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Definition of Asset/liability management
Also called surplus management, the task of managing funds of a financial
A merger or consolidation in which an acquirer purchases the selling firm's assets.
Any possession that has value in an exchange.
The ratio of total assets to stockholder equity.
Ratios that measure how effectively the firm is managing its assets.
The decision regarding how an institution's funds should be distributed among the
A security that is collateralized by loans, leases, receivables, or installment contracts
Methods of financing in which lenders and equity investors look principally to the
Categories of assets, such as stocks, bonds, real estate and foreign securities.
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
Creditors exchange the debt of one defaulting borrower for the debt of another
A model for determining the required rate of return on an asset.
A firm's investing in assets that are riskier than those that the debtholders expected.
Arises when the stockholders substitute riskier assets for the firm's existing
An interest rate swap used to alter the cash flow characteristics of an institution's assets so as to
The ratio of net sales to total assets.
Asset pricing model
A model, such as the Capital asset Pricing Model (CAPM), that determines the required
A firm's productive resources.
A common element of a financial plan that describes projected capital spending and the
Bottom-up equity management style
A management style that de-emphasizes the significance of economic
Capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and
Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash
Contingent pension liability
Under ERISA, the firm is liable to the plan participants for up to 39% of the net
Corporate financial management
The application of financial principals within a corporation to create and
Value of cash, accounts receivable, inventories, marketable securities and other assets that
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Claims on real assets.
Long-lived property owned by a firm that is used by a firm in the production of its income.
Fixed asset turnover ratio
The ratio of sales to fixed assets.
A legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual
A financial obligation, or the cash outlay that must be made at a specific time to satisfy the
Liability funding strategies
Investment strategies that select assets so that cash flows will equal or exceed
An interest rate swap used to alter the cash flow characteristics of an institution's liabilities so
Limitation of possible loss to what has already been invested.
A security, such as a call option, in which the owner can only lose his initial
asset that is easily and cheaply turned into cash - notably cash itself and short-term securities.
Value of property, equipment and other capital assets minus the depreciation. This is an
Limitation on asset dispositions
A bond covenant that restricts in some way a firm's ability to sell major assets.
A security, such as a call option, in which the owner can only lose his initial investment.
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.
Net asset value (NAV)
The value of a fund's investments. For a mutual fund, the net asset value per share
The difference between total assets on the one hand and current liabilities and noncapitalized longterm
A tangible asset with unique physical properties, like a parcel of land, a mine, or a
Other current assets
Value of non-cash assets, including prepaid expenses and accounts receivable, due
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
Related: Investment management
Publicly traded assets
assets that can be traded in a public market, such as the stock market.
Current assets minus inventories.
Identifiable assets, such as buildings, equipment, patents, and trademarks, as distinguished from a
A tangible asset with physical properties that can be reproduced, such as a building or
assets that remain after sufficient assets are dedicated to meet all senior debtholder's claims in full.
Return on assets (ROA)
Indicator of profitability. Determined by dividing net income for the past 12 months
Return on total assets
The ratio of earnings available to common stockholders to total assets.
The process of identifying and evaluating risks and selecting and managing techniques to
Riskless or risk-free asset
An asset whose future return is known today with certainty. The risk free asset is
An asset whose future return is uncertain.
An asset whose future return is known today with certainty.
Related: asset management
Tactical Asset Allocation (TAA)
An asset allocation strategy that allows active departures from the normal
An asset whose value depends on particular physical properties. These i nclude reproducible
Top-down equity management style
A management style that begins with an assessment of the overall
Total asset turnover
The ratio of net sales to total assets.
The asset that an option gives the option holder the right to buy or to sell.
Full liability for the debt and other obligations of a legal entity. The general partners of a
An asset which has a limited life and thus, decreases in value (depreciates) over time. Also
Working capital management
The management of current assets and current liabilities to maximize shortterm liquidity.
Anything of value that a company owns.
Cash, things that will be converted into cash within a year (such as accounts receivable), and inventory.
RATE OF RETURN ON TOTAL ASSETS
The percentage return or profit that management made on each dollar of assets. The formula is:
Things that the business owns.
Amounts receivable by the business within a period of 12 months, including bank, debtors, inventory and prepayments.
Things that the business owns and are part of the business infrastructure – fixed assets may be
Intangible fixed assets
Non-physical assets, e.g. customer goodwill or intellectual property (patents and trademarks).
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).
Tangible fixed assets
Physical assets that can be seen and touched, e.g. buildings, machinery, vehicles, computers etc.
A variety of approaches that emphasize increasing shareholder value as the primary goal of every business.
Items owned by the company or expenses that have been paid for but have not been used up.
An offset to an asset account that reduces the balance of the asset account.
assets owned by the company that do not possess physical substance; they usually take the form of rights and privileges such as patents, copyrights, and franchises.
asset turnover ratio
A broad-gauge ratio computed by dividing annual
Current refers to cash and those assets that will be turned
An informal term that refers to the variety of long-term operating
This is difficult to define in a few words—indeed, an
return on assets (ROA)
Although there is no single uniform practice for
The amount of total risk that can be eliminated by diversification by
Capital Asset Pricing Model (CAPM)
A model for estimating equilibrium rates of return and values of
Fixed Assets Turnover Ratio
A measure of the utilization of a company's fixed assets to
Return on Total Assets Ratio
A measure of the percentage return earned on the value of the
Total Asset Turnover Ratio
A measure of the utilization of all of a company's assets to
Total Debt to Total Assets Ratio
See debt ratio
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
a ratio measuring asset productivity and showing the number of sales dollars generated by each dollar of assets
an asset used to generate revenues or cost savings
Certified Management Accountant (CMA)
a professional designation in the area of management accounting that
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