|Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized against|
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Definition of Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized against
Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized against
Accelerated cost recovery system (ACRS)
Schedule of depreciation rates allowed for tax purposes.
A bond on which interest accrues, but is not paid to the investor during the time of accrual.
Acquisition of assets
A merger or consolidation in which an acquirer purchases the selling firm's assets.
Agency cost view
The argument that specifies that the various agency costs create a complex environment in
The incremental costs of having an agent make decisions for a principal.
Total costs, explicit and implicit.
Any possession that has value in an exchange.
The ratio of total assets to stockholder equity.
Also called surplus management, the task of managing funds of a financial
Asset activity ratios
Ratios that measure how effectively the firm is managing its assets.
Asset allocation decision
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
Asset for asset swap
Creditors exchange the debt of one defaulting borrower for the debt of another
Asset pricing model
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.
Asset substitution problem
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
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other
Capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and
Amount used during a particular period to acquire or improve long-term assets such as
Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures
Interest that is not immediately expensed, but rather is considered as an asset and is then
costs that increase with increases in the level of investment in current assets.
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
Cost of capital
The required return for a capital budgeting project.
Cost of carry
Related: Net financing cost
Cost of funds
Interest rate associated with borrowing money.
Cost of lease financing
A lease's internal rate of return.
Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital
The net present value of an investment divided by the investment's initial cost. Also called
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
Equivalent annual cost
The equivalent cost per year of owning an asset over its entire life.
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
The difference between the execution price of a security and the price that would have
Claims on real assets.
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
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 cost that is fixed in total for a given period of time and for given production levels.
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
Transaction costs that include the assessment of the investment merits of a financial asset.
A legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual
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.
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
Market timing costs
costs that arise from price movement of the stock during the time of the transaction
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
Net financing cost
Also called the cost of carry or, simply, carry, the difference between the cost of financing
A tangible asset with unique physical properties, like a parcel of land, a mine, or a
Opportunity cost of capital
Expected return that is foregone by investing in a project rather than in
The difference in the performance of an actual investment and a desired investment
Other current assets
Value of non-cash assets, including prepaid expenses and accounts receivable, due
Planned capital expenditure program
Capital expenditure program as outlined in the corporate financial plan.
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
Price impact costs
Related: market impact costs
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
cost to replace a firm's assets.
The pool factor as reported by the bond buyer for a given amortization period.
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.
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.
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
costs associated with locating a counterparty to a trade, including explicit costs (such as
costs that fall with increases in the level of investment in current assets.
costs that have been incurred and cannot be reversed.
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
Total asset turnover
The ratio of net sales to total assets.
costs of buying and selling marketable securities and borrowing. Trading costs include
The time, effort, and money necessary, including such things as commission fees and the
True interest cost
For a security such as commercial paper that is sold on a discount basis, the coupon rate
The asset that an option gives the option holder the right to buy or to sell.
A cost that is directly proportional to the volume of output produced. When production is zero,
An asset which has a limited life and thus, decreases in value (depreciates) over time. Also
Weighted average cost of capital
Expected return on a portfolio of all the firm's securities. Used as a hurdle
A method of accounting in which you record expenses when you incur them and sales as you make them—not when you pay bills or receive checks in the mail.
Anything of value that a company owns.
An asset’s purchase price, plus costs associated with the purchase, like installation fees, taxes, etc.
Cost of goods sold
The cost of merchandise that a company sold this year. For manufacturing companies, the cost of raw
Cash, things that will be converted into cash within a year (such as accounts receivable), and inventory.
MACRS (Modified Accelerated Cost Recovery System)
A depreciation method created by the IRS under the Tax Reform Act of 1986. Companies must use it to depreciate all plant and equipment assets installed after December 31, 1986 (for tax purposes).
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