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Definition of Comparative Advantage
A country has a comparative advantage over another country in the production of good A if to produce a unit of A it forgoes more of the production of good B than would the other country when it produces a unit of good A. Its efficiency in the production of good A relative to its efficiency in the production of good B is greater than is the case for the other country. See also absolute advantage.
The ability to produce a good or service with fewer resources than competitors. See also comparative advantage.
A method of analysis in which a firm is compared to others that have a desired
The net present value of the savings from a refunding.
The net present value of entering into a lease financing arrangement rather than
The difference in total post- and pre-merger market value minus the cost of the merger.
The strategies, skills, knowledge, resources or competencies that differentiate a business from its competitors.
Rule in bankruptcy proceedings whereby senior creditors are required to be paid in full
A method developed by BARRA, a consulting firm in
The requirement that a claim holder voting against a plan of reorganization
An analysis of the level of sales at which a project would make zero profit.
A statistical technique that identifies clusters of stocks whose returns are highly correlated
The representing of accounting information over multiple years as percentages
credit granted by a firm to consumers for the purchase of goods or services. Also called
The process of analyzing information on companies and bond issues in order to estimate the
Purchase of the financial guarantee of a large insurance company to raise funds.
The length of time for which the customer is granted credit.
The risk that an issuer of debt securities or a borrower may default on his obligations, or that the
A statistical technique wherein several financial characteristics are combined to form a single
The interest rate offered on an investment type insurance policy.
Lender of money.
Demand line of credit
A bank line of credit that enables a customer to borrow on a daily or on-demand basis.
A statistical process that links the probability of default to a specified set of financial ratios.
Intermediate-term loans of Eurocurrencies made by banking syndicates to corporate and
Revolving credit without maturity.
A statistical procedure that seeks to explain a certain phenomenon, such as the return on a
Federal credit agencies
Agencies of the federal government set up to supply credit to various classes of
Five Cs of credit
Five characteristics that are used to form a judgement about a customer's creditworthiness:
Foreign tax credit
Home country credit against domestic income tax for foreign taxes paid on foreign
Full faith-and-credit obligations
The security pledges for larger municipal bond issuers, such as states and
Security analysis that seeks to detect misvalued securities by an analysis of the firm's
An analysis of returns using total return to assess performance over some investment horizon.
The process of dividing each expense item of a given year by the same expense item in
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
Letter of credit (L/C)
A form of guarantee of payment issued by a bank used to guarantee the payment of
Line of credit
An informal arrangement between a bank and a customer establishing a maximum loan
Line of credit
An informal arrangement between a bank and a customer establishing a maximum loan
Evaluation of risky prospects based on the expected value and variance of possible outcomes.
Multiple-discriminant analysis (MDA)
Statistical technique for distinguishing between two groups on the
Performance attribution analysis
The decomposition of a money manager's performance results to explain
Pro forma capital structure analysis
A method of analyzing the impact of alternative capital structure
A statistical technique that can be used to estimate relationships between variables.
credit granted by a firm to consumers for the purchase of goods or services.
Revolving credit agreement
A legal commitment wherein a bank promises to lend a customer up to a
Revolving line of credit
A bank line of credit on which the customer pays a commitment fee and can take
The use of horizon analysis to project bond total returns under different reinvestment rates
analysis of the effect on a project's profitability due to changes in sales, cost, and so on.
Security analysis that seeks to detect and interpret patterns in past security prices.
credit granted by a firm to another firm for the purchase of goods or services.
The process of dividing each expense item in the income statement of a given year by net
A financial analysis technique that relates key amounts on the income statement and balance sheet to a 100 percent or base figure for the present and previous year.
Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
Buying or selling goods or services now with the intention of payment following at some time in
Purchases of goods or services from suppliers on credit to whom the debt is not yet paid. Or a
A method of analysing financial reports to interpret trends and make comparisons by using ratios – two numbers, with one generally expressed as a percentage of the other.
An approach to understanding how changes in one variable of cost–volume–profit analysis are affected by changes in the other variables.
A method of budgetary control that compares actual performance against plan, investigates the causes of the variance and takes corrective action to ensure that targets are achieved.
One side of a journal entry, usually depicted as the right side.
A method of relating numbers from the various financial statements to one another in order to get meaningful information for comparison.
capital investment analysis
Refers to various techniques and procedures
The process of using financial ratios, calculated from key accounts
the process of detailing the various repetitive actions that are performed in making a product or
an analytical technique that uses statistical
cost-benefit analysis the analytical process of comparing the
relative costs and benefits that result from a specific course
cost driver analysis
the process of investigating, quantifying,
a process of evaluating changes that
least squares regression analysis
a statistical technique that investigates the association between dependent and independent variables; it determines the line of "best fit" for a set of observations by minimizing the sum of the squares
a method of ranking the causes of variation
a process of determining the amount of change that must occur in a variable before a different decision would be made
the process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences
Statistical analysis techniques that quantify the
The 80:20 ratio that states that 20% of the variables included in an
analysis of the level of sales at which the company breaks even.
Procedure to determine the likelihood a customer will pay its bills.
Standards set to determine the amount and nature of credit to extend to customers.
line of credit
Agreement by a bank that a company may borrow at any time up to an established limit.
Project analysis given a particular combination of assumptions.
analysis of the effects of changes in sales, costs, and so on, on project profitability.
Estimation of the probabilities of different possible outcomes, e.g., from an investment project.
The calculation and comparison of the costs and benefits of a policy or project.
A decline in the ability or willingness of banks to lend.
Restriction of loans by lenders so that not all borrowers willing to pay the current interest rate are able to obtain loans.
Investment Tax Credit
A reduction in taxes offered to firms to induce them to increase investment spending.
Consumer Credit Protection Act
A federal Act specifying the proportion of
Absolute Right of Return
Goods may be returned to the seller by the purchaser without restrictions.
The examination of failure incidents to identify components
Creditor Proof Protection
The creditor proof status of such things as life insurance, non-registered life insurance investments, life insurance RRSPs and life insurance RRIFs make these attractive products for high net worth individuals, professionals and business owners who may have creditor concerns. Under most circumstances the creditor proof rules of the different provincial insurance acts take priority over the federal bankruptcy rules.
An analytical technique for studying the relationships between fixed cost, variable cost, and profits. A breakeven chart graphically depicts the nature of breakeven analysis. The breakeven point represents the volume of sales at which total costs equal total revenues (that is, profits equal zero).
A rating of a company's credit (ability to payback debt), usually by a third party credit agency.
A loan receivable that has proven uncollectible and is written off.
Financial and moral risk that an obligation will not be paid and a loss will result.
Conditions under which credit is extended by a lender to a borrower.
credit unions are community based financial co-operatives and most offer a full range of services. All are owned and controlled by members who are also shareholders. credit unions are regulated provincially and insured by a stabilization fund, deposit insurance or guarantee corporation.
Person or business that is owed money.
Export Credit Insurance
The granting of insurance to cover the commercial and political risks of selling in foreign markets.
Financial Trend Analysis
Process of analyzing financial statements of a company for any continuing relationship.
Formalized Line of Credit
A contractual commitment to make loans to a particular borrower up to a specified maximum during a specified period, usually one year.
Full Credit Period
The period of trade credit given by a supplier to its customer.
Letters of Credit
A letter of credit is a guarantee of payment by a bank (issuing institution)to a third party for a specific amount of money, if certain conditions are met.
Line of Credit
An agreement negotiated between a borrower and a lender which establishes the maximum amount against which a borrower may draw. The agreement also sets out other conditions, such as how and when money borrowed against the line of credit is to be repaid.
Operating Line of Credit
A bank's commitment to make loans to a particular borrower up to a specified maximum for a specified period, usually one year.
Line of credit against which funds may be borrowed at any time, with regular scheduled repayments of a predetermined minimum amount.
Period of delay allowed by a firm's supplier to pay its invoices. Frequently, the terms are : 2% discount on invoice if paid in 10 days or net if paid in 30 days.
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