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Definition of core competency
a higher proficiency relative to competitors
Primary area of competence. Narrowly defined fields or tasks at which a company or
A system of non-financial performance measurement that links innovation, customer and process measures to financial performance.
an approach to performance
A measure of earnings that includes only the results of the primary operating
Statistical measure that quantifies the distance (measured in standard deviations) a data point is from
an approach to performance
The multiplier associated with a change in government spending financed by an equal change in taxes.
An investment company that invests in stocks and bonds. The same as a balanced mutual fund.
This is a fund that buys common stock, preferred stock and bonds. The same as a
The ability to produce a good or service with fewer resources than competitors. See also comparative advantage.
Schedule of depreciation rates allowed for tax purposes.
A set of accounts that summarize the transactions of a business that have been recorded on source documents.
a repetitive action performed in fulfillment of business functions
the process of detailing the various repetitive actions that are performed in making a product or
A method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing.
planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and
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.
activity based costing (ABC)
A relatively new method advocated for the
activity-based costing (ABC)
a process using multiple cost drivers to predict and allocate costs to products and services;
Activity-based costing (ABC)
A cost allocation system that compiles costs and assigns
activity-based management (ABM)
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
a segment of the production or service
a measure of the demands on activities and,
actual cost system
a valuation method that uses actual direct
Aggregate Production Function
An equation determining aggregate output as a function of aggregate inputs such as labor and capital.
All or none
Requirement that none of an order be executed unless all of it can be executed at the specified price.
An arrangement whereby a security issue is canceled if the underwriter is unable
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
Asset activity ratios
Ratios that measure how effectively the firm is managing its assets.
Automated storage/retrieval system
A racking system using automated systems
Average (across-day) measures
An estimation of price that uses the average or representative price of a
balanced scorecard (BSC)
an approach to performance
BARRA's performance analysis (PERFAN)
A method developed by BARRA, a consulting firm in
Basic business strategies
Key strategies a firm intends to pursue in carrying out its business plan.
Large and creditworthy company.
Repetitive cycles of economic expansion and recession.
Fluctuations of GDP around its long-run trend, consisting of recession, trough, expansion, and peak.
Business Expansion Investment
The use of capital to create more money through the addition of fixed assets or through income producing vehicles.
A business that has terminated with a loss to creditors.
business intelligence (BI) system
a formal process for gathering and analyzing information and producing intelligence to meet decision making needs; requires information about
business process reengineering (BPR)
the process of combining information technology to create new and more effective
The risk that the cash flow of an issuer will be impaired because of adverse economic
an activity that is necessary for the operation of the business but for which a customer would not want to pay
Changes in Financial Position
Sources of funds internally provided from operations that alter a company's
a system using transfer prices; see transfer
chief financial officer (CFO)
Officer who oversees the treasurer and controller and sets overall financial strategy.
Clearing House Automated Payments System (CHAPS)
A computerized clearing system for sterling funds
Clearing House Interbank Payments System (CHIPS)
An international wire transfer system for high-value
Commercial Business Loan (Credit Insurance)
An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for business purposes.
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s performance Presentation Standards Implementation
Assets acquired to create money. May include plant, machinery and equipment, shares of another company etc.
company cost of capital
Expected rate of return demanded by investors in a company, determined by the average risk of the company’s assets and operations.
Related: Unsystematic risk
See asset-specific risk
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.
Sufficient ability or fitness for ones needs. Possessing the necessary abilities to be qualified to
The strategies, skills, knowledge, resources or competencies that differentiate a business from its competitors.
A securities offering process in which securities firms submit competing bids to the
An offering of securities through competitive bidding.
The relationship between consumption demand and disposable income. More generally, it refers to the relationship between consumption demand and all factors that affect this demand.
A measure of earnings that includes only the results of the Primary operating
Corporate financial management
The application of financial principals within a corporation to create and
Corporate financial planning
financial planning conducted by a firm that encompasses preparation of both
Corporate processing float
The time that elapses between receipt of payment from a customer and the
cost-benefit analysis the analytical process of comparing the
relative costs and benefits that result from a specific course
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
cost control system
a logical structure of formal and/or informal
cost management system (CMS)
a set of formal methods
costs of financial distress
Costs arising from bankruptcy or distorted business decisions before bankruptcy.
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Critical Growth Periods
Times in a company's history when growth is essential and without which survival of the business might be in jeopardy.
Critical Illness Insurance
Coverage that provides a lump-sum payment should you be diagnosed with a critical illness and survive a pre-determined period of time. There are no restrictions on how you use your benefit.
Critical Illness Insurance (Credit Insurance)
Coverage that provides a lump-sum payment should you become seriously ill with a specified illness. The payment is made to your creditors to pay off your debt owing.
critical success factors (CSF)
any item (such as quality, customer
Defined benefit plan
A pension plan in which the sponsor agrees to make specified dollar payments to
Defined Benefit Plan
A pension plan that pays out a predetermined dollar
Defined contribution plan
A pension plan in which the sponsor is responsible only for making specified
Defined Contribution Plan
A qualified retirement plan under which the employer
A measure of EBITDA that is outlined or defined in a debt or credit agreement.
Depository Trust Company (DTC)
DTC is a user-owned securities depository which accepts deposits of
A conception of the way a stock's price changes that assumes that the price takes on all
Du Pont system
A breakdown of ROE and ROA into component ratios.
Dupont system of financial control
Highlights the fact that return on assets (ROA) can be expressed in terms
Electronic Federal Tax Payment Systems (EFTPS)
An electronic funds transfer system used by businesses to remit taxes to the government.
enterprise resource planning (ERP) system
a packaged software program that allows a company to
Enterprise resource planning system
A computer system used to manage all company
European Monetary System (EMS)
An exchange arrangement formed in 1979 that involves the currencies
External Financial Statements
Corporate financial statements that have been reported on by an external independent accountant.
Federal Reserve System
The central bank of the U.S., established in 1913, and governed by the Federal
Federal Reserve System
The central banking authority responsible for monetary policy in the United States.
FIFO method (of process costing)
the method of cost assignment that computes an average cost per equivalent
company engaged in making loans to individuals or businesses. Unlike a bank, it does not receive deposits from the public.
The production of financial statements, primarily for those interested parties who are external to the business.
a discipline in which historical, monetary
Also called securities analysts and investment analysts, professionals who analyze
Claims on real assets.
Claims to the income generated by real assets. Also called securities.
Economic assistance provided by unrelated third parties, typically government agencies. They may take the form of loans, loan guarantees, subsidies, tax allowances, contributions, or cost-sharing arrangements.
a plan that aggregates monetary details
The management of a firm's costs and expenses in order to control them in relation to
A feature of a debt or credit agreement that is designed to protect the lender or creditor. It is common to characterize covenants as either positive or negative covenants.
A promise made related to financial conditions or events. Often a promise not to allow certain balance sheet items or ratios to fall below an agreed level. Usually found in loan documents, as a protection mechanism.
Events preceding and including bankruptcy, such as violation of loan contracts.
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
Combining or dividing existing instruments to create new financial products.
A contract entered into now that provides for the delivery of a specified asset in exchange
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