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Financial Terms | |
Effective margin (EM) |
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Definition of Effective margin (EM)Effective margin (EM)Used with SAT performance measures, the amount equaling the net earned spread, or
Related Terms:Abusive Earnings ManagementThe use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result. Abusive Earnings ManagementA characterization used by the Securities and Exchange Accelerated cost recovery system (ACRS)Schedule of depreciation rates allowed for tax purposes. Accidental Death and DismembermentCoverage that provides a lump-sum payment to you or your survivors if an accident results in the loss of a limb, paralysis or your death. Accidental Dismemberment: (Credit Insurance)Provides additional financial security should an insured person be dismembered or lose the use of a limb as the result of an accident. Accounting and Auditing Enforcement Release (AAER)Administrative proceedings or litigation releases that entail an accounting or auditing-related violation of the securities laws. Accounting systemA set of accounts that summarize the transactions of a business that have been recorded on source documents. ![]() 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 actual cost systema valuation method that uses actual direct After-tax profit marginThe ratio of net income to net sales. Agency problemConflicts of interest among stockholders, bondholders, and managers. agency problemsConflicts of interest between the firm’s owners and managers. Aggregate DemandTotal quantity of goods and services demanded. Aggregate Demand CurveCombinations of the price level and income for which the goods and services market is in equilibrium, or for which both the goods and services market and the money market are in equilibrium. Announcement dateDate on which particular news concerning a given company is announced to the public. Annual PremiumYearly amount payable by a client for a policy or component. ![]() Asset/liability managementAlso called surplus management, the task of managing funds of a financial Asset substitution problemArises when the stockholders substitute riskier assets for the firm's existing Assets requirementsA common element of a financial plan that describes projected capital spending and the Automated storage/retrieval systemA racking system using automated systems Automatic Waiver of PremiumA benefit that automatically forfeits premium payments. balancing itemVariable that adjusts to maintain the consistency Bank for International Settlements (BIS)An international bank headquartered in Basel, Switzerland, which Before-tax profit marginThe ratio of net income before taxes to net sales. Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit CommitteesA committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial Bond agreementA contract for privately placed debt. Bottom-up equity management styleA management style that de-emphasizes the significance of economic Bretton Woods AgreementAn agreement signed by the original United Nations members in 1944 that business intelligence (BI) systema formal process for gathering and analyzing information and producing intelligence to meet decision making needs; requires information about Buy on marginA transaction in which an investor borrows to buy additional shares, using the shares Buy/Sell AgreementThis is an agreement entered into by the owners of a business to define the conditions under which the interests of each shareholder will be bought and sold. The agreement sets the value of each shareholders interest and stipulates what happens when one of the owners wishes to dispose of his/her interest during his/her lifetime as well as disposal of interest upon death or disability. Life insurance, critical illness coverage and disability insurance are major considerations to help fund this type of agreement. Capital employedThe total of debt and equity, i.e. the total funds in the business. Cash deficiency agreementAn agreement to invest cash in a project to the extent required to cover any cash Cash-equivalent itemsTemporary investments of currently excess cash in short-term, high-quality CASH-FLOW STATEMENTA statement that shows where a company’s cash came from and where it went for a period of time, such as a year. Cash Flow statementA financial report that shows the movement in cash for a business during an accounting period. Cash management billVery short maturity bills that the Treasury occasionally sells because its cash Cash settlement contractsFutures contracts, such as stock index futures, that settle for cash, not involving Certified Management Accountant (CMA)a professional designation in the area of management accounting that charge-back systema system using transfer prices; see transfer 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 Clearing memberA member firm of a clearing house. Each clearing member must also be a member of the Committee, AIMR Performance Presentation Standards Implementation CommitteeThe Association for Investment Management and Research (AIMR)'s Performance Presentation Standards Implementation common-size income statementIncome statement that presents items as a percentage of revenues. Complementary PoliciesPolicies which enhance each other. Concession agreementAn understanding between a company and the host government that specifies the Conditional Sale AgreementAn agreement entered into between a conditional buyer and a conditional seller setting out the terms under which goods change hands. Confidentiality AgreementA legal document whereby the one party, usually the prospective investor, pledges to keep strictly confidential, and return on request, any and all information provided by the entrepreneur seeking funding. continuous improvementan ongoing process of enhancing employee task performance, level of product quality, and level of company service through eliminating nonvalue-added activities to reduce lead time, making products Contribution marginThe difference between variable revenue and variable cost. contribution marginAn intermediate measure of profit equal to sales revenue contribution marginthe difference between selling price and Contribution marginThe margin that results when variable production costs are subtracted contribution margin ratiothe proportion of each revenue dollar remaining after variable costs have been covered; control premiumthe additional value inherent in the control interest as contrasted to a minority interest, which reflects its power of control Controlled disbursementA service that provides for a single presentation of checks each day (typically in Convention statementAn annual statement filed by a life insurance company in each state where it does Conversion premiumThe percentage by which the conversion price in a convertible security exceeds the Corporate financial managementThe application of financial principals within a corporation to create and Cost company arrangementArrangement whereby the shareholders of a project receive output free of cost control systema logical structure of formal and/or informal cost management system (CMS)a set of formal methods Counterpart itemsIn the balance of payments, counterpart items are analogous to unrequited transfers in the Credit enhancementPurchase of the financial guarantee of a large insurance company to raise funds. credit memoA record of the funds which have been credited to your account. Cyclical UnemploymentUnemployment that increases when the economy enters a recession and decreases when the economy enters a boom. debit memoA record of the funds which have been debited from your account. Debt displacementThe amount of borrowing that leasing displaces. Firms that do a lot of leasing will be Deemed DispositionUnder certain circumstances, taxation rules assume that a transfer of property has occurred, even though there has not been an actual purchase or sale. This could happen upon death or transfer of ownership. Default premiumA differential in promised yield that compensates the investor for the risk inherent in default premiumDifference in promised yields between a default-free bond and a riskier bond. DemandAn amount desired, in the sense that people are willing and able to pay to obtain this amount. Always associated with a given price. Demand DepositA bank deposit that can be withdrawn on demand, such as a deposit in a checking account. Demand depositsChecking accounts that pay no interest and can be withdrawn upon demand. Demand line of creditA bank line of credit that enables a customer to borrow on a daily or on-demand basis. Demand LoanA loan which must be repaid in full on demand. Demand Management PolicyFiscal or monetary policy designed to influence aggregate demand for goods and services. Demand master notesShort-term securities that are repayable immediately upon the holder's demand. Demand-Pull InflationInflation whose initial cause is excess demand rather than cost increases. See also cost-push inflation. Demand shockAn event that affects the demand for goods in services in the economy. Direct placementSelling a new issue not by offering it for sale publicly, but by placing it with one of several Disbursement floatA decrease in book cash but no immediate change in bank cash, generated by checks Division of EnforcementA department within the Securities and Exchange Commission that Dollar safety marginThe dollar equivalent of the safety cushion for a portfolio in a contingent immunization Double-tax agreementAgreement between two countries that taxes paid abroad can be offset against Du Pont systemA breakdown of ROE and ROA into component ratios. dual pricing arrangementa transfer pricing system that allows Dupont system of financial controlHighlights the fact that return on assets (ROA) can be expressed in terms Earnings ManagementThe active manipulation of earnings toward a predetermined target. EBITDA MarginEBITDA divided by total sales or total revenue. Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of effective annual interest rateInterest rate that is annualized using compound interest. Effective annual yieldAnnualized interest rate on a security computed using compound interest techniques. Effective Annual YieldAnnualized rate of return on a security computed using compound Effective call priceThe strike price in an optional redemption provision plus the accrued interest to the Effective convexityThe convexity of a bond calculated with cash flows that change with yields. Effective dateIn an interest rate swap, the date the swap begins accruing interest. Effective durationThe duration calculated using the approximate duration formula for a bond with an Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |