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Return on Total Assets Ratio |
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Definition of Return on Total Assets RatioReturn on Total Assets RatioA measure of the percentage return earned on the value of the
Related Terms:CARs (cumulative abnormal returns)a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock. Abnormal returnsPart of the return that is not due to systematic influences (market wide influences). In Acid-test ratioAlso called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid Acquisition of assetsA merger or consolidation in which an acquirer purchases the selling firm's assets. After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. Annualized holding period returnThe annual rate of return that when compounded t times, would have Appraisal ratioThe signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard Arithmetic average (mean) rate of returnArithmetic mean return. Arithmetic mean returnAn average of the subperiod returns, calculated by summing the subperiod returns Articles of incorporationLegal document establishing a corporation and its structure and purpose. Asset/equity ratioThe ratio of total assets to stockholder equity. Asset activity ratiosratios that measure how effectively the firm is managing its assets. AssetsA firm's productive resources. Assets requirementsA common element of a financial plan that describes projected capital spending and the Average accounting returnThe average project earnings after taxes and depreciation divided by the average Average rate of return (ARR)The ratio of the average cash inflow to the amount invested. Capital rationingPlacing one or more limits on the amount of new investment undertaken by a firm, either Capitalization ratiosAlso called financial leverage ratios, these ratios compare debt to total capitalization Cash flow coverage ratioThe number of times that financial obligations (for interest, principal payments, Cash flow from operationsA firm's net cash inflow resulting directly from its regular operations Cash ratioThe proportion of a firm's assets held as cash. Common stock ratiosratios that are designed to measure the relative claims of stockholders to earnings Concentration accountA single centralized account into which funds collected at regional locations Concentration servicesMovement of cash from different lockbox locations into a single concentration Controlled foreign corporation (CFC)A foreign corporation whose voting stock is more than 50% owned Conversion ratioThe number of shares of common stock that the security holder will receive from CorporationA legal "person" that is separate and distinct from its owners. A corporation is allowed to own Cost-benefit ratioThe net present value of an investment divided by the investment's initial cost. Also called Coverage ratiosratios used to test the adequacy of cash flows generated through earnings for purposes of Cumulative abnormal return (CAR)Sum of the differences between the expected return on a stock and the Current assetsValue of cash, accounts receivable, inventories, marketable securities and other assets that Current ratioIndicator of short-term debt paying ability. Determined by dividing current assets by current Customary payout ratiosA range of payout ratios that is typical based on an analysis of comparable firms. Days' sales in inventory ratioThe average number of days' worth of sales that is held in inventory. Debt/equity ratioIndicator of financial leverage. Compares assets provided by creditors to assets provided Debt ratiototal debt divided by total assets. Debt-service coverage ratioEarnings before interest and income taxes plus one-third rental charges, divided Declaration dateThe date on which a firm's directors meet and announce the date and amount of the next Dividend payout ratioPercentage of earnings paid out as dividends. Dollar durationThe product of modified duration and the initial price. Dollar returnThe return realized on a portfolio for any evaluation period, including (1) the change in market Dollar-weighted rate of returnAlso called the internal rate of return, the interest rate that will make the Domestic International Sales Corporation (DISC)A U.S. corporation that receives a tax incentive for DurationA common gauge of the price sensitivity of an asset or portfolio to a change in interest rates. Earnings retention ratioPlowback rate. Edge corporationsSpecialized banking institutions, authorized and chartered by the Federal Reserve Board Effective durationThe duration calculated using the approximate duration formula for a bond with an Ex post returnRelated: Holding period return Exante returnThe expected return of a portfolio based on the expected returns of its component assets and Excess return on the market portfolioThe difference between the return on the market portfolio and the Excess returnsAlso called abnormal returns, returns in excess of those required by some asset pricing model. Exchange of assetsAcquisition of another company by purchase of its assets in exchange for cash or stock. Expected future returnThe return that is expected to be earned on an asset in the future. Also called the Expected returnThe return expected on a risky asset based on a probability distribution for the possible rates Expected return on investmentThe return one can expect to earn on an investment. See: capital asset Expected return-beta relationshipImplication of the CAPM that security risk premiums will be Expense ratioThe percentage of the assets that were spent to run a mutual fund (as of the last annual ExpirationThe time when the option contract ceases to exist (expires). Expiration cycleAn expiration cycle relates to the dates on which options on a particular security expire. A Expiration dateThe last day (in the case of American-style) or the only day (in the case of European-style) Feasible target payout ratiosPayout ratios that are consistent with the availability of excess funds to make Federal Deposit Insurance Corporation (FDIC)A federal institution that insures bank deposits. Financial assetsClaims on real assets. Financial leverage ratiosRelated: capitalization ratios. Financial ratioThe result of dividing one financial statement item by another. ratios help analysts interpret Fisher's separation theoremThe firm's choice of investments is separate from its owner's attitudes towards Fixed asset turnover ratioThe ratio of sales to fixed assets. Fixed-charge coverage ratioA measure of a firm's ability to meet its fixed-charge obligations: the ratio of Foreign Sales Corporation (FSC)A special type of corporation created by the Tax Reform Act of 1984 that Freddie Mac (Federal Home Loan Mortgage Corporation)A Congressionally chartered corporation that Funding ratioThe ratio of a pension plan's assets to its liabilities. Funds From Operations (FFO)Used by real estate and other investment trusts to define the cash flow from Geometric mean returnAlso called the time weighted rate of return, a measure of the compounded rate of Hard capital rationingCapital rationing that under no circumstances can be violated. Hedge ratio (delta)The ratio of volatility of the portfolio to be hedged and the return of the volatility of the Holding period returnThe rate of return over a given period. Horizon returntotal return over a given horizon. Income statement (statement of operations)A statement showing the revenues, expenses, and income (the Incremental internal rate of returnIRR on the incremental investment from choosing a large project Interest coverage ratioThe ratio of the earnings before interest and taxes to the annual interest expense. This Internal rate of returnDollar-weighted rate of return. Discount rate at which net present value (NPV) Irrational call optionThe implied call imbedded in the MBS. Identified as irrational because the call is Leverage ratiosMeasures of the relative contribution of stockholders and creditors, and of the firm's ability Leveraged required returnThe required return on an investment when the investment is financed partially by debt. Liquidity ratiosratios that measure a firm's ability to meet its short-term financial obligations on time. Long-term assetsValue of property, equipment and other capital assets minus the depreciation. This is an Long-term debt ratioThe ratio of long-term debt to total capitalization. Long-term debt to equity ratioA capitalization ratio comparing long-term debt to shareholders' equity. Low price-earnings ratio effectThe tendency of portfolios of stocks with a low price-earnings ratio to Liquidity ratiosratios that measure a firm's ability to meet its short-term financial obligations on time. Macaulay durationThe weighted-average term to maturity of the cash flows from the bond, where the Market returnThe return on the market portfolio. Market value ratiosratios that relate the market price of the firm's common stock to selected financial Market-book ratioMarket price of a share divided by book value per share. Modified durationThe ratio of Macaulay duration to (1 + y), where y = the bond yield. Modified duration is Money rate of returnAnnual money return as a percentage of asset value. Mortgage durationA modification of standard duration to account for the impact on duration of MBSs of Mortgage-Backed Securities Clearing CorporationA wholly owned subsidiary of the Midwest Stock Multinational corporationA firm that operates in more than one country.
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