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Definition of P/E effect
That portfolios with low P/E stocks have exhibited higher average risk-adjusted returns than high P/E stocks.
Part of the return that is not due to systematic influences (market wide influences). In
Cash flow provided by operating
Net income adjusted to exclude selected nonrecurring and noncash items of reserve, gain, expense, and loss.
Conventional earnings before interest, taxes, depreciation, and amortization (EBITDA) revised to exclude the effects of mainly nonrecurring items of revenue or gain and expense or loss.
Operations Reported income from continuing operations
The net present value analysis of an asset if financed solely by equity
An offset to the accounts receivable balance, against which
A contra account related to accounts receivable that represents the amounts that the company expects will not be collected.
An estimate of the uncollectible portion of accounts receivable
A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
Arithmetic mean return.
The amount of total risk that can be eliminated by diversification by
An arithmetic mean of selected stocks intended to represent the behavior of the market or some
The average project earnings after taxes and depreciation divided by the average
An estimation of price that uses the average or representative price of a
Average age of accounts receivable
The weighted-average age of all of the firm's outstanding invoices.
Average Amortization Period
The average useful life of a company's collective amortizable asset base.
Average Collection Period
average number of days necessary to receive cash for the sale of
Average collection period, or days' receivables
The ratio of accounts receivables to sales, or the total
Average-Cost Inventory Method
The inventory cost-flow assumption that assigns the average
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
The beginning inventory for a period, plus the amount at the end of
Also referred to as the weighted-average life (WAL). The average number of years that each
The average time to maturity of securities held by a mutual fund. Changes in interest rates
Average Propensity to Consume
Ratio of consumption to disposable income. See also marginal propensity to consume.
Average Propensity to Save
Ratio of saving to disposable income. See also marginal propensity to save.
Average rate of return (ARR)
The ratio of the average cash inflow to the amount invested.
Average tax rate
Taxes as a fraction of income; total taxes divided by total taxable income.
average tax rate
Total taxes owed divided by total income.
The risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk.
The uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for
Beta equation (Stocks)
The beta of a stock is determined as follows:
risk of a firm measured from the standpoint of an investor who holds a highly diversified portfolio.
A steep and rapid increase in price followed by a steep and rapid drop. This is an indicator seen
Book yield is the investment income earned in a year on a portfolio of assets purchased over a number of years and at different interest rates, divided by the book value of those assets.
The risk that the cash flow of an issuer will be impaired because of adverse economic
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
Capital Consumption Allowance
Capital Cost Allowance (CCA)
The annual depreciation expense allowed by the Canadian Income Tax Act.
Purchase by foreigners of our assets (capital inflows) or our purchase of foreign assets (capital outflows).
CARs (cumulative abnormal returns)
a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock.
In investments, it represents earnings before depreciation , amortization and non-cash charges.
An obvious but at the same time elusive term that refers to cash
the receipt or disbursement of cash; when related
Cash received and paid over time.
In investments, NET INCOME plus DEPRECIATION and other noncash charges. In this sense, it is synonymous with CASH EARNINGS. Investors focus on cash flow from operations because of their concern with a firm's ability to pay dividends.
Cash flow after interest and taxes
Net income plus depreciation.
Cash-flow break-even point
The point below which the firm will need either to obtain additional financing
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash Flow Forecast
An estimate of the timing and amount of a company's inflows and outflows of money measured over a specific period of time typically monthly for one to two years then annually for an additional one to three years.
cash flow from operating activities, or cash flow from profit
This equals the cash inflow from sales during the period minus the cash
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash flow matching
Also called dedicating a portfolio, this is an alternative to multiperiod immunization in
Cash flow per common share
Cash flow from operations minus preferred stock dividends, divided by the
Cash Flow Provided by Operating Activities
With some exceptions, the cash effects of transactions
Cash Flow Provided or Used from Financing Activities
Cash receipts and payments involving
Cash Flow Provided or Used from Investing Activities
Cash receipts and payments involving
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.
Cash Flow–to–Income Ratio (CFI)
adjusted cash flow provided by continuing operations
CASH FLOWS FROM FINANCING ACTIVITIES
A section on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations.
CASH FLOWS FROM INVESTING ACTIVITIES
A section on the cashflow statement that shows how much cash came in and went out because of various investing activities like purchasing machinery.
CASH FLOWS FROM OPERATIONS
A section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business.
Income payments to factors of production are spent to buy output. The receipts from these sales are used to pay factors of production, creating a circular flow of income.
The risk that a foreign debtor will be unable to pay its debts because of business events,
Related: Unsystematic risk
See asset-specific risk
The risk that a project will not be brought into operation successfully.
Inventories owned by a company, but located on the premises
The risk that the other party to an agreement will default. In an options contract, the risk
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Country risk General
Level of political and economic uncertainty in a country affecting the value of loans or
The risk that an issuer of debt securities or a borrower may default on his obligations, or that the
Financial and moral risk that an obligation will not be paid and a loss will result.
Refers to the volatility of returns on international investments caused by events associated
Related: Exchange rate risk
Currency risk sharing
An agreement by the parties to a transaction to share the currency risk associated with
Also referred to as credit risk (as gauged by commercial rating companies), the risk that an
The informal and frequently unauthorized retention of excess inventory on the shop floor, which is used as buffer safety stock.
Tax deductions that businesses can claim when they spend money on investment goods.
Discounted cash flow
A technique that determines the present value of future cash
Discounted Cash Flow
Techniques for establishing the relative worth of a future investment by discounting (at a required rate of return) the expected net cash flows from the project.
Discounted cash flow (DCF)
Future cash flows multiplied by discount factors to obtain present values.
Discounted cash flow (DCF)
A method of investment appraisal that discounts future cash flows to present value using a discount rate, which is the risk-adjusted cost of capital.
discounted cash flow (DCF)
Refers to a capital investment analysis technique
Discretionary cash flow
Cash flow that is available after the funding of all positive NPV capital investment
Related: unsystematic risk.
Dividend yield (Stocks)
Indicated yield represents annual dividends divided by current stock price.
Dow Jones industrial average
This is the best known U.S.index of stocks. It contains 30 stocks that trade on
Dow Jones Industrial Average
Index of the investment performance of a portfolio of 30 “blue-chip” stocks.
In project financing, the risk that the project's output will not be salable at a price that will
Equilibrium market price of risk
The slope of the capital market line (CML). Since the CML represents the
Equivalent annual cash flow
Annuity with the same net present value as the company's proposed investment.
The risk that the ability of an issuer to make interest and principal payments will change because
Also called abnormal returns, returns in excess of those required by some asset pricing model.
Exchange rate risk
Also called currency risk, the risk of an investment's value changing because of currency
The variability of a firm's value that results from unexpected exchange rate changes or the
Expected future cash flows
Projected future cash flows associated with an asset of decision.
A type of mortgage pipeline risk that is generally created when the terms of the loan to be
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