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Net benefit to leverage factor |
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Definition of Net benefit to leverage factorNet benefit to leverage factorA linear approximation of a factor, T*, that enables one to operationalize the
Related Terms:ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. NPV (net present value of cash flows)Same as PV, but usually includes a subtraction for an initial cash outlay. PPF (periodic perpetuity factor)a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity. Accumulated Benefit Obligation (ABO)An approximate measure of the liability of a plan in the event of a Amortization factorThe pool factor implied by the scheduled amortization assuming no prepayemts. Annuity factorPresent value of $1 paid for each of t periods. Conversion factorsRules set by the Chicago Board of Trade for determining the invoice price of each Cost-benefit ratioThe net present value of an investment divided by the investment's initial cost. Also called Debt leverageThe amplification of the return earned on equity when an investment or firm is financed Defined benefit planA pension plan in which the sponsor agrees to make specified dollar payments to Discount factorPresent value of $1 received at a stated future date. Equivalent annual benefitThe equivalent annual annuity for the net present value of an investment project. European Monetary System (EMS)An exchange arrangement formed in 1979 that involves the currencies Exposure nettingOffsetting exposures in one currency with exposures in the same or another currency, FactorA financial institution that buys a firm's accounts receivables and collects the debt. Factor analysisA statistical procedure that seeks to explain a certain phenomenon, such as the return on a Factor modelA way of decomposing the factors that influence a security's rate of return into common and Factor portfolioA well-diversified portfolio constructed to have a beta of 1.0 on one factor and a beta of FactoringSale of a firm's accounts receivable to a financial institution known as a factor. Financial leverageUse of debt to increase the expected return on equity. Financial leverage is measured by Financial leverage clienteleA group of investors who have a preference for investing in firms that adhere to Financial leverage ratiosRelated: capitalization ratios. Firm's net value of debtTotal firm value minus total firm debt. Flat benefit formulaMethod used to determine a participant's benefits in a defined benefit plan by Highly leveraged transaction (HLT)Bank loan to a highly leveraged firm. Homemade leverageIdea that as long as individuals borrow (or lend) on the same terms as the firm, they can Incremental costs and benefitsCosts and benefits that would occur if a particular course of action were International Monetary FundAn organization founded in 1944 to oversee exchange arrangements of International Monetary Market (IMM)A division of the CME established in 1972 for trading financial LeverageThe use of debt financing. Leverage clienteleA group of shareholders who, because of their personal leverage, seek to invest in Leverage ratiosMeasures of the relative contribution of stockholders and creditors, and of the firm's ability Leverage rebalancingMaking transactions to adjust (rebalance) a firm's leverage ratio back to its target. Leveraged betaThe beta of a leveraged required return; that is, the beta as adjusted for the degree of Leveraged buyout (LBO)A transaction used for taking a public corporation private financed through the use Leveraged equityStock in a firm that relies on financial leverage. Holders of leveraged equity face the Leveraged leaseA lease arrangement under which the lessor borrows a large proportion of the funds needed Leveraged portfolioA portfolio that includes risky assets purchased with funds borrowed. Leveraged required returnThe required return on an investment when the investment is financed partially by debt. Leveragehe use of debt financing. Leveraged portfolioA portfolio that includes risky assets purchased with funds borrowed. Maturity factoringfactoring arrangement that provides collection and insurance of accounts receivable. Monetary goldGold held by governmental authorities as a financial asset. Monetary policyActions taken by the Board of Governors of the Federal Reserve System to influence the Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Multifactor CAPMA version of the capital asset pricing model derived by Merton that includes extramarket Net adjusted present valueThe adjusted present value minus the initial cost of an investment. Net advantage of refundingThe net present value of the savings from a refunding. Net advantage to leasingThe net present value of entering into a lease financing arrangement rather than Net advantage to mergingThe difference in total post- and pre-merger market value minus the cost of the merger. Net asset value (NAV)The value of a fund's investments. For a mutual fund, the net asset value per share Net assetsThe difference between total assets on the one hand and current liabilities and noncapitalized longterm Net book valueThe current book value of an asset or liability; that is, its original book value net of any Net cash balanceBeginning cash balance plus cash receipts minus cash disbursements. Net changeThis is the difference between a day's last trade and the previous day's last trade. Net errors and omissionsIn balance of payments accounting, net errors and omissions record the statistical Net financing costAlso called the cost of carry or, simply, carry, the difference between the cost of financing Net floatSum of disbursement float and collection float. Net incomeThe company's total earnings, reflecting revenues adjusted for costs of doing business, Net investmentGross, or total, investment minus depreciation. Net leaseA lease arrangement under which the lessee is responsible for all property taxes, maintenance Net operating lossesLosses that a firm can take advantage of to reduce taxes. Net operating marginThe ratio of net operating income to net sales. Net periodThe period of time between the end of the discount period and the date payment is due. Net present value (NPV)The present value of the expected future cash flows minus the cost. Net present value of growth opportunitiesA model valuing a firm in which net present value of new Net present value of future investmentsThe present value of the total sum of NPVs expected to result from Net present value ruleAn investment is worth making if it has a positive NPV. Projects with negative NPVs Net profit marginnet income divided by sales; the amount of each sales dollar left over after all expenses Net salvage valueThe after-tax net cash flow for terminating the project. Net working capitalCurrent assets minus current liabilities. Often simply referred to as working capital. Net worthCommon stockholders' equity which consists of common stock, surplus, and retained earnings. NettingReducing transfers of funds between subsidiaries or separate companies to a net amount. Netting outTo get or bring in as a net; to clear as profit. Old-line factoringfactoring arrangement that provides collection, insurance, and finance for accounts receivable. One-factor APTA special case of the arbitrage pricing theory that is derived from the one-factor model by Operating leverageFixed operating costs, so-called because they accentuate variations in profits. Payments nettingReducing fund transfers between affiliates to only a netted amount. netting can be done on Pension Benefit Guaranty Corporation (PBGC)A federal agency that insures the vested benefits of Pool factorThe outstanding principal balance divided by the original principal balance with the result Present value factorfactor used to calculate an estimate of the present value of an amount to be received in Reported factorThe pool factor as reported by the bond buyer for a given amortization period. Safety-net returnThe minimum available return that will trigger an immunization strategy in a contingent SIMEX (Singapore International Monetary Exchange)A leading futures and options exchange in Singapore. Single factor modelA model of security returns that acknowledges only one common factor. Two-factor modelBlack's zero-beta version of the capital asset pricing model. Unit benefit formulaMethod used to determine a participant's benefits in a defined benefit plan by Unleveraged betaThe beta of an unleveraged required return (i.e. no debt) on an investment when the Unleveraged required returnThe required return on an investment when the investment is financed entirely NET INCOMEThe profit a company makes after cost of goods sold, expenses, and taxes are subtracted from net sales. NET SALES (revenue)The amount sold after customersâ€™ returns, sales discounts, and other allowances are taken away from RATIO OF NET INCOME TO NET SALESA 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 INCOMEA ratio that shows how much a company had to collect in net sales to make a dollar of profit. Figure it this way: Limiting factorThe production resource that, as a result of scarce resources, limits the production of goods Net present value (NPV)A discounted cash flow technique used for investment appraisal that calculates the present value of future cash flows and deducts the initial capital investment. Net profitSee operating profit. Net incomeThe last line of the Income Statement; it represents the amount that the company earned during a specified period. financial leverageThe equity (ownership) capital of a business can serve net income (also called the bottom line, earnings, net earnings, and netoperating earnings)
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