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Definition of Cash cost
The amount of cash expended.
Same as PV, but usually includes a subtraction for an initial cash outlay.
the value in todayâ€™s dollars of cash flows that occur in different time periods.
Schedule of depreciation rates allowed for tax purposes.
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.
A firm's required payout to the bondholders and to the stockholders expressed as a
The argument that expected indirect and direct bankruptcy costs offset the other
costs that increase with increases in the level of investment in current assets.
The value of assets that can be converted into cash immediately, as reported by a company. Usually
A forecasted summary of a firm's expected cash inflows and cash outflows as well as its
Purchase of a security and simultaneous sale of a future, with the balance being financed
The value of assets that can be converted into cash immediately, as reported by a
The actual physical commodity, as distinguished from a futures contract.
The length of time between a firm's purchase of inventory and the receipt of cash
A company that pays out all earnings per share to stockholders as dividends. Or, a company or
In general, the time between cash disbursement and cash collection. In net working capital
Cash deficiency agreement
An agreement to invest cash in a project to the extent required to cover any cash
The provision of some futures contracts that requires not delivery of underlying assets but
An incentive offered to purchasers of a firm's product for payment within a specified time
A dividend paid in cash to a company's shareholders. The amount is normally based on
A short-term security that is sufficiently liquid that it may be considered the financial
In investments, it represents earnings before depreciation , amortization and non-cash charges.
Cash flow after interest and taxes
Net income plus depreciation.
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash flow matching
Also called dedicating a portfolio, this is an alternative to multiperiod immunization in
Cash flow per common share
cash flow from operations minus preferred stock dividends, divided by the
Cash flow time-line
Line depicting the operating activities and cash flows for a firm over a particular period.
Cash-flow break-even point
The point below which the firm will need either to obtain additional financing
Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash
Also called spot markets, these are markets that involve the immediate delivery of a security
A public equity issue that is sold to all interested investors.
The proportion of a firm's assets held as cash.
Cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving
A transaction where exchange is immediate, as contrasted to a forward contract, which
Temporary investments of currently excess cash in short-term, high-quality
An amount the insurance company will pay if the policyholder ends a whole life
Refers to a situation where a firm runs out of cash and cannot readily sell marketable securities.
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
Discounted cash flow (DCF)
Future cash flows multiplied by discount factors to obtain present values.
Discretionary cash flow
cash flow that is available after the funding of all positive NPV capital investment
Equivalent annual cash flow
Annuity with the same net present value as the company's proposed investment.
Equivalent annual cost
The equivalent cost per year of owning an asset over its entire life.
The difference between the execution price of a security and the price that would have
Expected future cash flows
Projected future cash flows associated with an asset of decision.
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
A cost that is fixed in total for a given period of time and for given production levels.
Free cash flows
cash not required for operations or for reinvestment. Often defined as earnings before
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
General cash offer
A public offering made to investors at large.
Incremental cash flows
Difference between the firm's cash flows with and without a project.
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 firm's cash balance as reported in its financial statements. Also called book cash.
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 cash balance
Beginning cash balance plus cash receipts minus cash disbursements.
Net financing cost
Also called the cost of carry or, simply, carry, the difference between the cost of financing
Nominal cash flow
A cash flow expressed in nominal terms if the actual dollars to be received or paid out are given.
A cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow.
Operating cash flow
Earnings before depreciation minus taxes. It measures the cash generated from
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
Price impact costs
Related: market impact costs
Real cash flow
A cash flow is expressed in real terms if the current, or date 0, purchasing power of the cash
cost to replace a firm's assets.
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
Scheduled cash flows
The mortgage principal and interest payments due to be paid under the terms of the
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.
Statement of cash flows
A financial statement showing a firm's cash receipts and cash payments during a
A method of cash budgeting that is organized along the lines of the statement of cash flows.
costs that have been incurred and cannot be reversed.
Symmetric cash matching
An extension of cash flow matching that allows for the short-term borrowing of
Target cash balance
Optimal amount of cash for a firm to hold, considering the trade-off between the
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
A cost that is directly proportional to the volume of output produced. When production is zero,
Wanted for cash
A statement displayed on market tickers indicating that a bidder will pay cash for same day
Weighted average cost of capital
Expected return on a portfolio of all the firm's securities. Used as a hurdle
CASH AND CASH EQUIVALENTS
The balance in a companyâ€™s checking account(s) plus short-term or temporary investments (sometimes called â€śmarketable securitiesâ€ť), which are highly liquid.
A statement that shows where a companyâ€™s cash came from and where it went for a period of time, such as a year.
CASH FLOWS FROM FINANCING ACTIVITIES
A section on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations.
CASH FLOWS FROM INVESTING ACTIVITIES
A section on the cashflow statement that shows how much cash came in and went out because of various investing activities like purchasing machinery.
CASH FLOWS FROM OPERATIONS
A section on the cash-flow Stockholdersâ€™ equity statement that shows how much cash came into a company and how much went out during the normal course of business.
An assetâ€™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
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).
A method of costing in which all fixed and variable production costs are charged to products or services using an allocation base.
A method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers.
costs that are identifiable with and able to be influenced by decisions made at the business
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