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Definition of Consensus forecast
The mean of all financial analysts' forecasts for a company.
Positive or negative differences from the consensus forecast of earnings by institutions
A key input to a firm's financial planning process. External sales forecasts are based on
A revised budget estimate or update, part-way through a budget period.
An estimate of the timing and amount of a company's inflows and outflows of money measured over a specific period of time typically monthly for one to two years then annually for an additional one to three years.
Future-oriented financial information prepared using assumptions all of which reflect the entity's planned courses of action for the period covered given management's judgment as to the most probable set of economic conditions.
earnings of a firm as reported on its income statement.
Similar to equipment trust certificates except that the lender is either the
The formal name for the load of a back-end load fund.
The average number of days' worth of sales that is held in inventory.
Average collection period.
A U.S. corporation that receives a tax incentive for
Net income for the company during the period.
A financial measure defined as revenues less cost of goods sold
EPS, as it is called, is a company's profit divided by its number of outstanding
The ratio of earnings per share after allowing for tax and interest payments on fixed interest
The real flow of cash that a firm could pay out forever in the absence of any change in
Foreign Sales Corporation (FSC)
A special type of corporation created by the Tax Reform Act of 1984 that
Fully diluted earnings per shares
earnings per share expressed as if all outstanding convertible securities
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
Price/earnings ratio (PE ratio)
Shows the "multiple" of earnings at which a stock sells. Determined by dividing current
Price/sales ratio (PS Ratio)
Determined by dividing current stock price by revenue per share (adjusted for stock splits).
Accounting earnings that are retained by the firm for reinvestment in its operations;
The fee charged by a mutual fund when purchasing shares, usually payable as a commission to
An arrangement whereby a firm leases its own equipment, such as IBM leasing its own
Earnings per share of common stock
How much profit a company made on each share of common stock this year.
NET SALES (revenue)
The amount sold after customersâ€™ returns, sales discounts, and other allowances are taken away from
NUMBER OF DAYS SALES IN RECEIVABLES
(also called average collection period). The number of days of net sales that are tied up in credit sales (accounts receivable) that havenâ€™t been collected yet.
RATIO OF NET INCOME TO NET SALES
A ratio that shows how much net income (profit) a company made on each dollar of net sales. Hereâ€™s the formula:
RATIO OF NET SALES TO NET INCOME
A ratio that shows how much a company had to collect in net sales to make a dollar of profit. Figure it this way:
Profits a company plowed back into the business over the years. Last Januaryâ€™s retained earnings, plus the net income or profit that a company made this year (which is calculated on the income statement), minus dividends paid out, equals the retained earnings balance on the balance sheet date.
Cost of sales
The manufacture or purchase price of goods sold in a period or the cost of providing a service.
Earnings before interest and taxes (EBIT)
The operating profit before deducting interest and tax.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
The operating profit before deducting interest, tax, depreciation and amortization.
The mix of product/services offered by the business, each of which may be aimed at different customers, with each product/service having different prices and costs.
The residual earnings of the company.
Amounts earned by the company from the sale of merchandise or services; often used interchangeably with the term revenue.
A contra account that offsets revenue. It represents the amount of the discounts for early payment allowed on sales.
A journal used to record the transactions that result in a credit to sales.
A contra account that offsets revenue. It represents the amount of sales made that were later returned.
Statement Retained Earnings
One of the basic financial statements; it takes the beginning balance of retained earnings and adds net income, then subtracts dividends. The Statement of Retained earnings is prepared for a specified period of time.
basic earnings per share (EPS)
This important ratio equals the net
diluted earnings per share (EPS)
This measure of earnings per share
earnings before interest and income tax (EBIT)
A measure of profit that
earnings per share (EPS)
See basic earnings per share and diluted earnings per share.
net income (also called the bottom line, earnings, net earnings, and net
price/earnings ratio (price to earnings ratio, P/E ratio, PE ratio)
This key ratio equals the current market price
return on sales
This ratio equals net income divided by sales revenue.
Basic Earnings Power Ratio
Percentage of earnings relative to total assets; indication of how
Earnings per Share
A measure of the earnings generated by a company on a per
Price to Earnings Ratio (P/E, PE Ratio)
A measure of how much investors are willing to pay for each dollar
the relative combination of quantities of sales of the various products that make up the total sales of a company
sales value at split-off allocation
a method of assigning joint cost to joint products that uses the relative sales values of the products at the split-off point as the proration basis; use of this method requires that all joint products
The total sales recorded prior to sales discounts and returns.
Total revenue, less the cost of sales returns, allowances, and discounts.
A companyâ€™s accumulated earnings since its inception, less any distributions to shareholders.
A reduction in a price that is allowed by the seller, due to a problem
A reduction in the price of a product or service that is offered by the
Sales value at split-off
A cost allocation methodology that allocates joint costs to joint
Statement of retained earnings
An adjunct to the balance sheet, providing more detailed information about the beginning balance, changes, and ending balance in
percentage of sales models
Planning model in which sales forecasts are the driving variables and most other variables are
price-earnings (P/E) multiple (ratio)
Ratio of stock price to earnings per share.
earnings not paid out as dividends.
A tax levied as a percentage of retail sales.
Roth IRA. An IRA account whose earnings are not taxable at all under certain
Abusive Earnings Management
The use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result.
Abusive Earnings Management
A characterization used by the Securities and Exchange
Net income adjusted to exclude selected nonrecurring and noncash items of reserve, gain, expense, and loss.
A measure of earnings that includes only the results of the primary operating
Cost Plus Estimated Earnings in Excess of Billings
Revenue recognized to date under the percentage-of-completion method in excess of amounts billed. Also known as unbilled accounts
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working
The active manipulation of earnings toward a predetermined target.
EBBS - Earnings before the bad stuff
An acronym attributed to a member of the Securities and
EBDDT - Earnings before depreciation and deferred taxes
This measure is used principally by
A term frequently used to describe earnings after the removal of the
Operational Earnings Management
Management actions taken in the effort to create stable
earnings before the effects of any earnings-management activities.
Reported net income with selected nonrecurring items of revenue or gain
Real Actions (Earnings) Management
Involves operational steps and not simply acceleration
Sales Revenue Revenue recognized from the sales of products as opposed to the provision of
Lease accounting used by a manufacturer who is also a lessor. Up-front gross
Reported earnings that have had the after-tax effects of all material
In general, refers to a company's total sales less cost of sales and operating expenses, including interest and income tax.
Price / Earnings (P/E) Ratio
The ratio of price to earnings. Faster growing or less-risky firms typically have higher P/E ratios than either slower-growing or more risky firms.
Net profits kept to accumulate in a business after dividends are paid.
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