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Definition of Real Income
income expressed in base-year dollars, calculated by dividing nominal income by a price index.
Money after-tax rate of return minus the inflation rate.
Cash flow plus change in present value.
Also called a busted convertible, a convertible security that is trading like a straight
Assets that pay a fixed-dollar amount, such as bonds and preferred stock.
The market for trading bonds and preferred stock.
One who receives income from a trust.
A bond on which the payment of interest is contingent on sufficient earnings. These bonds are
A mutual fund providing for liberal current income from investments.
A statement showing the revenues, expenses, and income (the
Common stock with a high dividend yield and few profitable investment opportunities.
The revenue from a portfolio of invested assets.
Preferred stock issued by a subsidiary located in a tax haven.
The company's total earnings, reflecting revenues adjusted for costs of doing business,
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.
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
Also called margin income, the difference between income and cost. For a depository
Gross income less a set of deductions.
For an insurance company, the difference between the premiums earned and the costs
An accounting statement that summarizes information about a company in the following format:
What the business paid to the IRS.
The profit a company makes after cost of goods sold, expenses, and taxes are subtracted from net sales.
RATIO OF NET INCOME TO NET SALES
A ratio that shows how much net income (profit) a company made on each dollar of net sales. Hereâ€™s the formula:
RATIO OF NET SALES TO NET INCOME
A ratio that shows how much a company had to collect in net sales to make a dollar of profit. Figure it this way:
Residual income (RI)
The profit remaining after deducting from profit a notional cost of capital on the investment in a business or division of a business.
income that a company receives in the form of dividends on stock in other companies that it holds.
One of the basic financial statements; it lists the revenue and expense accounts of the company.
income that a company receives in the form of interest, usually as the result of keeping money in interest-bearing accounts at financial institutions and the lending of money to other companies.
The last line of the income Statement; it represents the amount that the company earned during a specified period.
earnings before interest and income tax (EBIT)
A measure of profit that
Financial statement that summarizes sales revenue
net income (also called the bottom line, earnings, net earnings, and net
Real Interest Rate
The rate of interest paid on an investment adjusted for inflation
approximated net realizable value at split-off allocation
a method of allocating joint cost to joint products using a
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
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
the profit earned by a responsibility center that exceeds an amount "charged" for funds committed to that center
current compensation that is taxed at a future date
current compensation that is never taxed
A security that pays a specified cash flow over a
Net earnings after all expenses for an accounting period are subtracted from all
A financial report that summarizes a companyâ€™s revenue, cost of
A government tax on the income earned by an individual or corporation.
The excess of revenues over expenses, including the impact of income taxes.
Net realizeable value
The expected revenue to be gained from the sale of an item or
The net income of a business, less the impact of any financial activity,
common-size income statement
income statement that presents items as a percentage of revenues.
Financial statement that shows the revenues, expenses, and net income of a firm over a period of time.
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 powerâ€“adjusted value of a dollar.
Also called economic value added. Profit minus cost of capital employed.
income less income tax.
Exchange Rate, Real
The nominal exchange rate corrected for price level differences.
A policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example.
Interest Rate, Real
Nominal interest rate less expected inflation.
GDP with some adjustments to remove items that do not make it into anyone's hands as income, such as indirect taxes and depreciation. Loosely speaking, it is interpreted as being equal to GDP.
National Income and Product Accounts
The national accounting system that records economic activity such as GDP and related measures.
Permanent Income Hypothesis
Theory that individuals base current consumption spending on their perceived long-run average income rather than their current income.
Measured in base year, or constant, dollars. Contrast with nominal.
Real Business Cycle Theory
Belief that business cycles arise from real shocks to the economy, such as technology advances and natural resource discoveries, and have little to do with monetary policy.
Real Exchange Rate
Exchange rate adjusted for relative price levels.
GDP expressed in base-year dollars, calculated by dividing nominal GDP by a price index.
Real Money Supply
Money supply expressed in base-year dollars, calculated by dividing the money supply by a price index.
Real Rate of Interest
See interest rate, real.
Wage expressed in base-year dollars, calculated by dividing the money wage by a price index.
Tax-Related Incomes Policy (TIP)
Tax incentives for labor and business to induce them to conform to wage/price guidelines.
Employee Retirement Income Security Act of 1974 (ERISA)
A federal Act that sets minimum operational and funding standards for employee benefit
Accumulated Other Comprehensive Income
Cumulative gains or losses reported in shareholders'
Adjusted Income from Continuing
Operations Reported income from continuing operations
Pretax income reported on the income statement.
Cash Flowâ€“toâ€“Income Ratio (CFI)
Adjusted cash flow provided by continuing operations
Current Income Tax Expense
That portion of the total income tax provision that is based on
Deferred Income Tax Expense
That portion of the total income tax provision that is the result
Income from Continuing Operations
After-tax net income before discontinued operations,
A form of earnings management designed to remove peaks and valleys
Income Tax Expense
See income tax provision.
Income Tax Provision
The expense deduction from pretax book income reported on the
A measure of results produced by the core operations of a firm. It is common
Real Actions (Earnings) Management
Involves operational steps and not simply acceleration
Realized Gains and Losses
Increases or decreases in the fair value of an asset or a liability that
Realizable Revenue A revenue transaction where assets received in exchange for goods and
services are readily convertible into known amounts of cash or claims to cash.
A revenue transaction where goods and services are exchanged for cash or
income subject to income tax as reported on the tax return.
income that has been earned but not yet received. For instance, if you have a non-registered Guaranteed Investment Certificate (GIC), Mutual Fund or Segregated Equity Fund, growth accrues annually or semi-annually and is taxable annually even though the gain is only paid at maturity of your investment.
This is a tax planning strategy of arranging for income to be transferred to family members who are in lower tax brackets than the one earning the income, thus reducing taxes. Even though attribution rules limit income splitting, there are still a number of legitimate ways to do so, such as through the use of spousal RRSPs.
Life Income Fund
Commonly known as a LIF, this is one of the options available to locked in Registered Pension Plan (RPP) holders for income payout as opposed to Registered Retirement Savings Plan (RRSP) holders choice of payout through Registered Retirement income Funds (RRIF). A LIF must be converted to a unisex annuity by the time the holder reaches age 80.
Registered Retirement Income Fund (Canada)
Commonly referred to as a RRIF, this is one of the options available to RRSP holders to convert their tax sheltered savings into taxable income.
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