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Financial Terms | |
Frictions |
Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
Main Page: payroll, business, credit, investment, stock trading, tax advisor, inventory control, money, Also see related: credit, homebuyer, first time homebuyer, buy home, property, condo, home financing, homes, insurance, |
Definition of FrictionsFrictionsThe "stickiness" in making transactions; the total hassle including time, effort, money, and tax
Related Terms:Acquisition of stockA merger or consolidation in which an acquirer purchases the acquiree's stock. Adjustable rate preferred stock (ARPS)Publicly traded issues that may be collateralized by mortgages and MBSs. After-tax profit marginThe ratio of net income to net sales. After-tax real rate of returnmoney after-tax rate of return minus the inflation rate. Allocation base A measure of activity or volume such as labourhours, machine hours or volume of production American Stock Exchange (AMEX)The second-largest stock exchange in the United States. It trades Asymmetric informationinformation that is known to some people but not to other people. ![]() Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the Auction rate preferred stock (ARPS)Floating rate preferred stock, the dividend on which is adjusted every Average tax ratetaxes as a fraction of income; total taxes divided by total taxable income. average tax ratetotal taxes owed divided by total income. Before-tax profit marginThe ratio of net income before taxes to net sales. Best-efforts saleA method of securities distribution/ underwriting in which the securities firm agrees to sell Beta equation (Stocks)The beta of a stock is determined as follows: BOOK VALUE OF COMMON STOCKThe theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals: ![]() Break-even tax rateThe tax rate at which a party to a prospective transaction is indifferent between entering Break-even timeRelated: Premium payback period. Buying the indexPurchasing the stocks in the S&P 500 in the same proportion as the index to achieve the Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance capital stockOwnership shares issued by a business corporation. A business Capital StockThe total amount of plant, equipment, and other physical capital. Cash flow after interest and taxesNet income plus depreciation. Cash flow time-lineLine depicting the operating activities and cash flows for a firm over a particular period. Cash transactionA transaction where exchange is immediate, as contrasted to a forward contract, which Common stockThese are securities that represent equity ownership in a company. Common shares let an Common stockShares of ownership sold to the public. ![]() Common StockA financial security that represents an ownership claim on the common stockOwnership shares in a publicly held corporation. Common StockThat part of the capital stock of a corporation that carries voting rights and represents Common stock equivalentA convertible security that is traded like an equity issue because the optioned Common stock marketThe market for trading equities, not including preferred stock. Common stock/other equityValue of outstanding common shares at par, plus accumulated retained Common stock ratiosRatios that are designed to measure the relative claims of stockholders to earnings Conflict between bondholders and stockholdersThese two groups may have interests in a corporation that Consigned stocksInventories owned by a company, but located on the premises Convertible exchangeable preferred stockConvertible preferred stock that may be exchanged, at the Convertible preferred stockPreferred stock that can be converted into common stock at the option of the holder. Corporate tax viewThe argument that double (corporate and individual) taxation of equity returns makes Corporate taxable equivalentRate of return required on a par bond to produce the same after-tax yield to Cost of Common StockThe rate of return required by the investors in the common stock of Cost of Preferred StockThe rate of return required by the investors in the preferred stock of Cumulative preferred stockPreferred stock whose dividends accrue, should the issuer not make timely Current Income Tax ExpenseThat portion of the total income tax provision that is based on Current Tax Payment Act of 1943A federal Act requiring employers to withhold income taxes from employee pay. cycle timethe time between the placement of an order to decision makingthe process of choosing among the alternative Deferred Income Tax ExpenseThat portion of the total income tax provision that is the result Deferred Tax AssetFuture tax benefit that results from (1) the origination of a temporary difference Deferred Tax LiabilityFuture tax obligation that results from the origination of a temporary Deferred taxesA non-cash expense that provides a source of free cash flow. Amount allocated during the Departmental stocksThe informal and frequently unauthorized retention of excess inventory on the shop floor, which is used as buffer safety stock. Depreciation tax shieldThe value of the tax write-off on depreciation of plant and equipment. depreciation tax shieldReduction in taxes attributable to the depreciation allowance. Direct stock-purchase programsThe purchase by investors of securities directly from the issuer. Dividend yield (Stocks)Indicated yield represents annual dividends divided by current stock price. Double-tax agreementAgreement between two countries that taxes paid abroad can be offset against earnings before interest and income tax (EBIT)A measure of profit that Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Earnings before interest and taxes (EBIT)The operating profit before deducting interest and tax. Earnings before interest, taxes, depreciation and amortization (EBITDA)The operating profit before deducting interest, tax, depreciation and amortization. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working Earnings per share of common stockHow much profit a company made on each share of common stock this year. EBDDT - Earnings before depreciation and deferred taxesThis measure is used principally by Effective Tax RateThe total tax provision divided by pretax book income from continuing Electronic Federal Tax Payment Systems (EFTPS)An electronic funds transfer system used by businesses to remit taxes to the government. Employee stock fundA firm-sponsored program that enables employees to purchase shares of the firm's Employee stock ownership plan (ESOP)A company contributes to a trust fund that buys stock on behalf of Employee Stock Ownership Plan (ESOP)a profit-sharing compensation program in which investments are made in Employee Stock Ownership Plan (ESOP)A fund containing company stock and owned by employees, paid for by ongoing contributions by the employer. employee time sheeta source document that indicates, for each employee, what jobs were worked on during the day and for what amount of time Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax Exchange of stockAcquisition of another company by purchase of its stock in exchange for cash or shares. Expected value of perfect informationThe expected value if the future uncertain outcomes could be known Federal Unemployment Tax Act (FUTA)A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a Fiat MoneyFiat money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category. Floor stocksLow-cost, high-usage inventory items stored near the shop floor, Foreign tax creditHome country credit against domestic income tax for foreign taxes paid on foreign Forward buyingThe purchase of items exceeding the quantity levels indicated Future-Oriented Financial Informationinformation about prospective results of operations, financial position and/or changes in financial position, based on assumptions about future economic conditions and courses of action. Future-oriented financial information is presented as either a forecast or a projection. Going-private transactionsPublicly owned stock in a firm is replaced with complete equity ownership by a Growth stockCommon stock of a company that has an opportunity to invest money and earn more than the Heavenly Parachute Stock OptionA nonqualified stock option that allows a deceased option holder’s estate up to three years in which to exercise his or her High-Powered MoneySee money base. Highly leveraged transaction (HLT)Bank loan to a highly leveraged firm. Hot moneymoney that moves across country borders in response to interest rate differences and that moves idle timethe amount of time spent in storing inventory or Imputation tax systemArrangement by which investors who receive a dividend also receive a tax credit for In-the-moneyA put option that has a strike price higher than the underlying futures price, or a call option Incentive Stock OptionAn option to purchase company stock that is not taxable Income stockCommon stock with a high dividend yield and few profitable investment opportunities. INCOME TAXWhat the business paid to the IRS. Income taxA government tax on the income earned by an individual or corporation. Income Tax ExpenseSee income tax provision. Income Tax ProvisionThe expense deduction from pretax book income reported on the Indirect Taxestaxes paid by consumers when they buy goods and services. A sales tax is an example. Inflation TaxThe loss in purchasing power due to inflation eroding the real value of financial assets such as cash. informationbits of knowledge or fact that have been carefully Information asymmetryA situation involving information that is known to some, but not all, participants. Information Coefficient (IC)The correlation between predicted and actual stock returns, sometimes used to Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |