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Definition of Sales discount
A reduction in the price of a product or service that is offered by the
A contra account that offsets revenue. It represents the amount of the discounts for early payment allowed on sales.
The amount sold after customersâ€™ returns, sales discounts, and other allowances are taken away from
The total sales recorded prior to sales discounts and returns.
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
an amount or percentage deducted from a pro rata share of the value of 100% of an equity interest in a business, to reflect the absence of some or all of the powers of control.
an amount or percentage deducted from an equity interest to reflect lack of marketability.
the rate of return on investment that would be required by a prudent investor to invest in an asset with a specific level risk. Also, a rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
the combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor.
model for calculating DLOM for minority interests r the discount rate
In portfolio accounting, a straight-line accumulation of capital gains on discount
A convention used for quoting bids and offers for treasury bills in terms of annualized
An incentive offered to purchasers of a firm's product for payment within a specified time
Similar to equipment trust certificates except that the lender is either the
The formal name for the load of a back-end load fund.
The average number of days' worth of sales that is held in inventory.
Days' sales outstanding
Average collection period.
A bond issued with a very low coupon or no coupon and selling at a price far below par
Referring to the selling price of a bond, a price below its par value. Related: premium.
Debt sold for less than its principal value. If a discount bond pays no interest, it is called a
Present value of $1 received at a stated future date.
The period during which a customer can deduct the discount from the net amount of the bill
The interest rate that the Federal Reserve charges a bank to borrow funds when a bank is
Non-interest-bearing money market instruments that are issued at a discount and
Facility provided by the Fed enabling member banks to borrow reserves against collateral
Selling something on a discounted basis is selling below what its value will be at maturity,
Discounted cash flow (DCF)
Future cash flows multiplied by discount factors to obtain present values.
Discounted dividend model (DDM)
A formula to estimate the intrinsic value of a firm by figuring the
Discounted payback period rule
An investment decision rule in which the cash flows are discounted at an
Calculating the present value of a future amount. The process is opposite to compounding.
Dividend discount model (DDM)
A model for valuing the common stock of a company, based on the
Documented discount notes
Commercial paper backed by normal bank lines plus a letter of credit from a
Domestic International Sales Corporation (DISC)
A U.S. corporation that receives a tax incentive for
Foreign Sales Corporation (FSC)
A special type of corporation created by the Tax Reform Act of 1984 that
A currency trades at a forward discount when its forward price is lower than its spot price.
Original issue discount debt (OID debt)
Debt that is initially offered at a price below par.
Price/sales ratio (PS Ratio)
Determined by dividing current stock price by revenue per share (adjusted for stock splits).
A bond that will make only one payment of principal and interest. Also called a zerocoupon
The fee charged by a mutual fund when purchasing shares, usually payable as a commission to
A key input to a firm's financial planning process. External sales forecasts are based on
An arrangement whereby a firm leases its own equipment, such as IBM leasing its own
NUMBER OF DAYS SALES IN RECEIVABLES
(also called average collection period). The number of days of net sales that are tied up in credit sales (accounts receivable) that havenâ€™t been collected yet.
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:
Cost of sales
The manufacture or purchase price of goods sold in a period or the cost of providing a service.
Discounted cash flow (DCF)
A method of investment appraisal that discounts future cash flows to present value using a discount rate, which is the risk-adjusted cost of capital.
The mix of product/services offered by the business, each of which may be aimed at different customers, with each product/service having different prices and costs.
A contra account that reduces purchases by the amount of the discounts taken for early payment.
Amounts earned by the company from the sale of merchandise or services; often used interchangeably with the term revenue.
A journal used to record the transactions that result in a credit to sales.
A contra account that offsets revenue. It represents the amount of sales made that were later returned.
discounted cash flow (DCF)
Refers to a capital investment analysis technique
return on sales
This ratio equals net income divided by sales revenue.
The process of calculating the present value of a stream of future
The rate of interest used to calculate the present value of a stream
The process of calculating the present value of a stream of future
ad hoc discount
a price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased
the process of reducing future cash flows to present value amounts
the rate of return used to discount future cash
risk-adjusted discount rate method
a formal method of adjusting for risk in which the decision maker increases the rate used for discounting the future cash flows to compensate for increased risk
the relative combination of quantities of sales of the various products that make up the total sales of a company
sales value at split-off allocation
a method of assigning joint cost to joint products that uses the relative sales values of the products at the split-off point as the proration basis; use of this method requires that all joint products
The curve of discount rates vs. maturity dates for bonds.
Discounted cash flow
A technique that determines the present value of future cash
Total revenue, less the cost of sales returns, allowances, and discounts.
A reduction in a price that is allowed by the seller, due to a problem
Sales value at split-off
A cost allocation methodology that allocates joint costs to joint
constant-growth dividend discount model
Version of the dividend discount model in which dividends grow at a constant rate.
Present value of a $1 future payment.
Interest rate used to compute present values of future cash flows.
dividend discount model
Computation of todayâ€™s stock price which states that share value equals the present value of all expected future dividends.
percentage of sales models
Planning model in which sales forecasts are the driving variables and most other variables are
The percentage amount at which bonds sell below their par value. Also the percentage amount at which a currency sells on the forward market below its current rate on the spot market.
A bond with no coupons, priced below its face value; the return on this bond comes from the difference between its face value and its current price.
Calculating the present value of a future payment.
The interest rate at which the Fed is prepared to loan reserves to commercial banks.
The Federal Reserve facility at which reserves are loaned to banks at the discount rate.
A tax levied as a percentage of retail sales.
Sales Revenue Revenue recognized from the sales of products as opposed to the provision of
Lease accounting used by a manufacturer who is also a lessor. Up-front gross
In October 1996 it was announced in the international news that scientists had finally located the link between cigarette smoking and lung cancer. In the early 1980's, some Canadian Life Insurance Companies had already started recognizing that non-smokers had a better life expectancy than smokers so commenced offering premium discounts for life insurance to new applicants who have been non-smokers for at least 12 months before applying for coverage. Today, most life insurance companies offer these discounts.
A rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
Discounted Cash Flow
Techniques for establishing the relative worth of a future investment by discounting (at a required rate of return) the expected net cash flows from the project.
The process of finding the present value of a series of future cash flows. discounting is the reverse of compounding.
Discounting of Accounts Receivable
Short-term financing in which accounts receivable are used as collateral to secure a loan. The lender does not buy the accounts receivable but simply uses them as collateral for the loan. Also called pledging of accounts receivable.
An amount deducted from an invoice by a supplier in exchange for quick payment (a typical example might be a 2% discount if paid in 10 days or the full amount of the invoice in 30 days).
Operating expenses that vary in proportion to
Operational Earnings Management
Management actions taken in the effort to create stable
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