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Financial Terms | |
Scale enhancing |
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Definition of Scale enhancingScale enhancingDescribes a project that is in the same risk class as the whole firm.
Related Terms:Economies of scaleThe decrease in the marginal cost of production as a plant's scale of operations increases. Logarithmic ScaleA scale in which equal proportions are shown as equal distances so that, for example, a doubling from 2 to 4 is represented by one inch, as is a doubling from 4 to 8. Ratio ScaleSee logarithmic scale. ScaleA bank that offers to pay different rates of interest on CDs of varying rates is said to "post a scale." Scale inWhen a trader or investor gradually takes a position in a security or market over time. Economies of scopeScope economies exist whenever the same investment can support multiple profitable "Soft" Capital RationingCapital rationing that under certain circumstances can be violated or even viewed ![]() ABC inventory classificationA method for dividing inventory into classifications, Absolute AdvantageThe ability to produce a good or service with fewer resources than competitors. See also comparative advantage. Absolute priorityRule in bankruptcy proceedings whereby senior creditors are required to be paid in full Absolute Right of ReturnGoods may be returned to the seller by the purchaser without restrictions. Absorption costingA method of costing in which all fixed and variable production costs are charged to products or services using an allocation base. absorption costinga cost accumulation and reporting Absorption costingA methodology under which all manufacturing costs are assigned Accelerated cost recovery system (ACRS)Schedule of depreciation rates allowed for tax purposes. Accounting insolvencyTotal liabilities exceed total assets. A firm with a negative net worth is insolvent on ![]() acid test ratio (also called the quick ratio)The sum of cash, accounts receivable, and short-term marketable Activity-based costingA method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers. activity based costing (ABC)A relatively new method advocated for the activity-based costing (ABC)a process using multiple cost drivers to predict and allocate costs to products and services; Activity-based costing (ABC)A cost allocation system that compiles costs and assigns Actual costThe actual expenditure made to acquire an asset, which includes the supplierinvoiced actual cost systema valuation method that uses actual direct Adjusted Cash Flow Provided by Continuing OperationsCash flow provided by operating Affirmative covenantA bond covenant that specifies certain actions the firm must take. Agency cost viewThe argument that specifies that the various agency costs create a complex environment in Agency costsThe incremental costs of having an agent make decisions for a principal. Aggregate Production FunctionAn equation determining aggregate output as a function of aggregate inputs such as labor and capital. Aggressive Cost Capitalizationcost capitalization that stretches the flexibility within generally All-in costTotal costs, explicit and implicit. All or noneRequirement that none of an order be executed unless all of it can be executed at the specified price. All-or-none underwritingAn arrangement whereby a security issue is canceled if the underwriter is unable Amortized Costcost of a security adjusted for the amortization of any purchase premium or appraisal costa quality control cost incurred for monitoring Asset classesCategories of assets, such as stocks, bonds, real estate and foreign securities. Asset-specific RiskThe amount of total risk that can be eliminated by diversification by At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the attribute-based costing (ABC II)an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute Average-Cost Inventory MethodThe inventory cost-flow assumption that assigns the average Average cost of capitalA firm's required payout to the bondholders and to the stockholders expressed as a Avoidable costscosts that are identifiable with and able to be influenced by decisions made at the business backflush costinga streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires Bankruptcy cost viewThe argument that expected indirect and direct bankruptcy costs offset the other Bankruptcy riskThe risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk. Basis riskThe uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for Batch costA cost that is incurred when a group of products or services are produced, batch-level costa cost that is caused by a group of things Beta riskrisk of a firm measured from the standpoint of an investor who holds a highly diversified portfolio. budgeted costa planned expenditure Business riskThe risk that the cash flow of an issuer will be impaired because of adverse economic Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance Call riskThe combination of cash flow uncertainty and reinvestment risk introduced by a call provision. Canadian Life and Health Insurance Association (CLHIA)An association of most of the life and health insurance companies in Canada that conducts research and compiles information about the life and health insurance industry in Canada. Capital Cost Allowance (CCA)The annual depreciation expense allowed by the Canadian Income Tax Act. capitalization of costsWhen a cost is recorded originally as an increase Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized againstfuture-period revenue. Carring costscosts that increase with increases in the level of investment in current assets. carrying costthe total variable cost of carrying one unit of Carrying costThe cost of holding inventory, which can include insurance, carrying costscosts of maintaining current assets, including opportunity cost of capital. Cash costThe amount of cash expended. Cash flow from operationsA firm's net cash inflow resulting directly from its regular operations CASH FLOWS FROM OPERATIONSA section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business. Classical MacroeconomicsThe school of macroeconomic thought prior to the rise of Keynesianism. Commercial riskThe risk that a foreign debtor will be unable to pay its debts because of business events, committed costa cost related either to the long-term investment company cost of capitalExpected rate of return demanded by investors in a company, determined by the average risk of the company’s assets and operations. Company-specific riskRelated: Unsystematic risk Companyspecific RiskSee asset-specific risk Comparison universeThe collection of money managers of similar investment style used for assessing Completion riskThe risk that a project will not be brought into operation successfully. ComponentRaw materials or subassemblies used to make either finished goods Confirmationhe written statement that follows any "trade" in the securities markets. Confirmation is issued ConsolA type of bond that has an infinite life but is not issued in the U.S. capital markets. Consolidated Omnibus Budget Reconciliation Act (COBRA)A federal Act ConsolidationThe combining of two or more firms to form an entirely new entity. ConsolidationA summarization of the financial statements of a parent company and Consortium banksA merchant banking subsidiary set up by several banks that may or may not be of the controllable costa cost over which a manager has the ability to authorize incurrence or directly influence magnitude Conventional projectA project with a negative initial cash flow (cash outflow), which is expected to be conversion costRefers to the sum of manufacturing direct labor and overhead conversion costthe total of direct labor and overhead cost; CostA resource sacrificed or forgone to achieve a specific objective (Horngren et al.), defined costthe cash or cash equivalent value necessary to attain an CostThe expense incurred to create and sell a product or service. If a product is not cost accountinga discipline that focuses on techniques or Cost Accounting Standards Board (CASB)a body established by Congress in 1970 to promulgate cost accounting cost accumulationthe approach to product costing that determines cost allocationthe assignment, using some reasonable basis, cost avoidancethe practice of finding acceptable alternatives Cost basisAn asset’s purchase price, plus costs associated with the purchase, like installation fees, taxes, etc. Cost behaviourThe idea that fixed costs and variable costs react differently to changes in the volume of Cost-Benefit AnalysisThe calculation and comparison of the costs and benefits of a policy or project. cost-benefit analysis the analytical process of comparing therelative costs and benefits that result from a specific course Cost-benefit ratioThe net present value of an investment divided by the investment's initial cost. Also called cost centera responsibility center in which the manager has Cost centreA division or unit of an organization that is responsible for controlling costs. Cost company arrangementArrangement whereby the shareholders of a project receive output free of cost consciousnessa company-wide attitude about the topics cost containmentthe practice of minimizing, to the extent Cost controlThe process of either reducing costs while maintaining the same level of productivity or maintaining costs while increasing productivity. cost control systema logical structure of formal and/or informal Cost depletionA method of expensing the cost of a resource consumed by first determining Cost driverThe most significant cause of the cost of an activity, a measure of the demand for an activity cost drivera factor that has a direct cause-effect relationship Cost driverA factor that directly impacts the incidence of a cost, and which is generally Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |