|Real Actions (Earnings) Management|
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Definition of Real Actions (Earnings) Management
Real Actions (Earnings) Management
Involves operational steps and not simply acceleration
earnings of a firm as reported on its income statement.
Money after-tax rate of return minus the inflation rate.
Also called surplus management, the task of managing funds of a financial
A management style that de-emphasizes the significance of economic
Very short maturity bills that the Treasury occasionally sells because its cash
The percentage of a given month's sales collected during the month of sale and each
The application of financial principals within a corporation to create and
Net income for the company during the period.
A financial measure defined as revenues less cost of goods sold
EPS, as it is called, is a company's profit divided by its number of outstanding
Positive or negative differences from the consensus forecast of earnings by institutions
The ratio of earnings per share after allowing for tax and interest payments on fixed interest
The real flow of cash that a firm could pay out forever in the absence of any change in
earnings per share expressed as if all outstanding convertible securities
Publicly owned stock in a firm is replaced with complete equity ownership by a
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
Management/closely held shares
Percentage of shares held by persons closely related to a company, as
Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.
An investment advisory fee charged by the financial advisor to a fund based on the fund's
Related: Investment management.
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
Related: Investment management
Price/earnings ratio (PE ratio)
Shows the "multiple" of earnings at which a stock sells. Determined by dividing current
Identifiable assets, such as buildings, equipment, patents, and trademarks, as distinguished from a
Wealth that can be represented in financial terms, such as savings account balances, financial
Real cash flow
A cash flow is expressed in real terms if the current, or date 0, purchasing power of the cash
Real exchange rates
Exchange rates that have been adjusted for the inflation differential between two countries.
Real interest rate
The rate of interest excluding the effect of inflation; that is, the rate that is earned in terms
The bid and offer prices at which a dealer could do "size." Quotes in the brokers market may
A real time stock or bond quote is one that states a security's most recent offer to sell or bid (buy).
Realized compound yield
Yield assuming that coupon payments are invested at the going market interest
The return that is actually earned over a given time period.
Receivables balance fractions
The percentage of a month's sales that remain uncollected (and part of
REIT (real estate investment trust)
real estate investment trust, which is similar to a closed-end mutual
REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages
Accounting earnings that are retained by the firm for reinvestment in its operations;
The process of identifying and evaluating risks and selecting and managing techniques to
Round-trip transactions costs
Costs of completing a transaction, including commissions, market impact
Related: asset management
Top-down equity management style
A management style that begins with an assessment of the overall
The time, effort, and money necessary, including such things as commission fees and the
A desire to hold cash for the purpose of conducting cash based transactions.
Working capital management
The management of current assets and current liabilities to maximize shortterm liquidity.
Earnings per share of common stock
How much profit a company made on each share of common stock this year.
Profits a company plowed back into the business over the years. Last January’s retained earnings, plus the net income or profit that a company made this year (which is calculated on the income statement), minus dividends paid out, equals the retained earnings balance on the balance sheet date.
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.
The production of financial and non-financial information used in planning for the future; making decisions about products, services, prices and what costs to incur; and ensuring that plans are implemented and achieved.
Strategic management accounting
The provision and analysis of management accounting data about a business and its competitors, which is of use in the development and monitoring of strategy (Simmonds).
A variety of approaches that emphasize increasing shareholder value as the primary goal of every business.
The residual earnings of the company.
Statement Retained Earnings
One of the basic financial statements; it takes the beginning balance of retained earnings and adds net income, then subtracts dividends. The Statement of Retained earnings is prepared for a specified period of time.
basic earnings per share (EPS)
This important ratio equals the net
diluted earnings per share (EPS)
This measure of earnings per share
earnings before interest and income tax (EBIT)
A measure of profit that
earnings per share (EPS)
See basic earnings per share and diluted earnings per share.
This is difficult to define in a few words—indeed, an
net income (also called the bottom line, earnings, net earnings, and net
price/earnings ratio (price to earnings ratio, P/E ratio, PE ratio)
This key ratio equals the current market price
Basic Earnings Power Ratio
Percentage of earnings relative to total assets; indication of how
Earnings per Share
A measure of the earnings generated by a company on a per
Price to Earnings Ratio (P/E, PE Ratio)
A measure of how much investors are willing to pay for each dollar
Real Interest Rate
The rate of interest paid on an investment adjusted for inflation
activity-based management (ABM)
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
approximated net realizable value at split-off allocation
a method of allocating joint cost to joint products using a
Certified Management Accountant (CMA)
a professional designation in the area of management accounting that
cost management system (CMS)
a set of formal methods
Institute of Management Accountants (IMA)
an organization composed of individuals interested in the field of management accounting; it coordinates the Certified management
a discipline that includes almost
Management Accounting Guidelines (MAGs)
pronouncements of the Society of management Accountants of
management control system (MCS)
an information system that helps managers gather information about actual organizational occurrences, make comparisons against plans,
management information system (MIS)
a structure of interrelated elements that collects, organizes, and communicates
the preference of a manager in how he/she interacts with other stakeholders in the organization;
net realizable value approach
a method of accounting for by-products or scrap that requires that the net realizable value of these products be treated as a reduction in the cost of the primary products; primary product cost may be reduced by decreasing either
net realizable value at split-off allocation
a method of allocating joint cost to joint products that uses, as the proration base, sales value at split-off minus all costs necessary
a philosophy about increasing a firm’s performance by involving all workers and by ensuring
performance management system
a system reflecting the entire package of decisions regarding performance measurement and evaluation
real microprofit center
a center whose output has a market value
realized value approach
a method of accounting for byproducts or scrap that does not recognize any value for these products until they are sold; the value recognized
Society of Management Accountants of Canada
the professional body representing an influential and diverse
Statement on Management Accounting (SMA)
a pronouncement developed and issued by the management
strategic resource management
organizational planning for the deployment of resources to create value for customers and shareholders; key varibles in the process include the management of information and the management of change in response to threats and opportunities
the cooperative strategic planning,
the use of all techniques that help an organization achieve its goals
total quality management (TQM)
a structural system for creating organization-wide participation in planning and implementing a continuous improvement process that exceeds
Net realizeable value
The expected revenue to be gained from the sale of an item or
A company’s accumulated earnings since its inception, less any distributions to shareholders.
Statement of retained earnings
An adjunct to the balance sheet, providing more detailed information about the beginning balance, changes, and ending balance in
management buyout (MBO)
Acquisition of the firm by its own management in a leveraged buyout.
price-earnings (P/E) multiple (ratio)
Ratio of stock price to earnings per share.
Assets used to produce goods and services.
real interest rate
Rate at which the purchasing power of an investment increases.
Options embedded in real assets.
real value of $1
Purchasing power–adjusted value of a dollar.
earnings not paid out as dividends.
Demand Management Policy
Fiscal or monetary policy designed to influence aggregate demand for goods and services.
Exchange Rate, Real
The nominal exchange rate corrected for price level differences.
Interest Rate, Real
Nominal interest rate less expected inflation.
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