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Definition of Factor analysis
A statistical procedure that seeks to explain a certain phenomenon, such as the return on a
the process of detailing the various repetitive actions that are performed in making a product or
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
The pool factor implied by the scheduled amortization assuming no prepayemts.
Present value of $1 paid for each of t periods.
Present value of an annuity of $1 per period.
A method developed by BARRA, a consulting firm in
An analysis of the level of sales at which a project would make zero profit.
analysis of the level of sales at which the company breaks even.
An analytical technique for studying the relationships between fixed cost, variable cost, and profits. A breakeven chart graphically depicts the nature of breakeven analysis. The breakeven point represents the volume of sales at which total costs equal total revenues (that is, profits equal zero).
Refers to various techniques and procedures
A statistical technique that identifies clusters of stocks whose returns are highly correlated
The representing of accounting information over multiple years as percentages
A method of analysis in which a firm is compared to others that have a desired
Rules set by the Chicago Board of Trade for determining the invoice price of each
an analytical technique that uses statistical
The calculation and comparison of the costs and benefits of a policy or project.
cost-benefit analysis the analytical process of comparing the
relative costs and benefits that result from a specific course
cost driver analysis
the process of investigating, quantifying,
Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
The process of analyzing information on companies and bond issues in order to estimate the
Procedure to determine the likelihood a customer will pay its bills.
critical success factors (CSF)
any item (such as quality, customer
Present value of $1 received at a stated future date.
Present value of a $1 future payment.
A statistical process that links the probability of default to a specified set of financial ratios.
A financial institution that buys a firm's accounts receivables and collects the debt.
An agent who buys and sells goods on behalf of others for a commission.
A way of decomposing the factors that influence a security's rate of return into common and
Factor of Production
A resource used to produce a good or service. The main macroeconomic factors of production are capital and labor.
A well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of
Sale of a firm's accounts receivable to a financial institution known as a factor.
The sale of accounts receivable to a third party, with the third party bearing
The discounting, or sale at a discount, of receivables on a nonrecourse, notification
Type of financial service whereby a firm sells or transfers title to its accounts receivable to a factoring company, which then acts as principal, not as agent.
All the costs incurred during the manufacturing process, minus the
The examination of failure incidents to identify components
Financial Trend Analysis
Process of analyzing financial statements of a company for any continuing relationship.
Security analysis that seeks to detect misvalued securities by an analysis of the firm's
An analysis of returns using total return to assess performance over some investment horizon.
The process of dividing each expense item of a given year by the same expense item in
a process of evaluating changes that
Numbers found in compound interest and annuity tables. Usually called the FVIF or PVIF.
least squares regression analysis
a statistical technique that investigates the association between dependent and independent variables; it determines the line of "best fit" for a set of observations by minimizing the sum of the squares
The production resource that, as a result of scarce resources, limits the production of goods
factoring arrangement that provides collection and insurance of accounts receivable.
Evaluation of risky prospects based on the expected value and variance of possible outcomes.
A version of the capital asset pricing model derived by Merton that includes extramarket
Multiple-discriminant analysis (MDA)
Statistical technique for distinguishing between two groups on the
Net benefit to leverage factor
A linear approximation of a factor, T*, that enables one to operationalize the
factoring arrangement that provides collection, insurance, and finance for accounts receivable.
A special case of the arbitrage pricing theory that is derived from the one-factor model by
a method of ranking the causes of variation
The 80:20 ratio that states that 20% of the variables included in an
Performance attribution analysis
The decomposition of a money manager's performance results to explain
The outstanding principal balance divided by the original principal balance with the result
PPF (periodic perpetuity factor)
a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity.
Present value factor
factor used to calculate an estimate of the present value of an amount to be received in
Pro forma capital structure analysis
A method of analyzing the impact of alternative capital structure
A method of analysing financial reports to interpret trends and make comparisons by using ratios – two numbers, with one generally expressed as a percentage of the other.
A method of relating numbers from the various financial statements to one another in order to get meaningful information for comparison.
The process of using financial ratios, calculated from key accounts
A statistical technique that can be used to estimate relationships between variables.
Statistical analysis techniques that quantify the
The pool factor as reported by the bond buyer for a given amortization period.
The use of horizon analysis to project bond total returns under different reinvestment rates
Project analysis given a particular combination of assumptions.
An anticipated loss percentage included in the bill of material and
analysis of the effect on a project's profitability due to changes in sales, cost, and so on.
An approach to understanding how changes in one variable of cost–volume–profit analysis are affected by changes in the other variables.
a process of determining the amount of change that must occur in a variable before a different decision would be made
analysis of the effects of changes in sales, costs, and so on, on project profitability.
The expected loss of some proportion of an item during the
Estimation of the probabilities of different possible outcomes, e.g., from an investment project.
Single factor model
A model of security returns that acknowledges only one common factor.
Security analysis that seeks to detect and interpret patterns in past security prices.
Black's zero-beta version of the capital asset pricing model.
A method of budgetary control that compares actual performance against plan, investigates the causes of the variance and takes corrective action to ensure that targets are achieved.
the process of categorizing the nature (favorable or unfavorable) of the differences between standard and actual costs and determining the reasons for those differences
The process of dividing each expense item in the income statement of a given year by net
A financial analysis technique that relates key amounts on the income statement and balance sheet to a 100 percent or base figure for the present and previous year.
extraordinary gains and losses
No pun intended, but these types of gains
A key input to a firm's financial planning process. External sales forecasts are based on
Expenses that vary in close proportion to changes
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