|Return on Total Assets Ratio|
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Definition of Return on Total Assets Ratio
Return on Total Assets Ratio
A measure of the percentage return earned on the value of the
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.
Part of the return that is not due to systematic influences (market wide influences). In
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid
A merger or consolidation in which an acquirer purchases the selling firm's assets.
Money after-tax rate of return minus the inflation rate.
The annual rate of return that when compounded t times, would have
The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard
Arithmetic mean return.
An average of the subperiod returns, calculated by summing the subperiod returns
Legal document establishing a corporation and its structure and purpose.
The ratio of total assets to stockholder equity.
ratios that measure how effectively the firm is managing its assets.
A firm's productive resources.
A common element of a financial plan that describes projected capital spending and the
The 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.
Placing one or more limits on the amount of new investment undertaken by a firm, either
Also called financial leverage ratios, these ratios compare debt to total capitalization
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
The proportion of a firm's assets held as cash.
Common stock ratios
ratios that are designed to measure the relative claims of stockholders to earnings
A single centralized account into which funds collected at regional locations
Movement 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
The number of shares of common stock that the security holder will receive from
A legal "person" that is separate and distinct from its owners. A corporation is allowed to own
The net present value of an investment divided by the investment's initial cost. Also called
ratios 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
Value of cash, accounts receivable, inventories, marketable securities and other assets that
Indicator of short-term debt paying ability. Determined by dividing current assets by current
Customary payout ratios
A range of payout ratios that is typical based on an analysis of comparable firms.
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
Indicator of financial leverage. Compares assets provided by creditors to assets provided
total debt divided by total assets.
Debt-service coverage ratio
Earnings before interest and income taxes plus one-third rental charges, divided
The date on which a firm's directors meet and announce the date and amount of the next
Dividend payout ratio
Percentage of earnings paid out as dividends.
The product of modified duration and the initial price.
The return realized on a portfolio for any evaluation period, including (1) the change in market
Dollar-weighted rate of return
Also 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
A common gauge of the price sensitivity of an asset or portfolio to a change in interest rates.
Earnings retention ratio
Specialized banking institutions, authorized and chartered by the Federal Reserve Board
The duration calculated using the approximate duration formula for a bond with an
Ex post return
Related: Holding period return
The expected return of a portfolio based on the expected returns of its component assets and
Excess return on the market portfolio
The difference between the return on the market portfolio and the
Also called abnormal returns, returns in excess of those required by some asset pricing model.
Exchange of assets
Acquisition of another company by purchase of its assets in exchange for cash or stock.
Expected future return
The return that is expected to be earned on an asset in the future. Also called the
The return expected on a risky asset based on a probability distribution for the possible rates
Expected return on investment
The return one can expect to earn on an investment. See: capital asset
Expected return-beta relationship
Implication of the CAPM that security risk premiums will be
The percentage of the assets that were spent to run a mutual fund (as of the last annual
The time when the option contract ceases to exist (expires).
An expiration cycle relates to the dates on which options on a particular security expire. A
The last day (in the case of American-style) or the only day (in the case of European-style)
Feasible target payout ratios
Payout ratios that are consistent with the availability of excess funds to make
Federal Deposit Insurance Corporation (FDIC)
A federal institution that insures bank deposits.
Claims on real assets.
Financial leverage ratios
Related: capitalization ratios.
The result of dividing one financial statement item by another. ratios help analysts interpret
Fisher's separation theorem
The firm's choice of investments is separate from its owner's attitudes towards
Fixed asset turnover ratio
The ratio of sales to fixed assets.
Fixed-charge coverage ratio
A 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
The 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 return
Also called the time weighted rate of return, a measure of the compounded rate of
Hard capital rationing
Capital 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 return
The rate of return over a given period.
total return over a given horizon.
Income statement (statement of operations)
A statement showing the revenues, expenses, and income (the
Incremental internal rate of return
IRR on the incremental investment from choosing a large project
Interest coverage ratio
The ratio of the earnings before interest and taxes to the annual interest expense. This
Internal rate of return
Dollar-weighted rate of return. Discount rate at which net present value (NPV)
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
Measures of the relative contribution of stockholders and creditors, and of the firm's ability
Leveraged required return
The required return on an investment when the investment is financed partially by debt.
ratios that measure a firm's ability to meet its short-term financial obligations on time.
Value of property, equipment and other capital assets minus the depreciation. This is an
Long-term debt ratio
The ratio of long-term debt to total capitalization.
Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
ratios that measure a firm's ability to meet its short-term financial obligations on time.
The weighted-average term to maturity of the cash flows from the bond, where the
The return on the market portfolio.
Market value ratios
ratios that relate the market price of the firm's common stock to selected financial
Market price of a share divided by book value per share.
The ratio of Macaulay duration to (1 + y), where y = the bond yield. Modified duration is
Money rate of return
Annual money return as a percentage of asset value.
A modification of standard duration to account for the impact on duration of MBSs of
Mortgage-Backed Securities Clearing Corporation
A wholly owned subsidiary of the Midwest Stock
A firm that operates in more than one country.
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