Why do bankers use M instead of K? TheStory Behind the MM Convention
While you can make MM stand for millions of anything, it’s important that the reader knows whether you’re talking about dollars, euros, units shipped, etc. If, say, you use it for both units and dollars in the same document, separate the different categories so your readers don’t get confused. Within finance and accounting, we often find something quite different. For example, a thousand is often abbreviated as (M), a million is abbreviated as (MM), and a billion is abbreviated as (BN) or (MMM). After enrolling in a program, you may request a withdrawal with refund (minus a $100 nonrefundable enrollment fee) up until 24 hours after the start of your program.
What is the Money Market (MM)?
- There are actually a few different ways that 1,000,000 can be expressed when it comes to writing dollar amounts.
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- The use of “MM” fit seamlessly into this new framework, offering a concise way to represent substantial amounts without cluttering financial records.
- In this example, we intentionally chose a piece of analysis that contained various different units, such as dollars and shares.
- By employing “MM,” companies can present their financial data in a universally understood format, minimizing the risk of misinterpretation.
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Financial Terminology: 20 Financial Terms to Know
In finance and accounting, MM (or lowercase “mm”) commonly denotes that the units of figures presented are in millions. In this context, MM is the same as writing “M multiplied by M,” which is equal to “1,000 times 1,000,” which equals 1,000,000 (one million). Today, MM remains the standard abbreviation for millions throughout the banking and accounting professions. In my experience analyzing data from top financial institutions, I estimate 90% or more use MM based on samples of hundreds of documents and reports. For example, if a company has revenue of $45,000,000, it can be written as $45MM.
MM in International Reporting
If 1,000 multiplied by 1,000 equals 1,000,000, and 1,000 equals M, then we can use the abbreviations to create calculations. The least ambiguous approach is to simply write them out in words, such as “$ thousands.” This is CFI’s recommended method, to avoid any potential confusion. This is based off the Roman numeral “M,” which stands for 1,000, and MM, which is used to indicate 1,000,000. Stack Exchange network consists of 183 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers. We expect to offer our courses in additional languages in the future but, at this time, HBS Online can only be provided in English. We offer self-paced programs (with weekly deadlines) on the HBS Online course platform.
Streamlining Financial Documents
If you would like to learn more about Old Republic Surety and some of our services like Commercial Surety Bonds, and Contract Bonds, or just want more information, don’t hesitate to contact us today. Signup for our newsletter to get access to our proven pitch deck template. Large numbers can be difficult to comprehend and interpret correctly, thus using MM to represent millions simplifies presentations and discussions, making them more efficient. Its significance also lies in its capability to provide clarity and prevent misunderstandings that could potentially occur if numbers were presented in their raw form. If you think there’s any possibility of your use of MM being confusing or being misinterpreted, you’re safer writing out the numbers or using “millions.” Despite some calls to modernize, MM persists because of its advantages for clarity, precision, and familiarity.
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The use of MM is not just about convenience; it also plays a role in standardizing financial reporting. Consistent use of such abbreviations helps maintain uniformity across various documents, whether they are balance sheets, income statements, or cash flow statements. This uniformity is crucial for analysts and investors who rely on these documents to make informed decisions. For example, when comparing financial statements from different companies, the use of MM ensures that figures are easily comparable, reducing the risk of misinterpretation.
Where Does the mm Abbreviation Come From?
In other words, a bank might need a loan for two hours to funds their cash reserves before the next delivery of cash arrives. Thus, the bank would take out a short-term loan on the market and pay interest to the lender. Some of the instruments traded in the MM are certificate of deposits, treasury bills, and commercial papers. For example, some businesses will not accept personal checks for large amounts, but will accept traveler’s checks or cash.
- To get a jumpstart, download our free Financial Terms Cheat Sheet.
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- Unfortunately, there isn’t a consistent approach to labeling units.
- Analysts use it to project future revenues, expenses, and other financial metrics.
- It’s what helps you balance short-term expenses with long-term goals, and meaningfully measure your team’s performance.
- This shorthand is particularly useful in simplifying the presentation of large figures, making financial documents more readable and less cluttered.
- Also, most transactions are settled over-the-counter and the size of each transaction is regularly high.
Orange Financial LLC is a firm that provides financial services to both companies and individuals. This account offers a return on investment a little bit higher than what the regular savings account is currently offering. Mrs. Simpson wants to invest her money in a MM account, but she doesn’t understand how they work. The finance term MM, denoting ‘Million’, is important what does mm mean in finance due to its wide usage in financial documents, reports, and communications to represent large quantities of money. In accounting speak, a written “MM” means a million, whether the accountant is referring to units, dollars, euros or shares. Rather than writing $400,000,000 or $400 million, the accountant can use the MM abbreviation and write $400MM instead.
