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Definition of Economic income
Cash flow plus change in present value.
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
economic environment in which the firm expects to reside over the life of the
See: in-substance defeasance.
Exists when the costs and/or revenues of one project depend on those of another.
The real flow of cash that a firm could pay out forever in the absence of any change in
The extent to which the value of the firm will change because of an exchange rate change.
The order quantity that minimizes total inventory costs.
Profits in excess of the competitive level.
In project financing, the risk that the project's output will not be salable at a price that will
For any entity, the difference between the market value of all its assets and the market
An agreement between two or more countries that allows the free movement of capital,
Also called a busted convertible, a convertible security that is trading like a straight
Assets that pay a fixed-dollar amount, such as bonds and preferred stock.
The market for trading bonds and preferred stock.
One who receives income from a trust.
A bond on which the payment of interest is contingent on sufficient earnings. These bonds are
A mutual fund providing for liberal current income from investments.
Income statement (statement of operations)
A statement showing the revenues, expenses, and income (the
Common stock with a high dividend yield and few profitable investment opportunities.
The revenue from a portfolio of invested assets.
Leading economic indicators
economic series that tend to rise or fall in advance of the rest of the economy.
Monthly income preferred security (MIP)
Preferred stock issued by a subsidiary located in a tax haven.
The company's total earnings, reflecting revenues adjusted for costs of doing business,
Also called margin income, the difference between income and cost. For a depository
Gross income less a set of deductions.
For an insurance company, the difference between the premiums earned and the costs
An accounting statement that summarizes information about a company in the following format:
What the business paid to the IRS.
The profit a company makes after cost of goods sold, expenses, and taxes are subtracted from net sales.
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. Here’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:
Economic Value Added (EVA)
Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge
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.
income that a company receives in the form of dividends on stock in other companies that it holds.
One of the basic financial statements; it lists the revenue and expense accounts of the company.
income 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.
The last line of the income Statement; it represents the amount that the company earned during a specified period.
earnings before interest and income tax (EBIT)
A measure of profit that
Financial statement that summarizes sales revenue
net income (also called the bottom line, earnings, net earnings, and net
the creation of multi-country markets
economic order quantity (EOQ)
an estimate of the number
economic production run (EPR)
an estimate of the number
when the incremental revenue from the sale of reworked defective units is greater than
economic value added (EVA)
a measure of the extent to which income exceeds the dollar cost of capital; calculated
the profit earned by a responsibility center that exceeds an amount "charged" for funds committed to that center
current compensation that is taxed at a future date
current compensation that is never taxed
A security that pays a specified cash flow over a
The period over which a company expects to be able to use an asset.
Net earnings after all expenses for an accounting period are subtracted from all
A financial report that summarizes a company’s revenue, cost of
A government tax on the income earned by an individual or corporation.
The excess of revenues over expenses, including the impact of income taxes.
The net income of a business, less the impact of any financial activity,
common-size income statement
income statement that presents items as a percentage of revenues.
economic order quantity
Order size that minimizes total inventory costs.
economic value added (EVA)
Term used by the consulting firm Stern Stewart for profit remaining after deduction of the cost
Financial statement that shows the revenues, expenses, and net income of a firm over a period of time.
Also called economic value added. Profit minus cost of capital employed.
The school of macroeconomic thought prior to the rise of Keynesianism.
income less income tax.
The study of the allocation and distribution of scare resources among competing wants.
A policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example.
The study of the determination of economic aggregates such as total output and the price level.
The study of firm and individual decisions insofar as they affect the allocation and distribution of goods and services.
GDP 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 Accounts
The national accounting system that records economic activity such as GDP and related measures.
Permanent Income Hypothesis
Theory that individuals base current consumption spending on their perceived long-run average income rather than their current income.
income expressed in base-year dollars, calculated by dividing nominal income by a price index.
View that incentives to work, save, and invest play an important role in determining economic activity by affecting the supply side of the economy.
Tax-Related Incomes Policy (TIP)
Tax incentives for labor and business to induce them to conform to wage/price guidelines.
Employee Retirement Income Security Act of 1974 (ERISA)
A federal Act that sets minimum operational and funding standards for employee benefit
Accumulated Other Comprehensive Income
Cumulative gains or losses reported in shareholders'
Adjusted Income from Continuing
Operations Reported income from continuing operations
Pretax income reported on the income statement.
Cash Flow–to–Income Ratio (CFI)
Adjusted cash flow provided by continuing operations
Current Income Tax Expense
That portion of the total income tax provision that is based on
Deferred Income Tax Expense
That portion of the total income tax provision that is the result
Income from Continuing Operations
After-tax net income before discontinued operations,
A form of earnings management designed to remove peaks and valleys
Income Tax Expense
See income tax provision.
Income Tax Provision
The expense deduction from pretax book income reported on the
A measure of results produced by the core operations of a firm. It is common
income subject to income tax as reported on the tax return.
income 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.
This 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.
Life Income Fund
Commonly 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.
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.
A financial statement that displays a breakdown of total sales and total expenses.
Earned 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.
Mutual 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.
Refers to one of the two basic sources of capital for a business, the
financial reports and statements
Financial means having to do with
The number of times during a year that the money supply turns over in supporting that year's economic activity, measured as the ratio of nominal income to the money supply.
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