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high-low method |
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Definition of high-low methodhigh-low methoda technique used to determine the fixed
Related Terms:NPV (net present value of cash flows)Same as PV, but usually includes a subtraction for an initial cash outlay. PV (present value of cash flows)the value in today’s dollars of cash flows that occur in different time periods. Blow-off topA steep and rapid increase in price followed by a steep and rapid drop. This is an indicator seen Capitalization methodA method of constructing a replicating portfolio in which the manager purchases a Cash flowIn investments, it represents earnings before depreciation , amortization and non-cash charges. Cash flow after interest and taxesNet income plus depreciation. Cash flow coverage ratioThe number of times that financial obligations (for interest, principal payments, Cash flow from operationsA firm's net cash inflow resulting directly from its regular operations Cash flow matchingAlso called dedicating a portfolio, this is an alternative to multiperiod immunization in Cash flow per common shareCash flow from operations minus preferred stock dividends, divided by the Cash flow time-lineLine depicting the operating activities and cash flows for a firm over a particular period. Cash-flow break-even pointThe point below which the firm will need either to obtain additional financing Current rate methodUnder this currency translation method, all foreign currency balance-sheet and income Direct estimate methodA method of cash budgeting based on detailed estimates of cash receipts and cash Discounted cash flow (DCF)Future cash flows multiplied by discount factors to obtain present values. Discretionary cash flowCash flow that is available after the funding of all positive NPV capital investment Equivalent annual cash flowAnnuity with the same net present value as the company's proposed investment. Expected future cash flowsProjected future cash flows associated with an asset of decision. Flower bondGovernment bonds that are acceptable at par in payment of federal estate taxes when owned by Flow-through basisAn account for the investment credit to show all income statement benefits of the credit Flow-through methodThe practice of reporting to shareholders using straight-line depreciation and Free cash flowsCash not required for operations or for reinvestment. Often defined as earnings before Hell-or-high-water contractA contract that obligates a purchaser of a project's output to make cash High-coupon bond refundingRefunding of a high-coupon bond with a new, lower coupon bond. High priceThe highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits. High-yield bondSee:junk bond. Highly leveraged transaction (HLT)Bank loan to a highly leveraged firm. Incremental cash flowsDifference between the firm's cash flows with and without a project. Log-linear least-squares methodA statistical technique for fitting a curve to a set of data points. One of the Low-coupon bond refundingRefunding of a low coupon bond with a new, higher coupon bond. Low priceThis is the day's lowest price of a security that has changed hands between a buyer and a seller. Low price-earnings ratio effectThe tendency of portfolios of stocks with a low price-earnings ratio to Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Nominal cash flowA cash flow expressed in nominal terms if the actual dollars to be received or paid out are given. Normalizing methodThe practice of making a charge in the income account equivalent to the tax savings Operating cash flowEarnings before depreciation minus taxes. It measures the cash generated from Plowback rateRelated: retention rate. Price-specie-flow mechanismAdjustment mechanism under the classical gold standard whereby Production-flow commitmentAn agreement by the loan purchaser to allow the monthly loan quota to be Purchase methodAccounting for an acquisition using market value for the consolidation of the two entities' Real cash flowA cash flow is expressed in real terms if the current, or date 0, purchasing power of the cash Residual methodA method of allocating the purchase price for the acquisition of another firm among the Scheduled cash flowsThe mortgage principal and interest payments due to be paid under the terms of the Simple compound growth methodA method of calculating the growth rate by relating the terminal value to Statement of cash flowsA financial statement showing a firm's cash receipts and cash payments during a Statement-of-cash-flows methodA method of cash budgeting that is organized along the lines of the statement of cash flows. Temporal methodUnder this currency translation method, the choice of exchange rate depends on the WallflowerStock that has fallen out of favor with investors; tends to have a low P/E (price to earnings ratio). 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 FLOWS FROM FINANCING ACTIVITIESA section on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations. CASH FLOWS FROM INVESTING ACTIVITIESA section on the cashflow statement that shows how much cash came in and went out because of various investing activities like purchasing machinery. CASH FLOWS FROM OPERATIONSA section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business. Cash Flow statementA financial report that shows the movement in cash for a business during an accounting period. Discounted cash flow (DCF)A method of investment appraisal that discounts future cash flows to present value using a discount rate, which is the risk-adjusted cost of capital. Allowance for doubtful accountsA contra account related to accounts receivable that represents the amounts that the company expects will not be collected. Allowance methodA method of adjusting accounts receivable to the amount that is expected to be collected based on company experience. Direct methodA method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows. Direct write-off methodA method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers. Indirect methodA method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities. Statement of Cash FlowsOne of the basic financial statements; it lists the cash inflows and cash outflows of the company, grouped into the categories of operating activities, financing activities, and investing activities. The Statement of Cash Flows is prepared for a specified period of time. cash flowAn obvious but at the same time elusive term that refers to cash cash flow from operating activities, or cash flow from profitThis equals the cash inflow from sales during the period minus the cash statement of cash flowsOne of the three primary financial statements discounted cash flow (DCF)Refers to a capital investment analysis technique free cash flowGenerally speaking, this term refers to cash flow from negative cash flowThe cash flow from the operating activities of a business operating cash flowSee cash flow from operating activities. Free Cash FlowThe funds available for distribution to the capital providers of the Operating Cash FlowIncome available after the payment of taxes, plus the value of the algebraic methoda process of service department cost allocation cash flowthe receipt or disbursement of cash; when related direct methoda service department cost allocation approach dividend growth methoda method of computing the cost FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent judgmental method (of risk adjustment)an informal method of adjusting for risk that allows the decision maker method of least squaressee least squares regression analysis method of neglecta method of treating spoiled units in the modified FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per net present value methoda process that uses the discounted operations flow documenta document listing all operations risk-adjusted discount rate methoda formal method of adjusting for risk in which the decision maker increases the rate used for discounting the future cash flows to compensate for increased risk simplex methodan iterative (sequential) algorithm used to solve multivariable, multiconstraint linear programming problems six-sigma methoda high-performance, data-driven approach to analyzing and solving the root causes of business problems standard quantity allowedthe quantity of input (in hours or some other cost driver measurement) required at standard for the output actually achieved for the period step methoda process of service department cost allocation strict FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the weighted average method (of process costing)the method of cost assignment that computes an average cost per Bootstrapping, bootstrap methodAn arithmetic method for backing an Cash flowCash received and paid over time. High-low-close chartA financial chart usually used to plot the high, low, Allowance for bad debtsAn offset to the accounts receivable balance, against which Discounted cash flowA technique that determines the present value of future cash First in, first-out costing method (FIFO)A process costing methodology that assigns the earliest Lower of cost or marketAn accounting valuation rule that is used to reduce the Moving average inventory methodAn inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase. Payback methodA capital budgeting analysis method that calculates the amount of Purchase methodAn accounting method used to combine the financial statements of Sales allowanceA reduction in a price that is allowed by the seller, due to a problem Statement of cash flowsPart of the financial statements; it summarizes an entity’s cash
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