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cafeteria plan a “menu” of fringe benefit options that include
cash or nontaxable benefits
Accumulated Benefit Obligation (ABO)
An approximate measure of the liability of a plan in the event of a
A plan by U.S. Treasury Secretary James Baker under which 15 principal middle-income debtor
Contracts with trigger points that, when crossed, automatically generate buying or selling of
Packages that involve the exchange of more than two currencies against a base currency at
Corporate financial planning
Financial planning conducted by a firm that encompasses preparation of both
The net present value of an investment divided by the investment's initial cost. Also called
Over-the-counter options, such as those offered by government and mortgage-backed
Defined benefit plan
A pension plan in which the sponsor agrees to make specified dollar payments to
Defined contribution plan
A pension plan in which the sponsor is responsible only for making specified
The options available to the seller of an interest rate futures contract, including the quality
Dividend reinvestment plan (DRP)
Automatic reinvestment of shareholder dividends in more shares of a
Employee stock ownership plan (ESOP)
A company contributes to a trust fund that buys stock on behalf of
Securities that give the holder the right to buy or sell a specified number of shares of stock, at
Equivalent annual benefit
The equivalent annual annuity for the net present value of an investment project.
A financial blueprint for the financial future of a firm.
The process of evaluating the investing and financing options available to a firm. It
Flat benefit formula
Method used to determine a participant's benefits in a defined benefit plan by
Arrangement used to finance inventory. A finance company buys the inventory, which is then
Incremental costs and benefits
Costs and benefits that would occur if a particular course of action were
Defined benefit pension plans that are guaranteed by life insurance products. Related: noninsured plans
Long-term financial plan
Financial plan covering two or more years of future operations.
Margin requirement (Options)
The amount of cash an uncovered (naked) option writer is required to
Materials requirement planning
Computer-based systems that plan backward from the production schedule
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and
Net benefit to leverage factor
A linear approximation of a factor, T*, that enables one to operationalize the
Defined benefit pension plans that are not guaranteed by life insurance products. Related:
A contract that, in exchange for the option price, gives the option buyer the right, but not
Options contract multiple
A constant, set at $100, which when multiplied by the cash index value gives the
Options on physicals
Interest rate options written on fixed-income securities, as opposed to those written on
Overfunded pension plan
A pension plan that has a positive surplus (i.e., assets exceed liabilities).
Pension Benefit Guaranty Corporation (PBGC)
A federal agency that insures the vested benefits of
A fund that is established for the payment of retirement benefits.
Plan for reorganization
A plan for reorganizing a firm during the Chapter 11 bankruptcy process.
The entities that establish pension plans, including private business entities acting for their
Planned amortization class CMO
1) One class of CMO that carries the most stable cash flows and the
Planned capital expenditure program
Capital expenditure program as outlined in the corporate financial plan.
Planned financing program
Program of short-term and long-term financing as outlined in the corporate
The length of time a model projects into the future.
Short-term financial plan
A financial plan that covers the coming fiscal year.
Tax-deferred retirement plans
Employer-sponsored and other plans that allow contributions and earnings to
Underfunded pension plan
A pension plan that has a negative surplus (i.e., liabilities exceed assets).
Unit benefit formula
Method used to determine a participant's benefits in a defined benefit plan by
The ability to establish automatic periodic mutual fund redemptions and have proceeds
Planning, programming and budgeting system (PPBS)
A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres.
property, plant, and equipment
This label is generally used in financial
a listing of service departments in an order that begins with the one providing the most service
cost-benefit analysis the analytical process of comparing the
relative costs and benefits that result from a specific course
Employee Stock Ownership Plan (ESOP)
a profit-sharing compensation program in which investments are made in
enterprise resource planning (ERP) system
a packaged software program that allows a company to
manufacturing resource planning (MRP II)
a fully integrated materials requirement planning system that involves
materials requirements planning (MRP)
a computerbased information system that simulates the ordering and
a formulation of the details of implementing
the process of creating the goals and objectives for
the process of developing a statement of
the process of determining the specific
tax benefit (of depreciation)
the amount of depreciation deductible for tax purposes multiplied by the tax rate;
Manufacturing resource planning (MRP II)
An expansion of the material requirements planning concept, with additional computer-based capabilities in the areas of
Material requirements planning (MRP)
A computer-driven production methodology
A formal agreement between an entity and its employees, whereby the
Property, plant, and equipment
This item is comprised of all types of fixed assets
Time horizon for a financial plan.
options embedded in real assets.
The calculation and comparison of the costs and benefits of a policy or project.
The costs to firms of changing their prices.
Plant and Equipment
Buildings and machines that firms use to produce output.
A retirement plan set up by an employer, into which employees can
A retirement plan similar to a 401k plan, except that it is designed
Benefit Ratio Method
The proportion of unemployment benefits paid to a company’s
Benefit Wage Ratio Method
The proportion of total taxable wages for laid off
A flexible benefits plan authorized under the Internal Revenue
Defined Benefit Plan
A pension plan that pays out a predetermined dollar
Defined Contribution Plan
A qualified retirement plan under which the employer
Educational Assistance Plan
A plan that an employer creates on behalf of its
Employee Stock Ownership Plan (ESOP)
A fund containing company stock and owned by employees, paid for by ongoing contributions by the employer.
Hourly Rate Plan
A method for calculating wages for hourly employees that involves
Nonqualified Retirement Plan
A pension plan that does not follow ERISA and
Piece Rate Plan
A wage calculation method based on the number of units of production
Profit Sharing Plan
A retirement plan generally funded by a percentage of company
Qualified Retirement Plan
A retirement plan designed to observe all of the requirements
Savings Incentive Match Plan for Employees (SIMPLE)
An IRA set up by an employer with no other retirement plan and employing fewer than 100 employees,
Target Benefit Plan
A defined benefit plan under which the employer makes
Workers' Compensation Benefits
Employer-paid insurance that provides their employees with wage compensation if they are injured on the job.
A budgeting process using summary-level information to
Enterprise resource planning system
A computer system used to manage all company
The movement of inventory from one company location to
Manufacturing resource planning
An integrated, computerized system for planning
Material requirements planning
A computerized system used to calculate material
A stock receipt for which no order was placed or for which an
Insured Retirement Plan
This is a recently coined phrase describing the concept of using Universal Life Insurance to tax shelter earnings which can be used to generate tax-free income in retirement. The concept has been described by some as "the most effective tax-neutralization strategy that exists in Canada today."
Some insurance companies include this benefit option at no cost to their policy holders. The insurer considers on a case to case basis, the need for insurance funds before death. If the insured can demonstrate a shortened life of less than two years and with some insurers one year, the insurer will consider releasing up to 50% or a maximum of $100,000 of the life insurance coverage held by the insured. Not all insurers offer this benefit for free. The need has resulted in specific stand alone living benefit/critical illness policies coming into existence. Look under "Different types of Life Insurance" for further information. You might have heard of "Viatical Settlements", the practice of seriously ill people selling the rights to their life insurance policies to third parties. This practice is common in the United States but has not caught on in Canada.
Registered Pension Plan
Commonly referred to as an RPP this is a tax sheltered employee group plan approved by Federal and Provincial governments allowing employees to have deductions made directly from their wages by their employer with a resulting reduction of income taxes at source. These plans are easy to implement but difficult to dissolve should the group have a change of heart. Employer contributions are usually a percentage of the employee's salary, typically from 3% to 5%, with a maximum of the lessor of 20% or $3,500 per annum. The employee has the same right of contribution. Vesting is generally set at 2 years, which means that the employee has right of ownership of both his/her and his/her employers contributions to the plan after 2 years. It also means that all contributions are locked in after 2 years and cannot be cashed in for use by the employee in a low income year. Should the employee change jobs, these funds can only be transferred to the RPP of a new employer or the funds can be transferred to an individual RRSP (or any number of RRSPs) but in either scenario, the funds are locked in and cannot be accessed until at least age 60. The only choices available to access locked in RPP funds after age 60 are the conversion to a Life Income Fund or a Unisex Annuity.
Registered Retirement Savings Plan (Canada)
Commonly referred to as an RRSP, this is a tax sheltered and tax deferred savings plan recognized by the Federal and Provincial tax authorities, whereby deposits are fully tax deductable in the year of deposit and fully taxable in the year of receipt. The ability to defer taxes on RRSP earnings allows one to save much faster than is ordinarily possible. The new rules which apply to RRSP's are that the holder of such a plan must convert it into income by the end of the year in which the holder turns age 69. The choices for conversion are to simply cash it in an pay full tax in the year of receipt, convert it to a RRIF and take a varying stream of income, paying tax on the amount received annually until the income is exhausted, or converting it into an annuity with guaranteed payments for a chosen number of years, again paying tax each year on moneys received.
Spousal Registered Retirement Savings Plan
This is an RRSP owned by the spouse of the person contributing to it. The contributor can direct up to 100% of eligible RRSP deposits into a spousal RRSP each and every year. Contributing to a spouses RRSP reduces the amount one can contribute to one's own RRSP, however, if the spouse is a lower income earner, it is an excellent way in which to split income for lower taxation in retirement years.
A variety of options available to an investor to recover their invested capital and the return on their investment.
RRSP (Registered Retirement Savings Plan) (Canada)
A savings plan registered with Revenue Canada, which allows you to set aside a portion of your earned income now for use in the future. When you contribute to your RRSP, you are eligible to claim a tax deduction. However, cashing RRSPs at a later date will result in the payment of tax.
Regular Investment Plan (RIP)
A plan under which you may make regular deposits of the same amount to your Mutual Funds account once a month, once every 2 weeks, or once a week. You can also make regular deposits up to four times a month on any dates you choose.
systematic withdrawal plan
plans offered by mutual fund companies that allow unitholders to receive payment from their investment at regular intervals.
Accidental Death Benefit (ADB)
Coverage against accidental death usually payable in addition to base amount of coverage.
Automatic Benefits Payment
Automatic payment of moneys derived from a benefit.
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