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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 total sales recorded prior to sales discounts and returns.
The amount sold after customers’ returns, sales discounts, and other allowances are taken away from
In portfolio accounting, a straight-line accumulation of capital gains on discount
a price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased
the present value of a finite stream of cash flows for every beginning $1 of cash flow.
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
Version of the dividend discount model in which dividends grow at a constant rate.
The formal name for the load of a back-end load fund.
The process of calculating the present value of a stream of future
The manufacture or purchase price of goods sold in a period or the cost of providing a service.
The average number of days' worth of sales that is held in inventory.
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.
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.
Debt sold for less than its principal value. If a discount bond pays no interest, it is called a
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.
The curve of discount rates vs. maturity dates for bonds.
Present value of $1 received at a stated future date.
Present value of a $1 future payment.
The period during which a customer can deduct the discount from the net amount of the bill
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 interest rate that the Federal Reserve charges a bank to borrow funds when a bank is
The rate of interest used to calculate the present value of a stream
the rate of return used to discount future cash
Interest rate used to compute present values of future cash flows.
The interest rate at which the Fed is prepared to loan reserves to commercial banks.
A rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
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
The Federal Reserve facility at which reserves are loaned to banks at the discount rate.
Selling something on a discounted basis is selling below what its value will be at maturity,
Discounted cash flow
A technique that determines the present value of future cash
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.
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 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.
The process of calculating the present value of a stream of future
the process of reducing future cash flows to present value amounts
Calculating the present value of a future payment.
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.
dividend discount model
Computation 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 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.
fractional interest discount
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.
Total revenue, less the cost of sales returns, allowances, and discounts.
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.
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 models
Planning 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).
A contra account that reduces purchases by the amount of the discounts taken for early payment.
A 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 SALES
A 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 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:
return on sales
This ratio equals net income divided by sales revenue.
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
Amounts earned by the company from the sale of merchandise or services; often used interchangeably with the term revenue.
A reduction in a price that is allowed by the seller, due to a problem
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
A journal used to record the transactions that result in a credit to sales.
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.
the relative combination of quantities of sales of the various products that make up the total sales of a company
A 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 of
A tax levied as a percentage of retail sales.
An arrangement whereby a firm leases its own equipment, such as IBM leasing its own
Lease accounting used by a manufacturer who is also a lessor. Up-front gross
Sales value at split-off
A cost allocation methodology that allocates joint costs to joint
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
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).
Operational Earnings Management
Management actions taken in the effort to create stable
Operating expenses that vary in proportion to
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