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Financial Terms | |
Pro forma financial statements |
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Definition of Pro forma financial statementsPro forma financial statementsfinancial statements as adjusted to reflect a projected or planned transaction.
Related Terms:master budgetthe comprehensive set of all budgetary schedules Adjusted Cash Flow Provided by Continuing OperationsCash flow provided by operating After-tax profit marginThe ratio of net income to net sales. Agency problemConflicts of interest among stockholders, bondholders, and managers. agency problemsConflicts of interest between the firm’s owners and managers. Aggregate Production FunctionAn equation determining aggregate output as a function of aggregate inputs such as labor and capital. Antidilution ProvisionsA clause in a shareholders agreement preventing a company from issuing additional shares, without allowing the current shareholders the opportunity to participate in the offering to avoid dilution of their percentage ownership. ![]() Antifraud ProvisionsSpecific sections and rules of the 1933 Act and 1934 Act that are appropriationa budgeted maximum allowable expenditure Appropriation requestformal request for funds for capital investment project. approximated net realizable value at split-off allocationa method of allocating joint cost to joint products using a Asset substitution problemArises when the stockholders substitute riskier assets for the firm's existing Asymmetric informationInformation that is known to some people but not to other people. Average Propensity to ConsumeRatio of consumption to disposable income. See also marginal propensity to consume. Average Propensity to SaveRatio of saving to disposable income. See also marginal propensity to save. BARRA's performance analysis (PERFAN)A method developed by BARRA, a consulting firm in ![]() Base probability of lossThe probability of not achieving a portfolio expected return. Before-tax profit marginThe ratio of net income before taxes to net sales. benefits-provided rankinga listing of service departments in an order that begins with the one providing the most service Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit CommitteesA committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial Book profitThe cumulative book income plus any gain or loss on disposition of the assets on termination of the SAT. business process reengineering (BPR)the process of combining information technology to create new and more effective by-productan incidental output of a joint process; it is salable, By-productA product that is an ancillary part of the primary production process, having By-productA material created incidental to a production process, which can be Call protectionA feature of some callable bonds that establishes an initial period when the bonds may not be Call provisionAn embedded option granting a bond issuer the right to buy back all or part of the issue prior ![]() cash flow from operating activities, or cash flow from profitThis equals the cash inflow from sales during the period minus the cash Cash Flow Provided by Operating ActivitiesWith some exceptions, the cash effects of transactions Cash Flow Provided or Used from Financing ActivitiesCash receipts and payments involving Cash Flow Provided or Used from Investing ActivitiesCash receipts and payments involving Changes in Financial PositionSources of funds internally provided from operations that alter a company's chief financial officer (CFO)Officer who oversees the treasurer and controller and sets overall financial strategy. Committee, AIMR Performance Presentation Standards Implementation CommitteeThe Association for Investment Management and Research (AIMR)'s Performance Presentation Standards Implementation Consumer Credit Protection ActA federal Act specifying the proportion of continuous improvementan ongoing process of enhancing employee task performance, level of product quality, and level of company service through eliminating nonvalue-added activities to reduce lead time, making products Controllable profitThe profit made by a division after deducting only those expenses that can be controlled by the Conventional projectA project with a negative initial cash flow (cash outflow), which is expected to be Corporate financial managementThe application of financial principals within a corporation to create and Corporate financial planningfinancial planning conducted by a firm that encompasses preparation of both Corporate processing floatThe time that elapses between receipt of payment from a customer and the cost-benefit analysis the analytical process of comparing therelative costs and benefits that result from a specific course cost of production reporta process costing document that Cost–volume–profit analysis (CVP)A method for understanding the relationship between revenue, cost and sales volume. cost-volume-profit (CVP)analysis a procedure that examines costs of financial distressCosts arising from bankruptcy or distorted business decisions before bankruptcy. Country financial riskThe ability of the national economy to generate enough foreign exchange to meet Creditor Proof ProtectionThe creditor proof status of such things as life insurance, non-registered life insurance investments, life insurance RRSPs and life insurance RRIFs make these attractive products for high net worth individuals, professionals and business owners who may have creditor concerns. Under most circumstances the creditor proof rules of the different provincial insurance acts take priority over the federal bankruptcy rules. Cross-sectional approachA statistical methodology applied to a set of firms at a particular point in time. Cumulative probability distributionA function that shows the probability that the random variable will Debt service parity approachAn analysis wherein the alternatives under consideration will provide the firm Detailed ProgramDesign In software development, a detailed step-by-step plan for completing the software. Diffusion processA conception of the way a stock's price changes that assumes that the price takes on all Direct-Method FormatA format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities. Direct stock-purchase programsThe purchase by investors of securities directly from the issuer. Dupont system of financial controlHighlights the fact that return on assets (ROA) can be expressed in terms economic production run (EPR)an estimate of the number Entitlement ProgramA program, such as social security, under which everyone meeting the eligibility requirements is entitled to receive benefits from the program, so that costs are not known in advance. equivalent units of production (EUP)an approximation of the number of whole units of output that could have been Expected value of perfect informationThe expected value if the future uncertain outcomes could be known ExpropriationThe official seizure by a government of private property. Any government has the right to External Financial StatementsCorporate financial statements that have been reported on by an external independent accountant. Factor of ProductionA resource used to produce a good or service. The main macroeconomic factors of production are capital and labor. Fair price provisionSee:appraisal rights. Farm Improvement and Marketing Cooperatives Loans ActSee here FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent Financial accountingThe production of financial statements, primarily for those interested parties who are external to the business. financial accountinga discipline in which historical, monetary Financial analystsAlso called securities analysts and investment analysts, professionals who analyze Financial assetsClaims on real assets. financial assetsClaims to the income generated by real assets. Also called securities. Financial AssistanceEconomic assistance provided by unrelated third parties, typically government agencies. They may take the form of loans, loan guarantees, subsidies, tax allowances, contributions, or cost-sharing arrangements. financial budgeta plan that aggregates monetary details Financial controlThe management of a firm's costs and expenses in order to control them in relation to Financial CovenantA feature of a debt or credit agreement that is designed to protect the lender or creditor. It is common to characterize covenants as either positive or negative covenants. Financial CovenantsA promise made related to financial conditions or events. Often a promise not to allow certain balance sheet items or ratios to fall below an agreed level. Usually found in loan documents, as a protection mechanism. Financial distressEvents preceding and including bankruptcy, such as violation of loan contracts. Financial distress costsLegal and administrative costs of liquidation or reorganization. Also includes Financial engineeringCombining or dividing existing instruments to create new financial products. Financial futureA contract entered into now that provides for the delivery of a specified asset in exchange financial incentivea monetary reward provided for performance Financial IncentiveAn expression of economic benefit that motivates behavior that might otherwise not take place. Financial intermediariesInstitutions that provide the market function of matching borrowers and lenders or financial intermediaryFirm that raises money from many small investors and provides financing to businesses or other Financial IntermediaryAny institution, such as a bank, that takes deposits from savers and loans them to borrowers. Financial IntermediationThe process whereby financial intermediaries channel funds from lender/savers to borrower/spenders. Financial leaseLong-term, non-cancelable lease. Financial LeaseLease in which the service provided by the lessor to the lessee is limited to financing equipment. All other responsibilities related to the possession of equipment, such as maintenance, insurance, and taxes, are borne by the lessee. A financial lease is usually noncancellable and is fully paid out amortized over its term. Financial leverageUse of debt to increase the expected return on equity. financial leverage is measured by financial leverageThe equity (ownership) capital of a business can serve financial leverageDebt financing amplifies the effects of changes in operating income on the returns to stockholders. Financial leverage clienteleA group of investors who have a preference for investing in firms that adhere to Financial leverage ratiosRelated: capitalization ratios. Financial marketAn organized institutional structure or mechanism for creating and exchanging financial assets. financial marketsMarkets in which financial assets are traded. Financial Numbers GameThe use of creative accounting practices to alter a financial statement Financial objectivesObjectives of a financial nature that the firm will strive to accomplish during the period Financial planA financial blueprint for the financial future of a firm. Financial planningThe process of evaluating the investing and financing options available to a firm. It Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |