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Definition of Materiality
A characterization of the magnitude of a financial statement item's effect on a
The proportional size of a financial misstatement. It can be construed as
A line representing equilibrium in the goods and services market, on a diagram with aggregate demand on the vertical axis and aggregate supply on the horizontal axis.
An alteration in the accounting methodology or estimates used in
Very early orders for materials before the completion
The second-largest stock exchange in the United States. It trades
The periodic rate times the number of periods in a year. For example, a 5%
Interest rate that is annualized using simple interest.
The effective, or true, annual rate of return. The APY is the rate actually
Result of a transaction that increases earnings per common share (e.g. by decreasing the
a method of allocating joint cost to joint products using a
The amount of total risk that can be eliminated by diversification by
Variable that adjusts to maintain the consistency
line of credit granted by a bank to a customer.
A method developed by BARRA, a consulting firm in
The requirement that a claim holder voting against a plan of reorganization
General term for a document demanding payment.
Bill of materials
A listing of all the materials and quantities that go to make up a completed product.
bill of materials
a document that contains information about
Bill of materials
An itemization of the parts and subassemblies required to create a
Bill of materials (BOM)
A listing of all parts and subassemblies required to produce one
Large and creditworthy company.
Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees
A committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial
A commonly used term that refers to the net income (profit)
Breeder bill of materials
A bill of material that accounts for the generation and
The tendency of stocks to perform differently at different times, including such anomalies as
Capital market line (CML)
The line defined by every combination of the risk-free asset and the market portfolio.
Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized against
Temporary investments of currently excess cash in short-term, high-quality
A statement that shows where a company’s cash came from and where it went for a period of time, such as a year.
Cash Flow statement
A financial report that shows the movement in cash for a business during an accounting period.
Cash flow time-line
line depicting the operating activities and cash flows for a firm over a particular period.
Change in Accounting Estimate
A change in accounting that occurs as the result of new information
Change in Accounting Estimate
A change in the implementation of an existing accounting
Change in Accounting Principle
A change from one generally accepted accounting principle to another generally accepted accounting principle—for example, a change from capitalizing expenditures
Change in Reporting Entity
A change in the scope of the entities included in a set of, typically, consolidated financial statements.
Changes in Financial Position
Sources of funds internally provided from operations that alter a company's
The market model applied to a single security. The slope of the line is a security's beta.
Chicago Mercantile Exchange (CME)
A not-for-profit corporation owned by its members. Its primary
chief financial officer (CFO)
Officer who oversees the treasurer and controller and sets overall financial strategy.
The grouping of investors who have a preference that the firm follow a particular financing
Refers to the fact that the merger of two firms decreases the probability of default on
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s performance Presentation Standards Implementation
Commodities Exchange Center (CEC)
The location of five New York futures exchanges: Commodity
common-size balance sheet
Balance sheet that presents items as a percentage of total assets.
common-size income statement
Income statement that presents items as a percentage of revenues.
Assets acquired to create money. May include plant, machinery and equipment, shares of another company etc.
company cost of capital
Expected rate of return demanded by investors in a company, determined by the average risk of the company’s assets and operations.
Related: Unsystematic risk
See asset-specific risk
One of two parties to a conditional sale agreement, the other being the conditional seller.
A type of agreement to sell whereby a seller retains title to goods sold and delivered to a purchaser until full payment has been made.
Conditional Sale Agreement
An agreement entered into between a conditional buyer and a conditional seller setting out the terms under which goods change hands.
Conditional sales contracts
Similar to equipment trust certificates except that the lender is either the
One of two parties to a conditional sale agreement, the other being the conditional buyer.
Constant dollar accounting
A method for restating financial statements by reducing or
See real dollars.
An annual statement filed by a life insurance company in each state where it does
Convertible exchangeable preferred stock
Convertible preferred stock that may be exchanged, at the
Corporate financial management
The application of financial principals within a corporation to create and
Corporate financial planning
financial planning conducted by a firm that encompasses preparation of both
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
costs of financial distress
Costs arising from bankruptcy or distorted business decisions before bankruptcy.
In the balance of payments, counterpart items are analogous to unrequited transfers in the
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Purchases of goods or services from suppliers on credit to whom the debt is not yet paid. Or a
The cumulative, after-tax, prior-year effect of a change in accounting
Cumulative Effect of a Change in Accounting Principle
The change in earnings of previous years
Cumulative Effect of Accounting Change
The change in earnings of previous years assuming
A variable like GDP is measured in current dollars if each year's value is measured in prices prevailing during that year. In contrast, when measured in real or constant dollars, each year's value is measured in a base year's prices.
Demand line of credit
A bank line of credit that enables a customer to borrow on a daily or on-demand basis.
Depository Trust Company (DTC)
DTC is a user-owned securities depository which accepts deposits of
Result of a transaction that decreases earnings per common share.
a readily identifiable part of a product; the cost of such a part
Direct materials cost
The cost of all materials used in a cost object, such as finished goods.
Direct materials mix variance
The variance between the budgeted and actual mixes of
Municipal revenue bonds for which quotes are given in dollar prices. Not to be confused with
Dollar Cost Averaging
A way of smoothing out your investment deposits by investing regularly. Instead of making one large deposit a year into your RRSP, you make smaller regular monthly deposits. If you are buying units in a mutual fund or segregated equity fund, you would end up buying more units in the month that values were low and less units in the month that values were higher. By spreading out your purchases, you don't have to worry about buying at the right time.
dollar days (of inventory)
a measurement of the value of inventory for the time that inventory is held
The product of modified duration and the initial price.
Dollar price of a bond
percentage of face value at which a bond is quoted.
The return realized on a portfolio for any evaluation period, including (1) the change in market
Similar to the reverse repurchase agreement - a simultaneous agreement to sell a security held in a
Dollar safety margin
The dollar equivalent of the safety cushion for a portfolio in a contingent immunization
Dollar-weighted rate of return
Also called the internal rate of return, the interest rate that will make the
Dupont system of financial control
Highlights the fact that return on assets (ROA) can be expressed in terms
Inventory that has been physically marked as being for a
Effective annual interest rate
An annual measure of the time value of money that fully reflects the effects of
effective annual interest rate
Interest rate that is annualized using compound interest.
Effective annual yield
Annualized interest rate on a security computed using compound interest techniques.
Effective Annual Yield
Annualized rate of return on a security computed using compound
Effective call price
The strike price in an optional redemption provision plus the accrued interest to the
The convexity of a bond calculated with cash flows that change with yields.
In an interest rate swap, the date the swap begins accruing interest.
The duration calculated using the approximate duration formula for a bond with an
Effective Exchange Rate
The weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country.
Effective Interest Rate
The rate of interest actually earned on an investment. It is
Effective margin (EM)
Used with SAT performance measures, the amount equaling the net earned spread, or
A measure of the time value of money that fully reflects the effects of compounding.
The gross underwriting spread adjusted for the impact of the announcement of the common
Effective Tax Rate
The total tax provision divided by pretax book income from continuing
a measure of how well an organization’s goals
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