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Financial Terms | |
Cost of Common Stock |
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Definition of Cost of Common StockCost of Common StockThe rate of return required by the investors in the common stock of
Related Terms:Cost of EquitySame as the cost of common stock. Sometimes viewed as the Absorption costingA method of costing in which all fixed and variable production costs are charged to products or services using an allocation base. absorption costinga cost accumulation and reporting Absorption costingA methodology under which all manufacturing costs are assigned Accelerated cost recovery system (ACRS)Schedule of depreciation rates allowed for tax purposes. Acquisition of stockA merger or consolidation in which an acquirer purchases the acquiree's stock. Activity-based costingA 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 Actual costThe actual expenditure made to acquire an asset, which includes the supplierinvoiced actual cost systema valuation method that uses actual direct Adjustable rate preferred stock (ARPS)Publicly traded issues that may be collateralized by mortgages and MBSs. Agency cost viewThe argument that specifies that the various agency costs create a complex environment in Agency costsThe incremental costs of having an agent make decisions for a principal. Aggressive Cost Capitalizationcost capitalization that stretches the flexibility within generally ![]() All-in costTotal costs, explicit and implicit. American Stock Exchange (AMEX)The second-largest stock exchange in the United States. It trades Amortized Costcost of a security adjusted for the amortization of any purchase premium or appraisal costa quality control cost incurred for monitoring attribute-based costing (ABC II)an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute Auction rate preferred stock (ARPS)Floating rate preferred stock, the dividend on which is adjusted every Average-Cost Inventory MethodThe inventory cost-flow assumption that assigns the average Average cost of capitalA firm's required payout to the bondholders and to the stockholders expressed as a Avoidable costscosts that are identifiable with and able to be influenced by decisions made at the business backflush costinga streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires Bankruptcy cost viewThe argument that expected indirect and direct bankruptcy costs offset the other ![]() Batch costA cost that is incurred when a group of products or services are produced, batch-level costa cost that is caused by a group of things Beta equation (Stocks)The beta of a stock is determined as follows: BOOK VALUE OF COMMON STOCKThe theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals: budgeted costa planned expenditure Capital Cost Allowance (CCA)The annual depreciation expense allowed by the Canadian Income Tax Act. capital stockOwnership shares issued by a business corporation. A business Capital StockThe total amount of plant, equipment, and other physical capital. capitalization of costsWhen a cost is recorded originally as an increase Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized againstfuture-period revenue. Carring costscosts that increase with increases in the level of investment in current assets. carrying costthe total variable cost of carrying one unit of Carrying costThe cost of holding inventory, which can include insurance, carrying costscosts of maintaining current assets, including opportunity cost of capital. Cash costThe amount of cash expended. Cash flow per common shareCash flow from operations minus preferred stock dividends, divided by the committed costa cost related either to the long-term investment Common-base-year analysisThe representing of accounting information over multiple years as percentages common body of knowledge (CBK)the minimum set of knowledge needed by a person to function effectively in a particular field Common marketAn agreement between two or more countries that permits the free movement of capital Common SharesAre equity instruments that take no security against assets, have no fixed terms of repayment and pay no fixed dividends. common-size balance sheetBalance sheet that presents items as a percentage of total assets. common-size income statementIncome statement that presents items as a percentage of revenues. Common stockThese are securities that represent equity ownership in a company. common shares let an Common stockShares of ownership sold to the public. Common StockA financial security that represents an ownership claim on the common stockOwnership shares in a publicly held corporation. Common StockThat part of the capital stock of a corporation that carries voting rights and represents Common stock equivalentA convertible security that is traded like an equity issue because the optioned Common stock marketThe market for trading equities, not including preferred stock. Common stock/other equityValue of outstanding common shares at par, plus accumulated retained Common stock ratiosRatios that are designed to measure the relative claims of stockholders to earnings company cost of capitalExpected rate of return demanded by investors in a company, determined by the average risk of the company’s assets and operations. Conflict between bondholders and stockholdersThese two groups may have interests in a corporation that Consigned stocksInventories owned by a company, but located on the premises controllable costa cost over which a manager has the ability to authorize incurrence or directly influence magnitude conversion costRefers to the sum of manufacturing direct labor and overhead conversion costthe total of direct labor and overhead cost; Convertible exchangeable preferred stockConvertible preferred stock that may be exchanged, at the Convertible preferred stockPreferred stock that can be converted into common stock at the option of the holder. CostA resource sacrificed or forgone to achieve a specific objective (Horngren et al.), defined costthe cash or cash equivalent value necessary to attain an CostThe expense incurred to create and sell a product or service. If a product is not cost accountinga discipline that focuses on techniques or Cost Accounting Standards Board (CASB)a body established by Congress in 1970 to promulgate cost accounting cost accumulationthe approach to product costing that determines cost allocationthe assignment, using some reasonable basis, cost avoidancethe practice of finding acceptable alternatives Cost basisAn asset’s purchase price, plus costs associated with the purchase, like installation fees, taxes, etc. Cost behaviourThe idea that fixed costs and variable costs react differently to changes in the volume of Cost-Benefit AnalysisThe calculation and comparison of the costs and benefits of a policy or project. cost-benefit analysis the analytical process of comparing therelative costs and benefits that result from a specific course Cost-benefit ratioThe net present value of an investment divided by the investment's initial cost. Also called cost centera responsibility center in which the manager has Cost centreA division or unit of an organization that is responsible for controlling costs. Cost company arrangementArrangement whereby the shareholders of a project receive output free of cost consciousnessa company-wide attitude about the topics cost containmentthe practice of minimizing, to the extent Cost controlThe process of either reducing costs while maintaining the same level of productivity or maintaining costs while increasing productivity. cost control systema logical structure of formal and/or informal Cost depletionA method of expensing the cost of a resource consumed by first determining Cost driverThe most significant cause of the cost of an activity, a measure of the demand for an activity cost drivera factor that has a direct cause-effect relationship Cost driverA factor that directly impacts the incidence of a cost, and which is generally cost driver analysisthe process of investigating, quantifying, cost leadership strategya plan to achieve the position in a cost management system (CMS)a set of formal methods Cost objectAnything for which a measurement of cost is required – inputs, processes, outputs or responsibility centres. Cost objectAn item for which a cost is compiled. For example, this can be a product, Cost of capitalThe required return for a capital budgeting project. Cost of capitalThe costs incurred by an organization to fund all its investments, comprising the risk-adjusted cost of capitalRefers to the interest cost of debt capital used by a business Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |