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Sales discount |
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Definition of Sales discountSales discountA reduction in the price of a product or service that is offered by the
Related Terms:Sales discountsA contra account that offsets revenue. It represents the amount of the discounts for early payment allowed on sales. Gross salesThe total sales recorded prior to sales discounts and returns. NET SALES (revenue)The amount sold after customers’ returns, sales discounts, and other allowances are taken away from Accretion (of a discount)In portfolio accounting, a straight-line accumulation of capital gains on discount ad hoc discounta price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. Bank discount basisA convention used for quoting bids and offers for treasury bills in terms of annualized Cash discountAn incentive offered to purchasers of a firm's product for payment within a specified time Conditional sales contractsSimilar to equipment trust certificates except that the lender is either the constant-growth dividend discount modelVersion of the dividend discount model in which dividends grow at a constant rate. Contingent deferred sales charge (CDSC)The formal name for the load of a back-end load fund. Continuous DiscountingThe process of calculating the present value of a stream of future Cost of salesThe manufacture or purchase price of goods sold in a period or the cost of providing a service. Days' sales in inventory ratioThe average number of days' worth of sales that is held in inventory. Days' sales outstandingAverage collection period. Deep-discount bondA bond issued with a very low coupon or no coupon and selling at a price far below par DiscountReferring to the selling price of a bond, a price below its par value. Related: premium. DiscountThe 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. Discount bondDebt sold for less than its principal value. If a discount bond pays no interest, it is called a Discount BondA 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. Discount curveThe curve of discount rates vs. maturity dates for bonds. Discount factorPresent value of $1 received at a stated future date. discount factorPresent value of a $1 future payment. Discount periodThe period during which a customer can deduct the discount from the net amount of the bill discount ratethe 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. Discount rateThe interest rate that the Federal Reserve charges a bank to borrow funds when a bank is Discount RateThe rate of interest used to calculate the present value of a stream discount ratethe rate of return used to discount future cash discount rateInterest rate used to compute present values of future cash flows. Discount RateThe interest rate at which the Fed is prepared to loan reserves to commercial banks. Discount RateA rate of return used to convert a monetary sum, payable or receivable in the future, into present value. Discount securitiesNon-interest-bearing money market instruments that are issued at a discount and Discount windowFacility provided by the Fed enabling member banks to borrow reserves against collateral Discount WindowThe Federal Reserve facility at which reserves are loaned to banks at the discount rate. Discounted basisSelling something on a discounted basis is selling below what its value will be at maturity, Discounted cash flowA technique that determines the present value of future cash Discounted Cash FlowTechniques 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. Discounted cash flow (DCF)Future cash flows multiplied by discount factors to obtain present values. 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. discounted cash flow (DCF)Refers to a capital investment analysis technique Discounted dividend model (DDM)A formula to estimate the intrinsic value of a firm by figuring the Discounted payback period ruleAn investment decision rule in which the cash flows are discounted at an DiscountingCalculating the present value of a future amount. The process is opposite to compounding. DiscountingThe process of calculating the present value of a stream of future discountingthe process of reducing future cash flows to present value amounts DiscountingCalculating the present value of a future payment. DiscountingThe process of finding the present value of a series of future cash flows. discounting is the reverse of compounding. Discounting of Accounts ReceivableShort-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. dividend discount modelComputation of today’s stock price which states that share value equals the present value of all expected future dividends. Dividend discount model (DDM)A model for valuing the common stock of a company, based on the DLOC (discount for lack of control)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. DLOM (discount for lack of marketability)an amount or percentage deducted from an equity interest to reflect lack of marketability. Documented discount notesCommercial 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 Forward discountA currency trades at a forward discount when its forward price is lower than its spot price. fractional interest discountthe 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. Net salesTotal revenue, less the cost of sales returns, allowances, and discounts. Non-Smoker DiscountIn 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. 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 haven’t been collected yet. Original issue discount debt (OID debt)Debt that is initially offered at a price below par. percentage of sales modelsPlanning model in which sales forecasts are the driving variables and most other variables are Price/sales ratio (PS Ratio)Determined by dividing current stock price by revenue per share (adjusted for stock splits). Purchase discountsA contra account that reduces purchases by the amount of the discounts taken for early payment. Pure-discount bondA bond that will make only one payment of principal and interest. Also called a zerocoupon QMDM (quantitative marketability discount model)model for calculating DLOM for minority interests r the discount rate RATIO OF NET INCOME TO NET SALESA ratio that shows how much net income (profit) a company made on each dollar of net sales. Here’s the formula: RATIO OF NET SALES TO NET INCOMEA ratio that shows how much a company had to collect in net sales to make a dollar of profit. Figure it this way: return on salesThis ratio equals net income divided by sales revenue. risk-adjusted discount rate methoda 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 SalesAmounts earned by the company from the sale of merchandise or services; often used interchangeably with the term revenue. Sales allowanceA reduction in a price that is allowed by the seller, due to a problem Sales chargeThe fee charged by a mutual fund when purchasing shares, usually payable as a commission to Sales forecastA key input to a firm's financial planning process. External sales forecasts are based on Sales journalA journal used to record the transactions that result in a credit to sales. Sales mixThe 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. sales mixthe relative combination of quantities of sales of the various products that make up the total sales of a company Sales returnsA contra account that offsets revenue. It represents the amount of sales made that were later returned. Sales Revenue Revenue recognized from the sales of products as opposed to the provision ofservices. Sales TaxA tax levied as a percentage of retail sales. Sales-type leaseAn arrangement whereby a firm leases its own equipment, such as IBM leasing its own Sales-type LeaseLease accounting used by a manufacturer who is also a lessor. Up-front gross Sales value at split-offA cost allocation methodology that allocates joint costs to joint sales value at split-off allocationa 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 Supplier DiscountAn 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). Operational Earnings ManagementManagement actions taken in the effort to create stable revenue-driven expensesOperating expenses that vary in proportion to
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