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Definition of Operating cycle
The average time intervening between the acquisition of materials or services and the final
In general, the time between cash disbursement and cash collection. In net working capital
For investment companies, the management fee and "other expenses,"
The annual period over which budgets are prepared.
Repetitive cycles of economic expansion and recession.
Fluctuations of GDP around its long-run trend, consisting of recession, trough, expansion, and peak.
The length of time between a firm's purchase of inventory and the receipt of cash
Period between firm’s payment for materials
The length of time between a purchase of materials and collection of accounts receivable generated by the sale of the products made from the materials.
This equals the cash inflow from sales during the period minus the cash
With some exceptions, the cash effects of transactions
The frequent, scheduled counting of a subset of all inventories,
the time between the placement of an order to
a factor that indicates how a percentage change in sales, from the existing or current
Percentage change in profits given a 1 percent change in sales.
An expiration cycle relates to the dates on which options on a particular security expire. A
life cycle costing
the accumulation of costs for activities that
An approach to costing that estimates and accumulates the costs of a product/service over
manufacturing cycle efficiency (MCE)
a ratio resulting from dividing the actual production time by total lead time;
The period between the 2 latest highs or lows of the S&P 500, showing net performance of a
Net operating losses
Losses that a firm can take advantage of to reduce taxes.
Net operating margin
The ratio of net operating income to net sales.
Includes all the sales and expense activities of a business.
a budget expressed in both units and dollars
Operating cash flow
Earnings before depreciation minus taxes. It measures the cash generated from
operating cash flow
See cash flow from operating activities.
Operating Cash Flow
Income available after the payment of taxes, plus the value of the
A term frequently used to describe earnings after the removal of the
Any expense associated with the general, sales, and administrative
The total amount that was spent to run a company this year.
The amount of money the company must spend on overhead, distribution, taxes, underwriting the risk and servicing the policy. It is a factor in calculating premium rates.
Degree to which exchange rate changes, in combination with price changes, will alter a
The net income of a business, less the impact of any financial activity,
A measure of results produced by the core operations of a firm. It is common
Short-term, cancelable lease. A type of lease in which the period of contract is less than the
The rental of an asset from a lessor, but not under terms that would
One where the risks and benefits, as well as ownership, stays with the lessor.
Fixed operating costs, so-called because they accentuate variations in profits.
A relatively small percent increase or decrease in
the proportionate relationship between
Degree to which costs are fixed.
Operating Line of Credit
A bank's commitment to make loans to a particular borrower up to a specified maximum for a specified period, usually one year.
A loan advanced under an operating line of credit.
The profit made by the business for an accounting period, equal to gross profit less selling, finance, administration etc. expenses, but before deducting interest or taxation.
See earnings before interest and income tax (EBIT).
Operating profit margin
The ratio of operating margin to net sales.
The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is
operating risk (business risk)
Risk in firm’s operating income.
The period of service for which a company compensates its employees.
Political Business Cycle
A business cycle caused by policies undertaken to help a government be re-elected.
The time it takes to bring new and/or improved products to market.
product life cycle
a model depicting the stages through
Real Business Cycle Theory
Belief that business cycles arise from real shocks to the economy, such as technology advances and natural resource discoveries, and have little to do with monetary policy.
The frequency with which an asset is replaced by an equivalent asset.
Short-run operating activities
Events and decisions concerning the short-term finance of a firm, such as
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