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Comprehensive due diligence investigation |
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Definition of Comprehensive due diligence investigationComprehensive due diligence investigationThe investigation of a firm's business in conjunction with a
Related Terms:Accumulated Other Comprehensive IncomeCumulative gains or losses reported in shareholders' Annuity dueAn annuity with n payments, wherein the first payment is made at time t = 0 and the last Annuity DueAnnuity where the payments are to be made at the beginning of annuity duea series of equal cash flows being received or paid at the beginning of a period annuity dueLevel stream of cash flows starting immediately. Due billAn instrument evidencing the obligation of a seller to deliver securities sold to the buyer. Due DiligenceThe process of systematically evaluating information, to identify risks and issues relating to a proposed transaction.(i.e. verify that information is what it is proposed to be). ![]() Accrued Incomeincome that has been earned but not yet received. For instance, if you have a non-registered Guaranteed Investment Certificate (GIC), Mutual Fund or Segregated Equity Fund, growth accrues annually or semi-annually and is taxable annually even though the gain is only paid at maturity of your investment. Accumulated Benefit Obligation (ABO)An approximate measure of the liability of a plan in the event of a Accumulated depreciationA contra-fixed asset account representing the portion of the cost of a fixed asset that has been previously charged to expense. Each fixed asset account will have its own associated accumulated depreciation account. accumulated depreciationA contra, or offset, account that is coupled Accumulated depreciationThe sum total of all deprecation expense recognized to date Accumulated ValueAn amount of money invested plus the interest earned on that money. ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. Adjusted Income from ContinuingOperations Reported income from continuing operations AnnuityA regular periodic payment made by an insurance company to a policyholder for a specified period ![]() AnnuityA series of payments or deposits of equal size spaced evenly over AnnuityA series of payments over a period of time. The payments are usually annuityEqually spaced level stream of cash flows. AnnuityA contract which provides an income for a specified period of time, such as a certain number of years or for life. An annuity is like a life insurance policy in reverse. The purchaser gives the life insurance company a lump sum of money and the life insurance company pays the purchaser a regular income, usually monthly. AnnuityPeriodic payments made to an individual under the terms of the policy. Annuity factorPresent value of $1 paid for each of t periods. annuity factorPresent value of an annuity of $1 per period. Annuity in arrearsAn annuity with a first payment on full period hence, rather than immediately. Annuity PeriodThe time between each payment under an annuity. Back To Back AnnuityThis term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application. Book IncomePretax income reported on the income statement. Cash Flow–to–Income Ratio (CFI)Adjusted cash flow provided by continuing operations common-size income statementincome statement that presents items as a percentage of revenues. Common stock/other equityValue of outstanding common shares at par, plus accumulated retained Current Income Tax ExpenseThat portion of the total income tax provision that is based on Deferred AnnuityAn annuity providing for income payments to commence at a specified future time. Deferred Income Tax ExpenseThat portion of the total income tax provision that is the result Deferred nominal life annuityA monthly fixed-dollar payment beginning at retirement age. It is nominal Disposable Incomeincome less income tax. Dividend incomeincome that a company receives in the form of dividends on stock in other companies that it holds. earned incomeEarned income is generally an individual's salary or wages from employment. It also includes some taxable benefits. Earned income also includes business income if the individual is self-employed. Earned income is used as the basis for calculating RRSP maximum contribution limits. earnings before interest and income tax (EBIT)A measure of profit that Economic incomeCash flow plus change in present value. Employee Retirement Income Security Act of 1974 (ERISA)A federal Act that sets minimum operational and funding standards for employee benefit Equivalent annual annuityThe equivalent amount per year for some number of years that has a present Fixed-income equivalentAlso called a busted convertible, a convertible security that is trading like a straight Fixed-income instrumentsAssets that pay a fixed-dollar amount, such as bonds and preferred stock. Fixed-income marketThe market for trading bonds and preferred stock. Fixed-income securityA security that pays a specified cash flow over a Guaranteed Interest Annuity (GIA)Interest bearing investment with fixed rate and term. IncomeNet earnings after all expenses for an accounting period are subtracted from all Income beneficiaryOne who receives income from a trust. Income bondA bond on which the payment of interest is contingent on sufficient earnings. These bonds are Income from Continuing OperationsAfter-tax net income before discontinued operations, Income fundA mutual fund providing for liberal current income from investments. income fundsMutual funds that seek regular income. This type of fund invests primarily in government, corporate and other types of bonds, debt securities, and other income producing securities and in certain circumstances can also hold common and preferred shares. Income SmoothingA form of earnings management designed to remove peaks and valleys Income SplittingThis is a tax planning strategy of arranging for income to be transferred to family members who are in lower tax brackets than the one earning the income, thus reducing taxes. Even though attribution rules limit income splitting, there are still a number of legitimate ways to do so, such as through the use of spousal RRSPs. INCOME STATEMENTAn accounting statement that summarizes information about a company in the following format: Income StatementOne of the basic financial statements; it lists the revenue and expense accounts of the company. income statementFinancial statement that summarizes sales revenue Income statementA financial report that summarizes a company’s revenue, cost of income statementFinancial statement that shows the revenues, expenses, and net income of a firm over a period of time. Income statement (statement of operations)A statement showing the revenues, expenses, and income (the Income StatementsA financial statement that displays a breakdown of total sales and total expenses. Income stockCommon stock with a high dividend yield and few profitable investment opportunities. INCOME TAXWhat the business paid to the IRS. Income taxA government tax on the income earned by an individual or corporation. Income Tax ExpenseSee income tax provision. Income Tax ProvisionThe expense deduction from pretax book income reported on the Incomes PolicyA policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example. Individual Retirement AnnuityAn IRA comprised of an annuity that is managed Interest incomeincome that a company receives in the form of interest, usually as the result of keeping money in interest-bearing accounts at financial institutions and the lending of money to other companies. Investment incomeThe revenue from a portfolio of invested assets. Life Income FundCommonly known as a LIF, this is one of the options available to locked in Registered Pension Plan (RPP) holders for income payout as opposed to Registered Retirement Savings Plan (RRSP) holders choice of payout through Registered Retirement income Funds (RRIF). A LIF must be converted to a unisex annuity by the time the holder reaches age 80. Monthly income preferred security (MIP)Preferred stock issued by a subsidiary located in a tax haven. National IncomeGDP with some adjustments to remove items that do not make it into anyone's hands as income, such as indirect taxes and depreciation. Loosely speaking, it is interpreted as being equal to GDP. National Income and Product AccountsThe national accounting system that records economic activity such as GDP and related measures. Net incomeThe company's total earnings, reflecting revenues adjusted for costs of doing business, NET INCOMEThe profit a company makes after cost of goods sold, expenses, and taxes are subtracted from net sales. Net incomeThe last line of the income Statement; it represents the amount that the company earned during a specified period. Net incomeThe excess of revenues over expenses, including the impact of income taxes. net income (also called the bottom line, earnings, net earnings, and netoperating earnings) Normal annuity formThe manner in which retirement benefits are paid out. Operating incomeThe net income of a business, less the impact of any financial activity, Operating IncomeA measure of results produced by the core operations of a firm. It is common Ordinary AnnuityAn annuity where the payments are made at the end of each ordinary annuitya series of equal cash flows being received Other assetsA cluster of accounts that are listed after fixed assets on the balance sheet, Other capitalIn the balance of payments, other capital is a residual category that groups all the capital Other current assetsValue of non-cash assets, including prepaid expenses and accounts receivable, due Other long term liabilitiesValue of leases, future employee benefits, deferred taxes and other obligations Other sourcesAmount of funds generated during the period from operations by sources other than Other-than-Temporary Decline in Market ValueThe standard used to describe a decline in market value that is not expected to recover. The use of the other-than-temporary description as Permanent Income HypothesisTheory that individuals base current consumption spending on their perceived long-run average income rather than their current income. RAMs (Reverse-annuity mortgages)Mortgages in which the bank makes a loan for an amount equal to a RATIO OF NET INCOME TO NET SALESA ratio that shows how much net income (profit) a company made on each dollar of net sales. Here’s the formula: RATIO OF NET SALES TO NET INCOMEA ratio that shows how much a company had to collect in net sales to make a dollar of profit. Figure it this way: Real Incomeincome expressed in base-year dollars, calculated by dividing nominal income by a price index. Registered Retirement Income Fund (Canada)Commonly referred to as a RRIF, this is one of the options available to RRSP holders to convert their tax sheltered savings into taxable income. residual incomethe profit earned by a responsibility center that exceeds an amount "charged" for funds committed to that center residual incomeAlso called economic value added. Profit minus cost of capital employed. Residual income (RI)The profit remaining after deducting from profit a notional cost of capital on the investment in a business or division of a business. Single-premium deferred annuityAn insurance policy bought by the sponsor of a pension plan for a single Spread incomeAlso called margin income, the difference between income and cost. For a depository tax-deferred incomecurrent compensation that is taxed at a future date Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |