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Financial Terms | |
Pro forma statement |
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Definition of Pro forma statementPro forma statementA financial statement showing the forecast or projected operating results and balance
Related Terms:Pro forma financial statementsFinancial statements as adjusted to reflect a projected or planned transaction. Pro forma (Proforma)A set of financial statements that incorporates some assumptions, usually 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 CASH-FLOW STATEMENTA 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 statementA financial report that shows the movement in cash for a business during an accounting period. Committee, AIMR Performance Presentation Standards Implementation CommitteeThe Association for Investment Management and Research (AIMR)'s Performance Presentation Standards Implementation common-size income statementIncome statement that presents items as a percentage of revenues. 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 Convention statementAn annual statement filed by a life insurance company in each state where it does Conventional projectA project with a negative initial cash flow (cash outflow), which is expected to be 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 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. 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 reports and statementsFinancial means having to do with Financial reports or statementsThe profit and Loss account, Balance Sheet and Cash Flow statement of a business. Formalized Line of CreditA contractual commitment to make loans to a particular borrower up to a specified maximum during a specified period, usually one year. Future-Oriented Financial InformationInformation about prospective results of operations, financial position and/or changes in financial position, based on assumptions about future economic conditions and courses of action. Future-oriented financial information is presented as either a forecast or a projection. Good delivery and settlement proceduresRefers to PSA Uniform Practices such as cutoff times on delivery grade (of product or service)the addition or removal of product Gross Domestic ProductTotal output of final goods and services produced within a country during a year. Gross domestic product (GDP)The market value of goods and services produced over time including the gross margin, or gross profitThis first-line measure of profit Gross National ProductTotal output of final goods and services produced by a country's citizens during a year. Gross national product (GNP)Measures and economy's total income. It is equal to GDP plus the income GROSS PROFITThe profit a company makes before expenses and taxes are taken away. Gross profitThe difference between the price at which goods or services are sold and the cost of sales. Gross profitThe result of subtracting cost of goods sold from sales. Synonymous with gross margin. Gross ProfitRevenue less cost of goods sold. Gross profit marginGross profit divided by sales, which is equal to each sales dollar left over after paying Gross Profit MarginGross profit divided by revenue. Guarantor programUnder the Freddie Mac program, the aggregation by a single issuer (usually an S&L) In-house processing floatRefers to the time it takes the receiver of a check to process the payment and INCOME STATEMENTAn accounting statement that summarizes information about a company in the following format: Income StatementOne of the basic financial statements; it lists the revenue and expense accounts of the company. income statementFinancial statement that summarizes sales revenue Income statementA financial report that summarizes a company’s revenue, cost of income statementFinancial statement that shows the revenues, expenses, and net income of a firm over a period of time. Income statement (statement of operations)A statement showing the revenues, expenses, and income (the Income StatementsA financial statement that displays a breakdown of total sales and total expenses. Income Tax ProvisionThe expense deduction from pretax book income reported on the Independent projectA project whose acceptance or rejection is independent of the acceptance or rejection of independent projectan investment project that has no specific Independent ProjectsA situation where an increase (or decrease) in the benefits of one Indirect-Method FormatA format for the operating section of the cash-flow statement that informationbits of knowledge or fact that have been carefully Information asymmetryA situation involving information that is known to some, but not all, participants. Information Coefficient (IC)The correlation between predicted and actual stock returns, sometimes used to Information-content effectThe rise in the stock price following the dividend signal. 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