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Cash flow after interest and taxes |
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Definition of Cash flow after interest and taxesCash flow after interest and taxesNet income plus depreciation.
Related Terms:fractional interest discountthe combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor. NPV (net present value of cash flows)Same as PV, but usually includes a subtraction for an initial cash outlay. PV (present value of cash flows)the value in todayâ€™s dollars of cash flows that occur in different time periods. Accrued interestThe accumulated coupon interest earned but not yet paid to the seller of a bond by the After-tax profit marginThe ratio of net income to net sales. After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. Amortizing interest rate swapSwap in which the principal or national amount rises (falls) as interest rates Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. Base interest rateRelated: Benchmark interest rate. Benchmark interest rateAlso called the base interest rate, it is the minimum interest rate investors will Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization Capitalized interestinterest that is not immediately expensed, but rather is considered as an asset and is then CashThe value of assets that can be converted into cash immediately, as reported by a company. Usually Cash budgetA forecasted summary of a firm's expected cash inflows and cash outflows as well as its Cash and carryPurchase of a security and simultaneous sale of a future, with the balance being financed Cash and equivalentsThe value of assets that can be converted into cash immediately, as reported by a Cash commodityThe actual physical commodity, as distinguished from a futures contract. Cash conversion cycleThe length of time between a firm's purchase of inventory and the receipt of cash Cash cowA company that pays out all earnings per share to stockholders as dividends. Or, a company or Cash cycleIn general, the time between cash disbursement and cash collection. In net working capital Cash deficiency agreementAn agreement to invest cash in a project to the extent required to cover any cash Cash deliveryThe provision of some futures contracts that requires not delivery of underlying assets but Cash discountAn incentive offered to purchasers of a firm's product for payment within a specified time Cash dividendA dividend paid in cash to a company's shareholders. The amount is normally based on Cash equivalentA short-term security that is sufficiently liquid that it may be considered the financial Cash flowIn investments, it represents earnings before depreciation , amortization and non-cash charges. Cash flow coverage ratioThe number of times that financial obligations (for interest, principal payments, Cash flow from operationsA firm's net cash inflow resulting directly from its regular operations Cash flow matchingAlso called dedicating a portfolio, this is an alternative to multiperiod immunization in Cash flow per common sharecash flow from operations minus preferred stock dividends, divided by the Cash flow time-lineLine depicting the operating activities and cash flows for a firm over a particular period. Cash-flow break-even pointThe point below which the firm will need either to obtain additional financing Cash management billVery short maturity bills that the Treasury occasionally sells because its cash Cash marketsAlso called spot markets, these are markets that involve the immediate delivery of a security Cash offerA public equity issue that is sold to all interested investors. Cash ratioThe proportion of a firm's assets held as cash. Cash settlement contractsFutures contracts, such as stock index futures, that settle for cash, not involving Cash transactionA transaction where exchange is immediate, as contrasted to a forward contract, which Cash-equivalent itemsTemporary investments of currently excess cash in short-term, high-quality Cash-surrender valueAn amount the insurance company will pay if the policyholder ends a whole life CashoutRefers to a situation where a firm runs out of cash and cannot readily sell marketable securities. Compound interestinterest paid on previously earned interest as well as on the principal. Covered interest arbitrageA portfolio manager invests dollars in an instrument denominated in a foreign Deferred taxesA non-cash expense that provides a source of free cash flow. Amount allocated during the Discounted cash flow (DCF)Future cash flows multiplied by discount factors to obtain present values. Discretionary cash flowcash flow that is available after the funding of all positive NPV capital investment Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of Equilibrium rate of interestThe interest rate that clears the market. Also called the market-clearing interest Equivalent annual cash flowAnnuity with the same net present value as the company's proposed investment. Expected future cash flowsProjected future cash flows associated with an asset of decision. Flower bondGovernment bonds that are acceptable at par in payment of federal estate taxes when owned by Flow-through basisAn account for the investment credit to show all income statement benefits of the credit Flow-through methodThe practice of reporting to shareholders using straight-line depreciation and Forward interest rateinterest rate fixed today on a loan to be made at some future date. Free cash flowscash not required for operations or for reinvestment. Often defined as earnings before General cash offerA public offering made to investors at large. Gross interestinterest earned before taxes are deducted. Incremental cash flowsDifference between the firm's cash flows with and without a project. InterestThe price paid for borrowing money. It is expressed as a percentage rate over a period of time and Interest coverage ratioThe ratio of the earnings before interest and taxes to the annual interest expense. This Interest coverage testA debt limitation that prohibits the issuance of additional long-term debt if the issuer's Interest equalization taxTax on foreign investment by residents of the U.S. which was abolished in 1974. Interest paymentsContractual debt payments based on the coupon rate of interest and the principal amount. Interest on interestinterest earned on reinvestment of each interest payment on money invested. Interest-only strip (IO)A security based solely on the interest payments form a pool of mortgages, Treasury Interest rate agreementAn agreement whereby one party, for an upfront premium, agrees to compensate the Interest rate capAlso called an interest rate ceiling, an interest rate agreement in which payments are made Interest rate ceilingRelated: interest rate cap. Interest rate floorAn interest rate agreement in which payments are made when the reference rate falls Interest rate on debtThe firm's cost of debt capital. Interest rate parity theoreminterest rate differential between two countries is equal to the difference Interest rate riskThe risk that a security's value changes due to a change in interest rates. For example, a Interest rate swapA binding agreement between counterparties to exchange periodic interest payments on Interest subsidyA firm's deduction of the interest payments on its debt from its earnings before it calculates Interest tax shieldThe reduction in income taxes that results from the tax-deductibility of interest payments. Ledger cashA firm's cash balance as reported in its financial statements. Also called book cash. Net cash balanceBeginning cash balance plus cash receipts minus cash disbursements. Nominal cash flowA cash flow expressed in nominal terms if the actual dollars to be received or paid out are given. Nominal interest rateThe interest rate unadjusted for inflation. Noncash chargeA cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow. Open interestThe total number of derivative contracts traded that not yet been liquidated either by an Operating cash flowEarnings before depreciation minus taxes. It measures the cash generated from Pooling of interestsAn accounting method for reporting acquisitions accomplished through the use of equity. Price-specie-flow mechanismAdjustment mechanism under the classical gold standard whereby Production-flow commitmentAn agreement by the loan purchaser to allow the monthly loan quota to be Rate of interestThe rate, as a proportion of the principal, at which interest is computed. Real cash flowA cash flow is expressed in real terms if the current, or date 0, purchasing power of the cash Real interest rateThe rate of interest excluding the effect of inflation; that is, the rate that is earned in terms Scheduled cash flowsThe mortgage principal and interest payments due to be paid under the terms of the Short interestThis is the total number of shares of a security that investors have borrowed, then sold in the Simple interestinterest calculated only on the initial investment. Related:compound interest. Spot interest rateinterest rate fixed today on a loan that is made today. Related: forward interest rates. Stated annual interest rateThe interest rate expressed as a per annum percentage, by which interest Statement of cash flowsA financial statement showing a firm's cash receipts and cash payments during a Statement-of-cash-flows methodA method of cash budgeting that is organized along the lines of the statement of cash flows. Symmetric cash matchingAn extension of cash flow matching that allows for the short-term borrowing of Target cash balanceOptimal amount of cash for a firm to hold, considering the trade-off between the Times-interest-earned ratioEarnings before interest and tax, divided by interest payments.
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