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Definition of Related Party
An entity whose management or operating policies can be controlled or significantly
The use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result.
A characterization used by the Securities and Exchange
A business for which a separate set of accounting records is being
The principles, bases, conventions, rules and procedures adopted by management in preparing and presenting financial statements.
a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received
Capitalizing and reporting as assets significant portions of
For investment companies, the management fee and "other expenses,"
Also called surplus management, the task of managing funds of a financial
Total Assets = Total Liabilities + Total Stockholders' Equity
A management style that de-emphasizes the significance of economic
This equals the cash inflow from sales during the period minus the cash
With some exceptions, the cash effects of transactions
Very short maturity bills that the Treasury occasionally sells because its cash
a professional designation in the area of management accounting that
A change in the scope of the entities included in a set of, typically, consolidated financial statements.
policies which enhance each other.
A service that provides for a single presentation of checks each day (typically in
Controlled foreign corporation (CFC)
A foreign corporation whose voting stock is more than 50% owned
Corporate financial management
The application of financial principals within a corporation to create and
cost management system (CMS)
a set of formal methods
on the other side of a trade or transaction.
The risk that the other party to an agreement will default. In an options contract, the risk
degree of operating leverage
a factor that indicates how a percentage change in sales, from the existing or current
degree of operating leverage (DOL)
Percentage change in profits given a 1 percent change in sales.
Demand Management Policy
Fiscal or monetary policy designed to influence aggregate demand for goods and services.
The active manipulation of earnings toward a predetermined target.
Related: Variable life
Institute of Management Accountants (IMA)
an organization composed of individuals interested in the field of management accounting; it coordinates the Certified management
management refers to the individuals in an entity that have the authority and the responsibility to manage the entity. The positions of these individuals, and their titles, vary from one entity to another and, to some extent, from one country to another depending on the local laws and customs. Thus, when the context requires it, the term includes the board of directors or committees of the board which are designated to oversee certain matters (e.g., audit committee).
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.
a discipline that includes almost
Management Accounting Guidelines (MAGs)
pronouncements of the Society of management Accountants of
Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.
management buyout (MBO)
Acquisition of the firm by its own management in a leveraged buyout.
Management/closely held shares
Percentage of shares held by persons closely related to a company, as
This is difficult to define in a few words—indeed, an
management control system (MCS)
an information system that helps managers gather information about actual organizational occurrences, make comparisons against plans,
management expense ratio (MER)
The total expenses expressed as an annualized percentage of daily average net assets. MER does not include brokerage fees and commissions, which are also payable by the Fund.
An investment advisory fee charged by the financial advisor to a fund based on the fund's
The fee paid to the fund’s manager for supervising the administration of the fund.
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;
Related: Investment management.
Net operating losses
Losses that a firm can take advantage of to reduce taxes.
Net operating margin
The ratio of net operating income to net sales.
a philosophy about increasing a firm’s performance by involving all workers and by ensuring
Includes all the sales and expense activities of a business.
a budget expressed in both units and dollars
Operating cash flow
Earnings before depreciation minus taxes. It measures the cash generated from
operating cash flow
See cash flow from operating activities.
Operating Cash Flow
Income available after the payment of taxes, plus the value of the
The average time intervening between the acquisition of materials or services and the final
A term frequently used to describe earnings after the removal of the
Any expense associated with the general, sales, and administrative
The total amount that was spent to run a company this year.
The amount of money the company must spend on overhead, distribution, taxes, underwriting the risk and servicing the policy. It is a factor in calculating premium rates.
Degree to which exchange rate changes, in combination with price changes, will alter a
The net income of a business, less the impact of any financial activity,
A measure of results produced by the core operations of a firm. It is common
Short-term, cancelable lease. A type of lease in which the period of contract is less than the
The rental of an asset from a lessor, but not under terms that would
One where the risks and benefits, as well as ownership, stays with the lessor.
Fixed operating costs, so-called because they accentuate variations in profits.
A relatively small percent increase or decrease in
the proportionate relationship between
Degree to which costs are fixed.
Operating Line of Credit
A bank's commitment to make loans to a particular borrower up to a specified maximum for a specified period, usually one year.
A loan advanced under an operating line of credit.
The profit made by the business for an accounting period, equal to gross profit less selling, finance, administration etc. expenses, but before deducting interest or taxation.
See earnings before interest and income tax (EBIT).
Operating profit margin
The ratio of operating margin to net sales.
The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is
operating risk (business risk)
Risk in firm’s operating income.
Operational Earnings Management
management actions taken in the effort to create stable
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
performance management system
a system reflecting the entire package of decisions regarding performance measurement and evaluation
Related: Investment management
Real Actions (Earnings) Management
Involves operational steps and not simply acceleration
Risk controlled arbitrage
A self-funding, self-hedged series of transactions that generally utilize mortgage
The process of identifying and evaluating risks and selecting and managing techniques to
Roth IRA. An IRA account whose earnings are not taxable at all under certain
Short-run operating activities
Events and decisions concerning the short-term finance of a firm, such as
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 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).
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,
Related: asset management
the use of all techniques that help an organization achieve its goals
outsourcing of the moving and warehousing
Top-down equity management style
A management style that begins with an assessment of the overall
total quality management (TQM)
a structural system for creating organization-wide participation in planning and implementing a continuous improvement process that exceeds
A variety of approaches that emphasize increasing shareholder value as the primary goal of every business.
Working capital management
The management of current assets and current liabilities to maximize shortterm liquidity.
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