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Financial Terms | |
Period costs |
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Definition of Period costsPeriod costsThe costs that relate to a period of time.
Related Terms:Non-production overheadA general term referring to period costs, such as selling, administration and financial expenses. Variable costingA method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs. Accounting periodThe period of time for which financial statements are produced – see also financial year. Agency costsThe incremental costs of having an agent make decisions for a principal. Annualized holding period returnThe annual rate of return that when compounded t times, would have Annuity PeriodThe time between each payment under an annuity. Average Amortization PeriodThe average useful life of a company's collective amortizable asset base. ![]() Average Collection PeriodAverage number of days necessary to receive cash for the sale of Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Avoidable costscosts that are identifiable with and able to be influenced by decisions made at the business capitalization of costsWhen a cost is recorded originally as an increase Carring costscosts that increase with increases in the level of investment in current assets. carrying costscosts of maintaining current assets, including opportunity cost of capital. Compounding periodThe length of the time period (for example, a quarter in the case of quarterly compounding periodthe time between each interest computation Costs Capitalized in StealthA particularly egregious form of aggressive cost capitalization ![]() costs of financial distresscosts arising from bankruptcy or distorted business decisions before bankruptcy. Credit periodThe length of time for which the customer is granted credit. Critical Growth PeriodsTimes in a company's history when growth is essential and without which survival of the business might be in jeopardy. Direct costscosts that are readily traceable to particular products or services. Discount periodThe period during which a customer can deduct the discount from the net amount of the bill Discounted payback period ruleAn investment decision rule in which the cash flows are discounted at an Evaluation periodThe time interval over which a money manager's performance is evaluated. Execution costsThe difference between the execution price of a security and the price that would have Extended Amortization PeriodAn amortization period that continues beyond a long-lived asset's economic useful life. Extended Amortization PeriodsAmortizing capitalized expenditures over estimated useful lives that are unduly optimistic. Financial distress costsLegal and administrative costs of liquidation or reorganization. Also includes ![]() Fixed costscosts that do not change with increases or decreases in the volume of goods or services fixed costscosts that do not depend on the level of output. fixed expenses (costs)Expenses or costs that remain the same in amount, Friction costscosts, both implied and direct, associated with a transaction. Such costs include time, effort, Full Credit PeriodThe period of trade credit given by a supplier to its customer. Funding CostsThe price of obtaining capital, either borrowed or equity, with intent to carry on business operations. Grace PeriodA specific period of time after a premium payment is due during which the policy owner may make a payment, and during which, the protection of the policy continues. The grace period usually ends in 30 days. Grace PeriodLength of time during which repayments of loan principal are excused. Usually occurs at the start of the loan period. Holding periodLength of time that an individual holds a security. Holding period returnThe rate of return over a given period. Incremental costs and benefitscosts and benefits that would occur if a particular course of action were Indirect costscosts that are necessary to produce a product/service but are not readily traceable to particular products or services – see overhead. Information costsTransaction costs that include the assessment of the investment merits of a financial asset. Market impact costsAlso called price impact costs, the result of a bid/ask spread and a dealer's price concession. Market timing costscosts that arise from price movement of the stock during the time of the transaction Menu CostsThe costs to firms of changing their prices. Multiperiod immunizationA portfolio strategy in which a portfolio is created that will be capable of Net periodThe period of time between the end of the discount period and the date payment is due. Neutral periodIn the Euromarket, a period over which Eurodollars are sold is said to be neutral if it does not Odd first or last periodFixed-income securities may be purchased on dates Opportunity costsThe difference in the performance of an actual investment and a desired investment overhead costsOverhead generally refers to indirect, in contrast to direct, Payback PeriodThe number of years necessary for the net cash flows of an payback periodthe time it takes an investor to recoup an payback periodTime until cash flows recover the initial investment of the project. period costcost other than one associated with making or acquiring inventory periodic compensationa pay plan based on the time spent on the task rather than the work accomplished Periodic inventoryA physical inventory count taken on a repetitive basis. Periodic inventory systemAn inventory system in which the balance in the Inventory account is adjusted for the units sold only at the end of the period. Policy Acquisition Costscosts incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium Political CostsThe costs of additional regulation, including higher taxes, borne by large and 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. Preopening CostsA form of start-up cost incurred in preparing for the opening of a new store or facility. Price impact costsRelated: market impact costs Reporting periodThe time period for which transactions are compiled into a set of financial statements. Round-trip transactions costscosts of completing a transaction, including commissions, market impact Search costscosts associated with locating a counterparty to a trade, including explicit costs (such as Semi-fixed costs costs that are constant within a defined level of activity but that can increase or decrease when Semi-variable costscosts that have both fixed and variable components. shortage costscosts incurred from shortages in current assets. Standard costsA budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a Start-up Costscosts related to such onetime activities as opening a new facility, introducing Subperiod returnThe return of a portfolio over a shorter period of time than the evaluation period. Sunk costscosts that have been incurred and cannot be reversed. Sunk costscosts that have been incurred in the past. sunk costscosts that have been incurred and cannot be recovered. T-period holding-period returnThe percentage return over the T-year period an investment lasts. Trading costscosts of buying and selling marketable securities and borrowing. Trading costs include Transactions costsThe time, effort, and money necessary, including such things as commission fees and the Undepreciated Capital CostsThe tax definition of the value of an asset that is eligible for tax deprecation. variable costscosts that change as the level of output changes. Waiting periodTime during which the SEC studies a firm's registration statement. During this time the firm Waiting Period (Credit Insurance)A specific time that must pass following the onset of a covered disability before any benefits will be paid under a creditor disability policy. (Also known as an elimination period). Workout periodRealignment period of a temporary misaligned yield relationship that sometimes occurs in Absorption costingA methodology under which all manufacturing costs are assigned accrual-basis accountingWell, frankly, accrual is not a good descriptive accumulated depreciationA contra, or offset, account that is coupled activity based costing (ABC)A relatively new method advocated for the AmortizationThe write-off of an asset over the period when the asset is used. This term breakeven pointThe annual sales volume level at which total contribution cost containmentthe practice of minimizing, to the extent cost of capitalRefers to the interest cost of debt capital used by a business Cost of goods soldThe charge to expense of the direct materials, direct labor, and Direct costingA costing methodology that only assigns direct labor and material costs equivalent units of production (EUP)an approximation of the number of whole units of output that could have been FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent Long runA period of time in which all costs are variable; greater than one year. Long runA period of time in which all costs are variable; greater than one year. Operating leaseShort-term, cancelable lease. A type of lease in which the period of contract is less than the Process costingA method of costing for continuous manufacture in which costs for an accounting compared are compared with production for the same period to determine a cost per unit produced. ProfilingA method of budgeting that takes into account seasonal fluctuations and estimates of when revenues will be earned and costs will be incurred over each month in the budget period. profitThe general term profit is not precisely defined; it may refer to net Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |