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Definition of Fixed costs
costs that do not change with increases or decreases in the volume of goods or services
costs that do not depend on the level of output.
costs that are constant within a defined level of activity but that can increase or decrease when
Expenses or costs that remain the same in amount,
a graph that depicts the relationships among revenues, variable costs, fixed costs, and profits (or losses)
The annual sales volume level at which total contribution
The sales level at which a company, division, or product line makes a
The point below which the firm will need either to obtain additional financing
the difference between selling price and
The idea that fixed costs and variable costs react differently to changes in the volume of
the practice of minimizing, to the extent
the proportionate relationship between
The difference in the performance of an actual investment and a desired investment
Overhead generally refers to indirect, in contrast to direct,
The incremental costs of having an agent make decisions for a principal.
costs that are identifiable with and able to be influenced by decisions made at the business
When a cost is recorded originally as an increase
costs that increase with increases in the level of investment in current assets.
costs of maintaining current assets, including opportunity cost of capital.
Costs Capitalized in Stealth
A particularly egregious form of aggressive cost capitalization
costs of financial distress
costs arising from bankruptcy or distorted business decisions before bankruptcy.
costs that are readily traceable to particular products or services.
The difference between the execution price of a security and the price that would have
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
Annuity contracts in which the insurance company or issuing financial institution pays a
Long-lived property owned by a firm that is used by a firm in the production of its income.
An item with a longevity greater than one year, and which exceeds a company’s
Fixed asset turnover ratio
The ratio of sales to fixed assets.
Things that the business owns and are part of the business infrastructure – fixed assets may be
An informal term that refers to the variety of long-term operating
Land, buildings, plant, equipment, and other assets acquired for carrying on the business of a company with a life exceeding one year. Normally expressed in financial accounts at cost, less accumulated depreciation.
Fixed Assets Turnover Ratio
A measure of the utilization of a company's fixed assets to
Fixed-charge coverage ratio
A measure of a firm's ability to meet its fixed-charge obligations: the ratio of
Fixed Charge Coverage Ratio
A measure of how well a company is able to meet its fixed
A cost that is fixed in total for a given period of time and for given production levels.
a cost that remains constant in total within a specified
A cost that does not vary in the short run, irrespective of changes in any
In the Euromarket the standard periods for which Euros are traded (1 month out to a year out) are
Conventional bonds for which the coupon rate is set as a fixed percentage of the par value.
A nonnegotiable debt security that can be redeemed at some fixed price or according to
A country's decision to tie the value of its currency to another country's currency, gold
Fixed Exchange Rate
An exchange rate held constant by a government promise to buy or sell dollars at the fixed rate on the foreign exchange market.
Cost of doing business which does not change with the volume of business. Examples might be rent for business premises, insurance payments, heat and light.
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.
A security that pays a specified cash flow over a
Fixed Interest Rate
A rate that does not fluctuate with general market conditions.
An inventory storage technique under which permanent
That portion of total overhead costs which remains constant in size
fixed overhead spending variance
the difference between the total actual fixed overhead and budgeted fixed overhead;
fixed overhead volume variance
see volume variance
Fixed price basis
An offering of securities at a fixed price.
Fixed-price tender offer
A one-time offer to purchase a stated number of shares at a stated fixed price,
A loan on which the rate paid by the borrower is fixed for the life of the loan.
Fixed Rate Loan
Loan for a fixed period of time with a fixed interest rate for the life of the loan.
In an interest rate swap the counterparty who pays a fixed rate, usually in exchange for a
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
The price of obtaining capital, either borrowed or equity, with intent to carry on business operations.
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
costs that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead.
Transaction costs that include the assessment of the investment merits of a financial asset.
Intangible fixed assets
Non-physical assets, e.g. customer goodwill or intellectual property (patents and trademarks).
Longer-Term Fixed Assets
Assets having a useful life greater than one year but the duration of the 'long term' will vary with the context in which the term is applied.
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
The costs to firms of changing their prices.
The costs that relate to a period of time.
Policy Acquisition Costs
costs incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium
The costs of additional regulation, including higher taxes, borne by large and
A form of start-up cost incurred in preparing for the opening of a new store or facility.
Price impact costs
Related: market impact costs
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
costs associated with locating a counterparty to a trade, including explicit costs (such as
costs that have both fixed and variable components.
costs incurred from shortages in current assets.
A budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a
costs related to such onetime activities as opening a new facility, introducing
costs that have been incurred and cannot be reversed.
costs that have been incurred in the past.
costs that have been incurred and cannot be recovered.
Tangible fixed assets
Physical assets that can be seen and touched, e.g. buildings, machinery, vehicles, computers etc.
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
Undepreciated Capital Costs
The tax definition of the value of an asset that is eligible for tax deprecation.
costs that change as the level of output changes.
A method of costing in which all fixed and variable production costs are charged to products or services using an allocation base.
a cost accumulation and reporting
activity based costing (ABC)
A relatively new method advocated for the
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).
In Finance: to find the present value of a stream of cash flows.
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
The margin that results when variable production costs are subtracted
the relative composition of an organization’s
fixed operating costs, so-called because they accentuate variations in profits.
Degree to which costs are fixed.
Optimum selling price
The price at which profit is maximized, which takes into account the cost behaviour of fixed and variable costs and the relationship between price and demand for a product/service.
a graph that plots all known activity observations
A cost that has been paid and cannot be undone or reversed.
A method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs.
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