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Definition of Fixed-income instruments
Assets that pay a fixed-dollar amount, such as bonds and preferred stock.
Variations of mortgage instruments such as adjustable-rate and variablerate
Contracts such as options and futures whose price is derived from the price of the
Cash flow plus change in present value.
Long-lived property owned by a firm that is used by a firm in the production of its income.
The ratio of sales to fixed assets.
A cost that is fixed in total for a given period of time and for given production levels.
Annuity contracts in which the insurance company or issuing financial institution pays a
A measure of a firm's ability to meet its fixed-charge obligations: the ratio of
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
Also called a busted convertible, a convertible security that is trading like a straight
The market for trading bonds and preferred stock.
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.
In an interest rate swap the counterparty who pays a fixed rate, usually in exchange for a
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.
Financial securities, such as money market instruments or capital market insturments.
The revenue from a portfolio of invested assets.
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. Hereâ€™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:
Things that the business owns and are part of the business infrastructure â€“ fixed assets may be
Costs that do not change with increases or decreases in the volume of goods or services
Intangible fixed assets
Non-physical assets, e.g. customer goodwill or intellectual property (patents and trademarks).
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.
Costs that are constant within a defined level of activity but that can increase or decrease when
Tangible fixed assets
Physical assets that can be seen and touched, e.g. buildings, machinery, vehicles, computers etc.
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
An informal term that refers to the variety of long-term operating
fixed expenses (costs)
Expenses or costs that remain the same in amount,
Financial statement that summarizes sales revenue
net income (also called the bottom line, earnings, net earnings, and net
Fixed Assets Turnover Ratio
A measure of the utilization of a company's fixed assets to
Fixed Charge Coverage Ratio
A measure of how well a company is able to meet its fixed
a cost that remains constant in total within a specified
fixed overhead spending variance
the difference between the total actual fixed overhead and budgeted fixed overhead;
fixed overhead volume variance
see volume variance
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
An item with a longevity greater than one year, and which exceeds a companyâ€™s
A cost that does not vary in the short run, irrespective of changes in any
That portion of total overhead costs which remains constant in size
Net earnings after all expenses for an accounting period are subtracted from all
A financial report that summarizes a companyâ€™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.
Costs that do not depend on the level of output.
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.
income less income tax.
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.
A policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example.
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.
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 Flowâ€“toâ€“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.
An inventory storage technique under which permanent
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.
This is a generic term that refers to the many different forms of financing a business may use. For example - loans, shares, and bonds are all considered financing instruments.
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.
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