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Average |
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Definition of AverageAverageAn arithmetic mean of selected stocks intended to represent the behavior of the market or some
Related Terms:Arithmetic average (mean) rate of returnArithmetic mean return. Average accounting returnThe average project earnings after taxes and depreciation divided by the average Average (across-day) measuresAn estimation of price that uses the average or representative price of a Average age of accounts receivableThe weighted-average age of all of the firm's outstanding invoices. Average Amortization PeriodThe average useful life of a company's collective amortizable asset base. Average Collection Periodaverage number of days necessary to receive cash for the sale of Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Average-Cost Inventory MethodThe inventory cost-flow assumption that assigns the average Average cost of capitalA firm's required payout to the bondholders and to the stockholders expressed as a Average inventoryThe beginning inventory for a period, plus the amount at the end of Average lifeAlso referred to as the weighted-average life (WAL). The average number of years that each Average maturityThe average time to maturity of securities held by a mutual fund. Changes in interest rates Average Propensity to ConsumeRatio of consumption to disposable income. See also marginal propensity to consume. Average Propensity to SaveRatio of saving to disposable income. See also marginal propensity to save. Average rate of return (ARR)The ratio of the average cash inflow to the amount invested. Average tax rateTaxes as a fraction of income; total taxes divided by total taxable income. average tax rateTotal taxes owed divided by total income. Dow Jones industrial averageThis is the best known U.S.index of stocks. It contains 30 stocks that trade on Dow Jones Industrial AverageIndex of the investment performance of a portfolio of 30 “blue-chip” stocks. Moving averageUsed in charts and technical analysis, the average of security or commodity prices Moving averageA price average that is adjusted by adding other Moving average inventory methodAn inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase. Moving-averages chartA financial chart that plots leading and lagging Simple moving averageThe mean, calculated at any time over a past period of fixed length. WEIGHTED AVERAGEAn inventory valuation method that calculates a weighted average cost per unit for all the goods available for sale. Weighted averageA method of accounting for inventory. Weighted average cost of capitalExpected return on a portfolio of all the firm's securities. Used as a hurdle Weighted average cost of capitalSee cost of capital. weighted-average cost of capitalWeighted means that the proportions of weighted average cost of capitala composite of the cost of the various sources of funds that comprise a firm’s capital structure; the minimum rate of return that must be earned on new investments so as not to dilute shareholder value Weighted Average Cost of Capital (WACC)The weighted average of the costs of the capital components weighted-average cost of capital (WACC)Expected rate of return on a portfolio of all the firm’s securities, adjusted for tax savings due to interest payments. Weighted Average Cost of Capital (WACC)A weighted average of the component costs of debt, preferred shares, and common equity. Also called the composite cost of capital. Weighted average couponThe weighted average of the gross interest rate of the mortgages underlying the Weighted average lifeSee:average life. Weighted average maturityThe WAM of a MBS is the weighted average of the remaining terms to maturity weighted average method (of process costing)the method of cost assignment that computes an average cost per Weighted average portfolio yieldThe weighted average of the yield of all the bonds in a portfolio. Weighted average remaining maturityThe average remaining term of the mortgages underlying a MBS. 12b-1 fundsMutual funds that do not charge an upfront or back-end commission, but instead take out up to accounting rate of return (ARR)the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow Accounts Payable Days (A/P Days)The number of days it would take to pay the ending balance Accounts Receivable Days (A/R Days)The number of days it would take to collect the ending Accounts receivable turnoverThe ratio of net credit sales to average accounts receivable, a measure of how accounts receivable turnover ratioA ratio computed by dividing annual Arithmetic mean returnAn average of the subperiod returns, calculated by summing the subperiod returns Arms indexAlso known as a trading index (TRIN)= (number of advancing issues)/ (number of declining Asian optionOption based on the average price of the asset during the life of the option. Bollinger band chartA financial chart that plots actual asset data along Book value per shareThe ratio of stockholder equity to the average number of common shares. Book value Breakeven pointThe sales level at which a company, division, or product line makes a company cost of capitalExpected rate of return demanded by investors in a company, determined by the average risk of the company’s assets and operations. cost of capital (COC)the weighted average cost of the Days in receivablesaverage collection period. Days' sales in inventory ratioThe average number of days' worth of sales that is held in inventory. Days' sales outstandingaverage collection period. discount ratethe rate of return used to discount future cash DivergenceWhen two or more averages or indices fail to show confirming trends. DiversificationInvesting so that all your eggs are not in the same basket. By spreading your investments over different kinds of investments, you cushion your portfolio against sudden swings in any one area. Segregated equity funds have become a popular and secure way for average investors to get the benefits of greater diversification. Dividends per shareDividends paid for the past 12 months divided by the number of common shares DurationThe weighted average of the time until maturity of each of the Earnings per share (EPS)EPS, as it is called, is a company's profit divided by its number of outstanding Effective Exchange RateThe weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country. Expected valueThe weighted average of a probability distribution. FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent Geometric mean returnAlso called the time weighted rate of return, a measure of the compounded rate of Group Life InsuranceThis is a very common form of life insurance which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates. Inspection ReportThis is a telephone interview of the person applying for life insurance conducted by someone from the underwriting department of the insurance company. Some insurance companies only sporadically contact applicants and some contact every applicant. On average the interview lasts between 15 to 30 minutes. The questions asked relate to personal habits (like smoking and alcohol consumption) and finances, including income and net worth, confirmation of employment, duties and the nature of the applicant's business. In addition, there are questions about driving, sports, aviation and currently held insurance. All information obtained is strictly confidential and is submitted solely to the underwriter for review. Insurance principleThe law of averages. The average outcome for many independent trials of an experiment Internal rate of return a. The average annual yield earned by an investment during the period held. Inventory DaysThe number of days it would take to sell the ending balance in inventory at the Inventory turnoverThe ratio of annual sales to average inventory which measures the speed that inventory INVENTORY TURNOVERThe number of times a company sold out and replaced its average stock of goods in a year. The formula is: inventory turnover ratioThe cost-of-goods-sold expense for a given labor rate variancethe actual rate (or actual weighted average rate) paid to labor for the period minus the standard rate multiplied by all hours actually worked during the period; Lag response of prepaymentsThere is typically a lag of about three months between the time the weighted Life ExpectancyThe average number of years of life remaining for a group of people of a given age and gender according to a particular mortality table. Macaulay durationThe weighted-average term to maturity of the cash flows from the bond, where the Macaulay durationA widely used measure of price sensitivity to yield 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. Management feeAn investment advisory fee charged by the financial advisor to a fund based on the fund's Market value-weighted indexAn index of a group of securities computed by calculating a weighted average maturity premiumExtra average return from investing in longversus short-term Treasury securities. Mean a. A number that typifies a set of numbers, such as a geometric mean Mean of the sampleThe arithmetic average; that is, the sum of the observations divided by the number of modified FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per Multirule systemA technical trading strategy that combines mechanical rules, such as the CRISMA Noncompetitive bidIn a Treasury auction, bidding for a specific amount of securities at the price, whatever it normal capacitythe long-run (5–10 years) average production NUMBER OF DAYS SALES IN RECEIVABLES(also called average collection period). The number of days of net sales that are tied up in credit sales (accounts receivable) that haven’t been collected yet. Operating cycleThe average time intervening between the acquisition of materials or services and the final optimal mix of capitalthe combination of capital sources at which the lowest weighted average cost of capital is achieved P/E effectThat portfolios with low P/E stocks have exhibited higher average risk-adjusted returns than high P/E stocks. Permanent Income HypothesisTheory that individuals base current consumption spending on their perceived long-run average income rather than their current income. Portfolio turnover rateFor an investment company, an annualized rate found by dividing the lesser of price/earnings ratio (price to earnings ratio, P/E ratio, PE ratio)This key ratio equals the current market price Price LevelA weighted average of prices of all goods and services where the weights are given by total spending on each good or service. Measured by a price index. Process costingA costing methodology that arrives at an individual product cost through the calculation of average costs for large quantities of identical products. Progressive tax systemA tax system wherein the average tax rate increases for some increases in income but
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