultimate purpose is the dissemination of a firm’s financial data. This is accomplished by the publication of financial statements, all of which must be constructed in accordance with GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP).

FINANCIAL STATEMENTS are analyzed by MANAGEMENT and investors to predict and plan for the future. Financial ratios, fractions that show relationships between accounts found on the financial statements, are the tools used in financial-statement analysis. Some ratios are useful in the analysis of a single firm, while other ratios have meaning only when compared to those of other firms or to industry averages. A few of the more common financial ratios follow.

The Financial Planning Association (FPA) is an organization that trains and certifies financial planners. Financial planning is the process of establishing personal financial goals and allocating resources to obtain those goals. The FPA was created in 2000 through a merger of the Institute of Certified Financial Planners and the International Association for Financial Planning.

Financial intermediaries are institutions that take funds saved by households and in turn make LOANS to others. The process of taking savings and providing funds to borrowers is called intermediation, or indirect finance. While most people think of banks as financial intermediaries, in the United States, SAVINGS AND LOAN ASSOCIATIONS, mutual INSURANCE companies, CREDIT UNIONs, pension funds, finance companies, MUTUAL FUNDS, and money market funds all function as financial intermediaries.