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Definition of Multiplier
Change in the equilibrium value of a variable of interest per change in a variable over which one has control. "The" multiplier is the change in equilibrium income per change in government spending.
The multiplier associated with a change in government spending financed by an equal change in taxes.
Total assets divided by total common stockholders' equity; the amount of total assets per
Change in the money supply per change in the money base.
a number (prefaced as a multiplier
The process whereby the money multiplier operates.
A stimulating monetary of fiscal policy to set in motion an expansionary multiplier process.
A method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing.
planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and
The discount rate that reflects only the business risks of a project and abstracts from the
The ratio of total assets to stockholder equity.
An investment company that invests in stocks and bonds. The same as a balanced mutual fund.
This is a fund that buys common stock, preferred stock and bonds. The same as a
A system of non-financial performance measurement that links innovation, customer and process measures to financial performance.
an approach to performance
A management style that de-emphasizes the significance of economic
A detailed schedule of financial activity, such as an advertising budget, a sales budget, or a capital budget.
A plan expressed in monetary terms covering a future period of time and based on a defined
a financial plan for the future based on a single level
A set of interlinked plans that quantitatively describe a company’s projected
The annual period over which budgets are prepared.
The amount by which government spending exceeds government revenues.
The excess of government spending over tax receipts.
a detailed set of documents that provides information
an intentional underestimation of revenues
the difference between total actual overhead
The process of ensuring that actual financial results are in line with targets – see variance
a planned expenditure
the process of formalizing plans and committing
A firm's set of planned capital expenditures.
management’s plan for investments in longterm
List of planned investment projects.
The process of choosing the firm's long-term capital assets.
Refers generally to analysis procedures for ranking
The process of ranking and selecting investment alternatives and
a process of evaluating an entity’s proposed
The series of steps one follows when justifying the decision to purchase
capital budgeting decision
Decision as to which real assets the firm should acquire.
A forecasted summary of a firm's expected cash inflows and cash outflows as well as its
Common stock/other equity
Value of outstanding common shares at par, plus accumulated retained
Consolidated Omnibus Budget Reconciliation Act (COBRA)
A federal Act
a process in which there is a rolling
An account that reduces an equity account. An example is Treasury stock.
Cost of Equity
Same as the cost of common stock. Sometimes viewed as the
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A comparison of debt to equity in a company's capital structure.
A widely used financial statement ratio to assess the
A common term for convertible bonds because of their equity component and the
Dual syndicate equity offering
An international equity placement where the offering is split into two
Represents ownership interest in a firm. Also the residual dollar value of a futures trading account,
Funds raised from shareholders.
Amounts contributed to the company by the owners (contributed capital) plus the residual earnings of the business (retained earnings).
Refers to one of the two basic sources of capital for a business, the
The difference between the total of all recorded assets and liabilities on the balance
Ownership. Common stock represents equity in a corporation.
The net worth of a business, consisting of capital stock, capital (or paid-in) surplus (or retained earnings), and, occasionally, certain net worth reserves. Common equity is that part of the total net worth belonging to the common shareholders. Total equity includes preferred shareholders. The terms common stock, net worth, and common equity are frequently used interchangeably.
The net worth of a company. This represents the ownership interest of the shareholders (common and preferred) of a company. For this reason, shares or stocks are often known as equities.
Life insurance or annuity product in which the cash value and benefit level fluctuate according to the performance of an equity portfolio.
Refers to the investors percentage ownership of a company that can be re-acquired by the company, usually at a pre-determined amount.
An agreement in which one party, for an upfront premium, agrees to compensate the other at
Also called a residual claim, a claim to a share of earnings after debt obligation have been
The simultaneous purchase of an equity floor and sale of an equity cap.
Equity contribution agreement
An agreement to contribute equity to a project under certain specified
An agreement in which one party agrees to pay the other at specific time periods if a specific
Through equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock.
Used to refer to warrants because they are usually issued attached to privately placed bonds.
Related: Variable life
Accounting method for an equity security in cases where the investor has sufficient
Securities that give the holder the right to buy or sell a specified number of shares of stock, at
An ownership interest in an enterprise, including preferred and common stock.
A swap in which the cash flows that are exchanged are based on the total return on some stock
Those holding shares of the firm's equity.
Securities sold in the Euromarket. That is, securities initially sold to investors
a plan that aggregates monetary details
A method of budgetary control that flexes, i.e. adjusts the original budget by applying standard
a presentation of multiple budgets that
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
GEMs (growing-equity mortgages)
Mortgages in which annual increases in monthly payments are used to
a budget developed by top management
A budget that takes the previous year as a base and adds (or deducts) a percentage to arrive at
The balance of a margin account. Related: buying on margin, initial margin requirement.
Stock in a firm that relies on financial leverage. Holders of leveraged equity face the
Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.
the comprehensive set of all budgetary schedules
a budget expressed in both units and dollars
Refers to the capital invested in a business by its shareowners
The total of all capital contributions and retained earnings on a business’s
a budget that has been developed
Planning, programming and budgeting system (PPBS)
A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres.
Preferred equity redemption stock (PERC)
Preferred stock that converts automatically into equity at a
A budget that allocates funds in line with strategies.
an approach to budgeting that relates
Funds, other than paid-up capital and retained earnings, employed in a business and which will remain in a business as permanent capital.
RATE OF RETURN ON STOCKHOLDERS’ EQUITY
The percentage return or profit that management made on each dollar stockholders invested in a company. Here’s how you figure it:
RATIO OF DEBT TO STOCKHOLDERS’ EQUITY
A ratio that shows which group—creditors or stockholders—has the biggest stake in or the most control of a company:
Return on Common Equity Ratio
A measure of the percentage return earned on the value of the
Return on equity (ROE)
Indicator of profitability. Determined by dividing net income for the past 12
return on equity (ROE)
This key ratio, expressed as a percent, equals net
see continuous budgeting
A method of budgeting in which as each month passes, an additional budget month is added such that there is always a 12-month budget.
Represents the total assets of a corporation less liabilities.
This is a company's total assets minus total liabilities. A company's net worth is the
The total amount of contributed capital and retained earnings; synonymous with stockholders' equity.
The residual interest or owners' claims on the assets of a corporation
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