|Abusive Earnings Management|
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Definition of Abusive Earnings Management
Abusive Earnings Management
The use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result.
Abusive Earnings Management
A characterization used by the Securities and Exchange
earnings of a firm as reported on its income statement.
Also called surplus management, the task of managing funds of a financial
Bottom-up equity management style
A management style that de-emphasizes the significance of economic
Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash
Corporate financial management
The application of financial principals within a corporation to create and
Net income for the company during the period.
Earnings before interest and taxes (EBIT)
A financial measure defined as revenues less cost of goods sold
Earnings per share (EPS)
EPS, as it is called, is a company's profit divided by its number of outstanding
Earnings retention ratio
Positive or negative differences from the consensus forecast of earnings by institutions
The ratio of earnings per share after allowing for tax and interest payments on fixed interest
The real flow of cash that a firm could pay out forever in the absence of any change in
Fully diluted earnings per shares
earnings per share expressed as if all outstanding convertible securities
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
Management/closely held shares
Percentage of shares held by persons closely related to a company, as
Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.
An investment advisory fee charged by the financial advisor to a fund based on the fund's
Related: Investment management.
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
Related: Investment management
Price/earnings ratio (PE ratio)
Shows the "multiple" of earnings at which a stock sells. Determined by dividing current
Accounting earnings that are retained by the firm for reinvestment in its operations;
The process of identifying and evaluating risks and selecting and managing techniques to
Related: asset management
Top-down equity management style
A management style that begins with an assessment of the overall
Working capital management
The management of current assets and current liabilities to maximize shortterm liquidity.
Earnings per share of common stock
How much profit a company made on each share of common stock this year.
Profits a company plowed back into the business over the years. Last January’s retained earnings, plus the net income or profit that a company made this year (which is calculated on the income statement), minus dividends paid out, equals the retained earnings balance on the balance sheet date.
Earnings before interest and taxes (EBIT)
The operating profit before deducting interest and tax.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
The operating profit before deducting interest, tax, depreciation and amortization.
The production of financial and non-financial information used in planning for the future; making decisions about products, services, prices and what costs to incur; and ensuring that plans are implemented and achieved.
Strategic management accounting
The provision and analysis of management accounting data about a business and its competitors, which is of use in the development and monitoring of strategy (Simmonds).
A variety of approaches that emphasize increasing shareholder value as the primary goal of every business.
The residual earnings of the company.
Statement Retained Earnings
One of the basic financial statements; it takes the beginning balance of retained earnings and adds net income, then subtracts dividends. The Statement of Retained earnings is prepared for a specified period of time.
basic earnings per share (EPS)
This important ratio equals the net
diluted earnings per share (EPS)
This measure of earnings per share
earnings before interest and income tax (EBIT)
A measure of profit that
earnings per share (EPS)
See basic earnings per share and diluted earnings per share.
This is difficult to define in a few words—indeed, an
net income (also called the bottom line, earnings, net earnings, and net
price/earnings ratio (price to earnings ratio, P/E ratio, PE ratio)
This key ratio equals the current market price
Basic Earnings Power Ratio
Percentage of earnings relative to total assets; indication of how
Earnings per Share
A measure of the earnings generated by a company on a per
Price to Earnings Ratio (P/E, PE Ratio)
A measure of how much investors are willing to pay for each dollar
activity-based management (ABM)
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
Certified Management Accountant (CMA)
a professional designation in the area of management accounting that
cost management system (CMS)
a set of formal methods
Institute of Management Accountants (IMA)
an organization composed of individuals interested in the field of management accounting; it coordinates the Certified management
a discipline that includes almost
Management Accounting Guidelines (MAGs)
pronouncements of the Society of management Accountants of
management control system (MCS)
an information system that helps managers gather information about actual organizational occurrences, make comparisons against plans,
management information system (MIS)
a structure of interrelated elements that collects, organizes, and communicates
the preference of a manager in how he/she interacts with other stakeholders in the organization;
a philosophy about increasing a firm’s performance by involving all workers and by ensuring
performance management system
a system reflecting the entire package of decisions regarding performance measurement and evaluation
Society of Management Accountants of Canada
the professional body representing an influential and diverse
Statement on Management Accounting (SMA)
a pronouncement developed and issued by the management
strategic resource management
organizational planning for the deployment of resources to create value for customers and shareholders; key varibles in the process include the management of information and the management of change in response to threats and opportunities
the cooperative strategic planning,
the use of all techniques that help an organization achieve its goals
total quality management (TQM)
a structural system for creating organization-wide participation in planning and implementing a continuous improvement process that exceeds
A company’s accumulated earnings since its inception, less any distributions to shareholders.
Statement of retained earnings
An adjunct to the balance sheet, providing more detailed information about the beginning balance, changes, and ending balance in
management buyout (MBO)
Acquisition of the firm by its own management in a leveraged buyout.
price-earnings (P/E) multiple (ratio)
Ratio of stock price to earnings per share.
earnings not paid out as dividends.
Demand Management Policy
Fiscal or monetary policy designed to influence aggregate demand for goods and services.
Roth IRA. An IRA account whose earnings are not taxable at all under certain
Net income adjusted to exclude selected nonrecurring and noncash items of reserve, gain, expense, and loss.
A measure of earnings that includes only the results of the primary operating
Cost Plus Estimated Earnings in Excess of Billings
Revenue recognized to date under the percentage-of-completion method in excess of amounts billed. Also known as unbilled accounts
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working
The active manipulation of earnings toward a predetermined target.
EBBS - Earnings before the bad stuff
An acronym attributed to a member of the Securities and
EBDDT - Earnings before depreciation and deferred taxes
This measure is used principally by
A term frequently used to describe earnings after the removal of the
Operational Earnings Management
management actions taken in the effort to create stable
earnings before the effects of any earnings-management activities.
Reported net income with selected nonrecurring items of revenue or gain
Real Actions (Earnings) Management
Involves operational steps and not simply acceleration
Reported earnings that have had the after-tax effects of all material
In general, refers to a company's total sales less cost of sales and operating expenses, including interest and income tax.
management refers to the individuals in an entity that have the authority and the responsibility to manage the entity. The positions of these individuals, and their titles, vary from one entity to another and, to some extent, from one country to another depending on the local laws and customs. Thus, when the context requires it, the term includes the board of directors or committees of the board which are designated to oversee certain matters (e.g., audit committee).
Price / Earnings (P/E) Ratio
The ratio of price to earnings. Faster growing or less-risky firms typically have higher P/E ratios than either slower-growing or more risky firms.
Net profits kept to accumulate in a business after dividends are paid.
management expense ratio (MER)
The total expenses expressed as an annualized percentage of daily average net assets. MER does not include brokerage fees and commissions, which are also payable by the Fund.
The fee paid to the fund’s manager for supervising the administration of the fund.
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