|Cost of lease financing|
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Definition of Cost of lease financing
Cost of lease financing
A lease's internal rate of return.
Schedule of depreciation rates allowed for tax purposes.
The argument that specifies that the various agency costs create a complex environment in
The incremental costs of having an agent make decisions for a principal.
Total costs, explicit and implicit.
Methods of financing in which lenders and equity investors look principally to the
A firm's required payout to the bondholders and to the stockholders expressed as a
An intercompany loan channeled through a bank.
The argument that expected indirect and direct bankruptcy costs offset the other
The lease payment at which a party to a prospective lease is indifferent between
Interim financing of one sort or another used to solidify a position until more permanent
A lease obligation that has to be capitalized on the balance sheet.
costs that increase with increases in the level of investment in current assets.
Arrangement whereby the shareholders of a project receive output free of
The required return for a capital budgeting project.
Related: Net financing cost
Cost of funds
Interest rate associated with borrowing money.
Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital
The net present value of an investment divided by the investment's initial cost. Also called
New debt obtained by a firm during the Chapter 11 bankruptcy process.
lease in which the lessor purchases new equipment from the manufacturer and leases it to the
A cross-border lease in which the disparate rules of the lessor's and lessee's countries let
Equivalent annual cost
The equivalent cost per year of owning an asset over its entire life.
The difference between the execution price of a security and the price that would have
Federal Financing Bank
A federal institution that lends to a wide array of federal credit agencies funds it
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
Long-term, non-cancelable lease.
Decisions concerning the liabilities and stockholders' equity side of the firm's balance
A cost that is fixed in total for a given period of time and for given production levels.
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
See: financial lease.
Also called rental lease. lease in which the lessor promises to maintain and insure the
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
Transaction costs that include the assessment of the investment merits of a financial asset.
A long-term rental agreement, and a form of secured long-term debt.
The payment per period stated in a lease contract.
A lease arrangement under which the lessor borrows a large proportion of the funds needed
Limitation on sale-and-leaseback
A bond covenant that restricts in some way a firm's ability to enter into
The payment per period stated in a lease contract.
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
Market timing costs
costs that arise from price movement of the stock during the time of the transaction
Multi-option financing facility
A syndicated confirmed credit line with attached options.
Net financing cost
Also called the cost of carry or, simply, carry, the difference between the cost of financing
A lease arrangement under which the lessee is responsible for all property taxes, maintenance
financing that is not shown as a liability in a company's balance sheet.
Short-term, cancelable lease. A type of lease in which the period of contract is less than the
Opportunity cost of capital
Expected return that is foregone by investing in a project rather than in
The difference in the performance of an actual investment and a desired investment
Planned financing program
Program of short-term and long-term financing as outlined in the corporate
Price impact costs
Related: market impact costs
Production payment financing
A method of nonrecourse asset-based financing in which a specified
cost to replace a firm's assets.
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
Safe harbor lease
A lease to transfer tax benefits of ownership (depreciation and debt tax shield) from the
Sale and lease-back
Sale of an existing asset to a financial institution that then leases it back to the user.
An arrangement whereby a firm leases its own equipment, such as IBM leasing its own
costs associated with locating a counterparty to a trade, including explicit costs (such as
costs that fall with increases in the level of investment in current assets.
costs that have been incurred and cannot be reversed.
Threshold for refinancing
The point when the WAC of an MBS is at a level to induce homeowners to
costs of buying and selling marketable securities and borrowing. Trading costs include
The time, effort, and money necessary, including such things as commission fees and the
True interest cost
For a security such as commercial paper that is sold on a discount basis, the coupon rate
A contract that qualifies as a valid lease agreement under the Internal Revenue code.
A cost that is directly proportional to the volume of output produced. When production is zero,
Weighted average cost of capital
Expected return on a portfolio of all the firm's securities. Used as a hurdle
CASH FLOWS FROM FINANCING ACTIVITIES
A section on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations.
An asset’s purchase price, plus costs associated with the purchase, like installation fees, taxes, etc.
Cost of goods sold
The cost of merchandise that a company sold this year. For manufacturing companies, the cost of raw
MACRS (Modified Accelerated Cost Recovery System)
A depreciation method created by the IRS under the Tax Reform Act of 1986. Companies must use it to depreciate all plant and equipment assets installed after December 31, 1986 (for tax purposes).
A method of costing in which all fixed and variable production costs are charged to products or services using an allocation base.
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.
costs that are identifiable with and able to be influenced by decisions made at the business
The amount of cash expended.
A resource sacrificed or forgone to achieve a specific objective (Horngren et al.), defined
The idea that fixed costs and variable costs react differently to changes in the volume of
A division or unit of an organization that is responsible for controlling costs.
The process of either reducing costs while maintaining the same level of productivity or maintaining costs while increasing productivity.
The most significant cause of the cost of an activity, a measure of the demand for an activity
Anything for which a measurement of cost is required – inputs, processes, outputs or responsibility centres.
Cost of capital
The costs incurred by an organization to fund all its investments, comprising the risk-adjusted
Cost of goods sold
See cost of sales.
Cost of manufacture
The cost of goods manufactured for subsequent sale.
Cost of quality
The difference between the actual costs of production, selling and service and the costs that would be incurred if there were no failures during production or usage of products or services.
Cost of sales
The manufacture or purchase price of goods sold in a period or the cost of providing a service.
A method of pricing in which a mark-up is added to the total product/service cost.
The costs of (cross-functional) business processes, irrespective of the organizational structure of the business.
Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
costs that are readily traceable to particular products or services.
costs that do not change with increases or decreases in the volume of goods or services
The cost of a product/service that includes an allocation of all the (production and
costs that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead.
A method of accounting that accumulates the costs of a product/service that is produced either
The non-salary or wage costs that follow from the payment of salaries or wages, e.g. National
An approach to costing that estimates and accumulates the costs of a product/service over
The cost of producing one extra unit.
The lost opportunity of not doing something, which may be financial or non-financial, e.g. time.
The costs that relate to a period of time.
The total of all direct costs.
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