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Definition of pro formas
projected or forecasted financial statements.
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
Ratio of consumption to disposable income. See also marginal propensity to consume.
Ratio of saving to disposable income. See also marginal propensity to save.
The probability of not achieving a portfolio expected return.
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
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 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
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
Direct stock-purchase programs
The purchase by investors of securities directly from the issuer.
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
The official seizure by a government of private property. Any government has the right to
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
Good delivery and settlement procedures
Refers to PSA Uniform Practices such as cutoff times on delivery
grade (of product or service)
the addition or removal of product
Gross Domestic Product
Total 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 profit
This first-line measure of profit
Gross National Product
Total 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
The profit a company makes before expenses and taxes are taken away.
The difference between the price at which goods or services are sold and the cost of sales.
The result of subtracting cost of goods sold from sales. Synonymous with gross margin.
Revenue less cost of goods sold.
Gross profit margin
Gross profit divided by sales, which is equal to each sales dollar left over after paying
Gross Profit Margin
Gross profit divided by revenue.
Under the Freddie Mac program, the aggregation by a single issuer (usually an S&L)
In-house processing float
Refers to the time it takes the receiver of a check to process the payment and
Income Tax Provision
The expense deduction from pretax book income reported on the
A project whose acceptance or rejection is independent of the acceptance or rejection of
an investment project that has no specific
A situation where an increase (or decrease) in the benefits of one
Variant of linear programming whereby the solution values must be integers.
a mathematical programming technique in which all solutions for variables must be restricted to whole numbers
Investment product line (IPML)
The line of required returns for investment projects as a function of beta
Statistical assumptions about the behavior of security prices. For
a manufacturing process that simultaneously
A product that has the highest sales value from among a group of products
The cost of improvements to land owned by the company, such as fencing and outdoor lighting.
The technique of stripping all non-value-added activities from
This is any upgrade to leased property by a lessee that will be
The cost of improvements made to property that the company leases.
Technique for finding the maximum value of some equation subject to stated linear constraints.
a method of mathematical programming used to solve a problem that involves an objective function and multiple limiting factors or constraints long-term variable cost a cost that was traditionally viewed as a fixed cost
A project, such as digging holes and filling them up again, that has no useful purpose other than to make work.
Marginal Propensity to Consume
Fraction of an increase in disposable income that is spent on consumption.
Marginal Propensity to Import
Fraction of an increase in disposable income that is spent on imports.
Marginal Propensity to Save
Fraction of an increase in disposable income that is saved.
An operations research technique that solves problems in which an optimal
a variety of techniques used
MM dividend-irrelevance proposition
Theory that under ideal conditions, the value of the firm is unaffected by dividend policy.
MM's proposition I (debt irrelevance proposition)
The value of a firm is unaffected by its capital structure.
MM's proposition II
The required rate of return on equity increases as the firm’s debt-equity ratio increases.
modified FIFO method (of process costing)
the method of cost assignment that uses FIFO to compute a cost per
Modigliani and Miller Proposition I
A proposition by Modigliani and Miller which states that a firm cannot
Modigliani and Miller Proposition II
A proposition by Modigliani and Miller which states that the cost of
the ability of a worker to monitor
mutually exclusive projects
a set of proposed capital projects from which one is chosen, causing all the others to be rejected
mutually exclusive projects
Two or more projects that cannot be pursued simultaneously.
mutually inclusive projects
a set of proposed capital projects that are all related and that must all be chosen if the primary project is chosen
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