|PV (present value of cash flows)|
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Definition of PV (present value of cash flows)
PV (present value of cash flows)
the value in today’s dollars of cash flows that occur in different time periods.
Same as pv, but usually includes a subtraction for an initial cash outlay.
The net present value analysis of an asset if financed solely by equity
With respect to convertible bonds, the value the security would have if it were not convertible
A company's book value is its total assets minus intangible assets and liabilities, such as debt. A
The ratio of stockholder equity to the average number of common shares. Book value
The value of assets that can be converted into cash immediately, as reported by a company. Usually
A forecasted summary of a firm's expected cash inflows and cash outflows as well as its
Purchase of a security and simultaneous sale of a future, with the balance being financed
The value of assets that can be converted into cash immediately, as reported by a
The actual physical commodity, as distinguished from a futures contract.
The length of time between a firm's purchase of inventory and the receipt of cash
A company that pays out all earnings per share to stockholders as dividends. Or, a company or
In general, the time between cash disbursement and cash collection. In net working capital
An agreement to invest cash in a project to the extent required to cover any cash
The provision of some futures contracts that requires not delivery of underlying assets but
An incentive offered to purchasers of a firm's product for payment within a specified time
A dividend paid in cash to a company's shareholders. The amount is normally based on
A short-term security that is sufficiently liquid that it may be considered the financial
In investments, it represents earnings before depreciation , amortization and non-cash charges.
Cash flow after interest and taxes
Net income plus depreciation.
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash flow matching
Also called dedicating a portfolio, this is an alternative to multiperiod immunization in
Cash flow per common share
cash flow from operations minus preferred stock dividends, divided by the
Cash flow time-line
Line depicting the operating activities and cash flows for a firm over a particular period.
Cash-flow break-even point
The point below which the firm will need either to obtain additional financing
Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash
Also called spot markets, these are markets that involve the immediate delivery of a security
A public equity issue that is sold to all interested investors.
The proportion of a firm's assets held as cash.
Cash settlement contracts
Futures contracts, such as stock index futures, that settle for cash, not involving
A transaction where exchange is immediate, as contrasted to a forward contract, which
Temporary investments of currently excess cash in short-term, high-quality
An amount the insurance company will pay if the policyholder ends a whole life
Refers to a situation where a firm runs out of cash and cannot readily sell marketable securities.
Committee, AIMR Performance Presentation Standards Implementation Committee
The Association for Investment Management and Research (AIMR)'s Performance presentation Standards Implementation
Also called parity value, the value of a convertible security if it is converted immediately.
Discounted cash flow (DCF)
Future cash flows multiplied by discount factors to obtain present values.
Discretionary cash flow
cash flow that is available after the funding of all positive Npv capital investment
Equivalent annual cash flow
Annuity with the same net present value as the company's proposed investment.
The amount of advantage over a current market transaction provided by an in-the-money
Expected future cash flows
Projected future cash flows associated with an asset of decision.
The weighted average of a probability distribution.
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
Extraordinary positive value
A positive net present value.
See: Par value.
Firm's net value of debt
Total firm value minus total firm debt.
Free cash flows
cash not required for operations or for reinvestment. Often defined as earnings before
The amount of cash at a specified date in the future that is equivalent in value to a specified
General cash offer
A public offering made to investors at large.
Incremental cash flows
Difference between the firm's cash flows with and without a project.
Intrinsic value of an option
The amount by which an option is in-the-money. An option which is not in-themoney
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the
A firm's cash balance as reported in its financial statements. Also called book cash.
Net amount that could be realized by selling the assets of a firm after paying the debt.
The amount a policyholder may borrow against a whole life insurance policy at the interest rate
1) The price at which a security is trading and could presumably be purchased or sold.
Market value ratios
Ratios that relate the market price of the firm's common stock to selected financial
Market value-weighted index
An index of a group of securities computed by calculating a weighted average
Related: par value.
Net adjusted present value
The adjusted present value minus the initial cost of an investment.
Net asset value (NAV)
The value of a fund's investments. For a mutual fund, the net asset value per share
Net book value
The current book value of an asset or liability; that is, its original book value net of any
Net cash balance
Beginning cash balance plus cash receipts minus cash disbursements.
Net present value (NPV)
The present value of the expected future cash flows minus the cost.
Net present value of growth opportunities
A model valuing a firm in which net present value of new
Net present value of future investments
The present value of the total sum of Npvs expected to result from
Net present value rule
An investment is worth making if it has a positive Npv. Projects with negative Npvs
Net salvage value
The after-tax net cash flow for terminating the project.
Nominal cash flow
A cash flow expressed in nominal terms if the actual dollars to be received or paid out are given.
A cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow.
See: Net present value.
A graph of Npv as a function of the discount rate.
Operating cash flow
Earnings before depreciation minus taxes. It measures the cash generated from
Original face value
The principal amount of the mortgage as of its issue date.
Also called the maturity value or face value, the amount that the issuer agrees to pay at the maturity date.
The amount of cash today that is equivalent in value to a payment, or to a stream of payments,
Present value factor
Factor used to calculate an estimate of the present value of an amount to be received in
Present value of growth opportunities (NPV)
Net present value of investments the firm is expected to make
Price value of a basis point (PVBP)
Also called the dollar value of a basis point, a measure of the change in
Real cash flow
A cash flow is expressed in real terms if the current, or date 0, purchasing power of the cash
A person registered with the CFTC who is employed by, and soliciting business
The attractiveness measured in terms of risk, liquidity, and return of one instrument relative to
Current cost of replacing the firm's assets.
Usually refers to the value of a lessor's property at the time the lease expires.
Scrap value of plant and equipment.
Scheduled cash flows
The mortgage principal and interest payments due to be paid under the terms of the
Also called the normal deviate, the distance of one data point from the mean, divided by
Statement of cash flows
A financial statement showing a firm's cash receipts and cash payments during a
A method of cash budgeting that is organized along the lines of the statement of cash flows.
Also called investment value, the value of a convertible security without the con-version option.
Symmetric cash matching
An extension of cash flow matching that allows for the short-term borrowing of
Target cash balance
Optimal amount of cash for a firm to hold, considering the trade-off between the
The value of a bond at maturity, typically its par value, or the value of an asset (or an entire
Time value of an option
The portion of an option's premium that is based on the amount of time remaining
Time value of money
The idea that a dollar today is worth more than a dollar in the future, because the dollar
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