|Pro forma financial statements|
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Definition of Pro forma financial statements
Pro forma financial statements
financial statements as adjusted to reflect a projected or planned transaction.
the comprehensive set of all budgetary schedules
Cash flow provided by operating
The ratio of net income to net sales.
Conflicts of interest among stockholders, bondholders, and managers.
Conflicts of interest between the firm’s owners and managers.
An equation determining aggregate output as a function of aggregate inputs such as labor and capital.
A 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.
Specific sections and rules of the 1933 Act and 1934 Act that are
a budgeted maximum allowable expenditure
formal request for funds for capital investment project.
a method of allocating joint cost to joint products using a
Arises when the stockholders substitute riskier assets for the firm's existing
Information that is known to some people but not to other people.
Ratio of consumption to disposable income. See also marginal propensity to consume.
Ratio 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 loss
The probability of not achieving a portfolio expected return.
Before-tax profit margin
The ratio of net income before taxes to net sales.
a 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 Committees
A committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial
The 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
an incidental output of a joint process; it is salable,
A product that is an ancillary part of the primary production process, having
A material created incidental to a production process, which can be
A feature of some callable bonds that establishes an initial period when the bonds may not be
An 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 profit
This equals the cash inflow from sales during the period minus the cash
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
Changes in Financial Position
Sources 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 Committee
The Association for Investment Management and Research (AIMR)'s Performance Presentation Standards Implementation
Consumer Credit Protection Act
A federal Act specifying the proportion of
an 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
The profit made by a division after deducting only those expenses that can be controlled by the
A project with a negative initial cash flow (cash outflow), which is expected to be
Corporate financial management
The application of financial principals within a corporation to create and
Corporate financial planning
financial planning conducted by a firm that encompasses preparation of both
Corporate processing float
The time that elapses between receipt of payment from a customer and the
cost-benefit analysis the analytical process of comparing the
relative costs and benefits that result from a specific course
cost of production report
a process costing document that
Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
analysis a procedure that examines
costs of financial distress
Costs arising from bankruptcy or distorted business decisions before bankruptcy.
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
Creditor Proof Protection
The 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.
A statistical methodology applied to a set of firms at a particular point in time.
Cumulative probability distribution
A function that shows the probability that the random variable will
Debt service parity approach
An analysis wherein the alternatives under consideration will provide the firm
Design In software development, a detailed step-by-step plan for completing the software.
A conception of the way a stock's price changes that assumes that the price takes on all
A format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities.
Direct stock-purchase programs
The purchase by investors of securities directly from the issuer.
Dupont system of financial control
Highlights the fact that return on assets (ROA) can be expressed in terms
economic production run (EPR)
an estimate of the number
A 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 information
The expected value if the future uncertain outcomes could be known
The official seizure by a government of private property. Any government has the right to
External Financial Statements
Corporate financial statements that have been reported on by an external independent accountant.
Factor of Production
A resource used to produce a good or service. The main macroeconomic factors of production are capital and labor.
Fair price provision
Farm Improvement and Marketing Cooperatives Loans Act
FIFO method (of process costing)
the method of cost assignment that computes an average cost per equivalent
The production of financial statements, primarily for those interested parties who are external to the business.
a discipline in which historical, monetary
Also called securities analysts and investment analysts, professionals who analyze
Claims on real assets.
Claims to the income generated by real assets. Also called securities.
Economic 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.
a plan that aggregates monetary details
The management of a firm's costs and expenses in order to control them in relation to
A 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.
A 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.
Events preceding and including bankruptcy, such as violation of loan contracts.
Financial distress costs
Legal and administrative costs of liquidation or reorganization. Also includes
Combining or dividing existing instruments to create new financial products.
A contract entered into now that provides for the delivery of a specified asset in exchange
a monetary reward provided for performance
An expression of economic benefit that motivates behavior that might otherwise not take place.
Institutions that provide the market function of matching borrowers and lenders or
Firm that raises money from many small investors and provides financing to businesses or other
Any institution, such as a bank, that takes deposits from savers and loans them to borrowers.
The process whereby financial intermediaries channel funds from lender/savers to borrower/spenders.
Long-term, non-cancelable lease.
Lease 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.
Use of debt to increase the expected return on equity. financial leverage is measured by
The equity (ownership) capital of a business can serve
Debt financing amplifies the effects of changes in operating income on the returns to stockholders.
Financial leverage clientele
A group of investors who have a preference for investing in firms that adhere to
Financial leverage ratios
Related: capitalization ratios.
An organized institutional structure or mechanism for creating and exchanging financial assets.
Markets in which financial assets are traded.
Financial Numbers Game
The use of creative accounting practices to alter a financial statement
Objectives of a financial nature that the firm will strive to accomplish during the period
A financial blueprint for the financial future of a firm.
The process of evaluating the investing and financing options available to a firm. It
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