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Definition of Reaganomics
The economic program of President Ronald Reagan, including tax cuts, restraint in spending except for defence spending, and less regulation.
Abrams’ model for calculating DLOM based on the interaction of discounts from four economic components.
The ratio of net income to net sales.
Money after-tax rate of return minus the inflation rate.
A situation wherein participants in a transaction have different net tax rates.
taxes as a fraction of income; total taxes divided by total taxable income.
The ratio of net income before taxes to net sales.
The tax rate at which a party to a prospective transaction is indifferent between entering
Net income plus depreciation.
The argument that double (corporate and individual) taxation of equity returns makes
Rate of return required on a par bond to produce the same after-tax yield to
A non-cash expense that provides a source of free cash flow. Amount allocated during the
The value of the tax write-off on depreciation of plant and equipment.
The purchase by investors of securities directly from the issuer.
Agreement between two countries that taxes paid abroad can be offset against
A financial measure defined as revenues less cost of goods sold
economic environment in which the firm expects to reside over the life of the
See: in-substance defeasance.
Exists when the costs and/or revenues of one project depend on those of another.
The real flow of cash that a firm could pay out forever in the absence of any change in
The extent to which the value of the firm will change because of an exchange rate change.
Cash flow plus change in present value.
Economic order quantity (EOQ)
The order quantity that minimizes total inventory costs.
Profits in excess of the competitive level.
In project financing, the risk that the project's output will not be salable at a price that will
For any entity, the difference between the market value of all its assets and the market
An agreement between two or more countries that allows the free movement of capital,
Equivalent taxable yield
The yield that must be offered on a taxable bond issue to give the same after-tax
Except for opinion
An auditor's opinion reflecting the fact that the auditor was unable to audit certain areas
Foreign tax credit
Home country credit against domestic income tax for foreign taxes paid on foreign
Under the Freddie Mac program, the aggregation by a single issuer (usually an S&L)
Warrant that allows the user to purchase a bond only by surrendering an existing bond
Imputation tax system
Arrangement by which investors who receive a dividend also receive a tax credit for
Trades that are the result of either a reallocation of wealth or an implementation of an
Variant of linear programming whereby the solution values must be integers.
Interest equalization tax
tax on foreign investment by residents of the U.S. which was abolished in 1974.
Interest tax shield
The reduction in income taxes that results from the tax-deductibility of interest payments.
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
Leading economic indicators
economic series that tend to rise or fall in advance of the rest of the economy.
An entity that leases an asset from another entity.
An entity that leases an asset to another entity.
Limited-tax general obligation bond
A general obligation bond that is limited as to revenue sources.
Technique for finding the maximum value of some equation subject to stated linear constraints.
An entity that leases an asset to another entity.
Marginal tax rate
The tax rate that would have to be paid on any additional dollars of taxable income earned.
An operations research technique that solves problems in which an optimal
Personal tax view (of capital structure)
The argument that the difference in personal tax rates between
Planned capital expenditure program
Capital expenditure program as outlined in the corporate financial plan.
Planned financing program
program of short-term and long-term financing as outlined in the corporate
Also called basket trades, orders requiring the execution of trades in a large number of
Trades based on signals from computer programs, usually entered directly from the trader's
Progressive tax system
A tax system wherein the average tax rate increases for some increases in income but
The securities regulation that exempts small public offerings, those valued at less than
Fed regulation currently that required member banks to hold reserves against their net
Fed regulation currently requiring member banks to hold reserves against their net borrowings
Fed regulation imposing caps on the rates that banks may pay on savings and time deposits.
The rate earned on a riskless investment, typically the rate earned on the 90-day U.S. Treasury Bill.
Riskless rate of return
The rate earned on a riskless asset.
The simultaneous purchase and sale of the same asset to yield a profit.
Riskless or risk-free asset
An asset whose future return is known today with certainty. The risk free asset is
Short-term tax exempts
Short-term securities issued by states, municipalities, local housing agencies, and
Split-rate tax system
A tax system that taxes retained earnings at a higher rate than earnings that are
Under Ginnie Mae, mortgage funds provided at below-market rates to residential
TANs (tax anticipation notes)
tax anticipation notes issued by states or municipalities to finance current
Tax anticipation bills (TABs)
Special bills that the Treasury occasionally issues that mature on corporate
Set of books kept by a firm's management for the IRS that follows IRS rules. The stockholder's
Tax clawback agreement
An agreement to contribute as equity to a project the value of all previously
Tax differential view ( of dividend policy)
The view that shareholders prefer capital gains over dividends,
The municipal bond market where state and local governments raise funds. Bonds issued
Tax free acquisition
A merger or consolidation in which 1) the acquirer's tax basis in each asset whose
A nation with a moderate level of taxation and/or liberal tax incentives for undertaking specific
Tax Reform Act of 1986
A 1986 law involving a major overhaul of the U.S. tax code.
The reduction in income taxes that results from taking an allowable deduction from taxable income.
Swapping two similar bonds to receive a tax benefit.
Tax deferral option
The feature of the U.S. Internal Revenue Code that the capital gains tax on an asset is
Tax-deferred retirement plans
Employer-sponsored and other plans that allow contributions and earnings to
The option to sell an asset and claim a loss for tax purposes or not to sell the asset and
A merger or consolidation that is not a tax-fee acquisition. The selling shareholders are
Gross income less a set of deductions.
Any transaction that is not tax-free to the parties involved, such as a taxable acquisition.
Two-tier tax system
A method of taxation in which the income going to shareholders is taxed twice.
Method of indirect taxation whereby a tax is levied at each stage of production on the value
A tax levied by a country of source on income paid, usually on dividends remitted to the
Zero-one integer programming
An analytical method that can be used to determine the solution to a capital
What the business paid to the IRS.
Earnings before interest and taxes (EBIT)
The operating profit before deducting interest and tax.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
The operating profit before deducting interest, tax, depreciation and amortization.
Economic Value Added (EVA)
Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge
Planning, programming and budgeting system (PPBS)
A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres.
Profit before interest and taxes (PBIT)
Payroll tax expense
The amount of tax associated with salaries that an employer pays to governments (federal, state, and local).
Payroll taxes payable
The amount of payroll taxes owed to the various governments at the end of a period.
earnings before interest and income tax (EBIT)
A measure of profit that
the creation of multi-country markets
economic order quantity (EOQ)
an estimate of the number
economic production run (EPR)
an estimate of the number
when the incremental revenue from the sale of reworked defective units is greater than
economic value added (EVA)
a measure of the extent to which income exceeds the dollar cost of capital; calculated
fixed overhead spending variance
the difference between the total actual fixed overhead and budgeted fixed overhead;
a mathematical programming technique in which all solutions for variables must be restricted to whole numbers
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
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