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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,"
Repetitive cycles of economic expansion and recession.
The length of time between a firm's purchase of inventory and the receipt of cash
An expiration cycle relates to the dates on which options on a particular security expire. A
The period between the 2 latest highs or lows of the S&P 500, showing net performance of a
Losses that a firm can take advantage of to reduce taxes.
The ratio of net operating income to net sales.
Earnings before depreciation minus taxes. It measures the cash generated from
Degree to which exchange rate changes, in combination with price changes, will alter a
The ratio of operating margin to net sales.
Short-term, cancelable lease. A type of lease in which the period of contract is less than the
Fixed operating costs, so-called because they accentuate variations in profits.
The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is
The time it takes to bring new and/or improved products to market.
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
The total amount that was spent to run a company this year.
The annual period over which budgets are prepared.
An approach to costing that estimates and accumulates the costs of a product/service over
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.
cash flow from operating activities, or cash flow from profit
This equals the cash inflow from sales during the period minus the cash
Includes all the sales and expense activities of a business.
operating cash flow
See cash flow from operating activities.
A relatively small percent increase or decrease in
See earnings before interest and income tax (EBIT).
Operating Cash Flow
Income available after the payment of taxes, plus the value of the
the time between the placement of an order to
degree of operating leverage
a factor that indicates how a percentage change in sales, from the existing or current
life cycle costing
the accumulation of costs for activities that
manufacturing cycle efficiency (MCE)
a ratio resulting from dividing the actual production time by total lead time;
a budget expressed in both units and dollars
the proportionate relationship between
product life cycle
a model depicting the stages through
Any expense associated with the general, sales, and administrative
The net income of a business, less the impact of any financial activity,
The rental of an asset from a lessor, but not under terms that would
cash conversion cycle
Period between firm’s payment for materials
degree of operating leverage (DOL)
Percentage change in profits given a 1 percent change in sales.
Degree to which costs are fixed.
operating risk (business risk)
Risk in firm’s operating income.
Fluctuations of GDP around its long-run trend, consisting of recession, trough, expansion, and peak.
Political Business Cycle
A business cycle caused by policies undertaken to help a government be re-elected.
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 period of service for which a company compensates its employees.
Cash Flow Provided by Operating Activities
With some exceptions, the cash effects of transactions
A term frequently used to describe earnings after the removal of the
A measure of results produced by the core operations of a firm. It is common
The frequent, scheduled counting of a subset of all inventories,
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.
One where the risks and benefits, as well as ownership, stays with the lessor.
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 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.
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