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Financial Terms | |
Segment reporting |
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Definition of Segment reportingSegment reportingA portion of the financial statements that breaks out the results of
Related Terms:Change in Reporting EntityA change in the scope of the entities included in a set of, typically, consolidated financial statements. Fraudulent Financial ReportingIntentional misstatements or omissions of amounts or disclosures Market segmentation theory or preferred habitat theoryA biased expectations theory that asserts that the Reporting currencyThe currency in which the parent firm prepares its own financial statements; that is, U.S. Reporting periodThe time period for which transactions are compiled into a set of financial statements. segment marginthe excess of revenues over direct variable expenses and avoidable fixed expenses for a particular segment Accounting changeAn alteration in the accounting methodology or estimates used in ![]() Accounting entityA business for which a separate set of accounting records is being American Stock Exchange (AMEX)The second-largest stock exchange in the United States. It trades Balance sheet identityTotal Assets = Total Liabilities + Total Stockholders' Equity Bill of exchangeGeneral term for a document demanding payment. Change in Accounting EstimateA change in accounting that occurs as the result of new information Change in Accounting EstimateA change in the implementation of an existing accounting Change in Accounting PrincipleA change from one generally accepted accounting principle to another generally accepted accounting principle—for example, a change from capitalizing expenditures Changes in Financial PositionSources of funds internally provided from operations that alter a company's Chicago Mercantile Exchange (CME)A not-for-profit corporation owned by its members. Its primary ![]() chief financial officer (CFO)Officer who oversees the treasurer and controller and sets overall financial strategy. Commodities Exchange Center (CEC)The location of five New York futures exchanges: Commodity Convertible exchangeable preferred stockConvertible preferred stock that may be exchanged, at the Corporate financial managementThe application of financial principals within a corporation to create and Corporate financial planningfinancial planning conducted by a firm that encompasses preparation of both costs of financial distressCosts arising from bankruptcy or distorted business decisions before bankruptcy. Country financial riskThe ability of the national economy to generate enough foreign exchange to meet Cumulative Effect of a Change in Accounting PrincipleThe change in earnings of previous years Cumulative Effect of Accounting ChangeThe change in earnings of previous years assuming Dupont system of financial controlHighlights the fact that return on assets (ROA) can be expressed in terms Effective Exchange RateThe weighted average of several exchange rates, where the weights are determined by the extent of our trade done with each country. ![]() Electronic data interchange (EDI)The exchange of information electronically, directly from one firm's electronic data interchange (EDI)the computer-to-computer transfer of information in virtual real time using standardized formats developed by the American National Standards Institute Embodied Technical ChangeTechnical change that can be used only when new capital embodying this technical change is produced. Engineering changeA change to a product’s specifications as issued by the engineering engineering change order (ECO)a business mandate that changes the way in which a product is manufactured or a Equation of ExchangeThe quantity theory equation Mv = PQ. ExchangeThe marketplace in which shares, options and futures on stocks, bonds, commodities and indices Exchange controlsGovernmental restrictions on the purchase of foreign currencies by domestic citizens or Exchange of assetsAcquisition of another company by purchase of its assets in exchange for cash or stock. Exchange of stockAcquisition of another company by purchase of its stock in exchange for cash or shares. Exchange offerAn offer by the firm to give one security, such as a bond or preferred stock, in exchange for Exchange rateThe price of one country's currency expressed in another country's currency. exchange rateAmount of one currency needed to purchase one unit of another. Exchange Rate Mechanism (ERM)The methodology by which members of the EMS maintain their Exchange Rate, NominalThe price of one currency in terms of another, in this book defined as number of units of foreign currency per dollar. Exchange Rate, RealThe nominal exchange rate corrected for price level differences. Exchange rate riskAlso called currency risk, the risk of an investment's value changing because of currency Exchange riskThe variability of a firm's value that results from unexpected exchange rate changes or the Exchangeable SecuritySecurity that grants the security holder the right to exchange the security for the expectations theory of exchange ratesTheory that expected spot exchange rate equals the forward rate. External Financial StatementsCorporate financial statements that have been reported on by an external independent accountant. Financial accountingThe production of financial statements, primarily for those interested parties who are external to the business. financial accountinga discipline in which historical, monetary Financial analystsAlso called securities analysts and investment analysts, professionals who analyze Financial assetsClaims on real assets. financial assetsClaims to the income generated by real assets. Also called securities. Financial AssistanceEconomic assistance provided by unrelated third parties, typically government agencies. They may take the form of loans, loan guarantees, subsidies, tax allowances, contributions, or cost-sharing arrangements. financial budgeta plan that aggregates monetary details Financial controlThe management of a firm's costs and expenses in order to control them in relation to Financial CovenantA feature of a debt or credit agreement that is designed to protect the lender or creditor. It is common to characterize covenants as either positive or negative covenants. Financial CovenantsA promise made related to financial conditions or events. Often a promise not to allow certain balance sheet items or ratios to fall below an agreed level. Usually found in loan documents, as a protection mechanism. Financial distressEvents preceding and including bankruptcy, such as violation of loan contracts. Financial distress costsLegal and administrative costs of liquidation or reorganization. Also includes Financial engineeringCombining or dividing existing instruments to create new financial products. Financial futureA contract entered into now that provides for the delivery of a specified asset in exchange financial incentivea monetary reward provided for performance Financial IncentiveAn expression of economic benefit that motivates behavior that might otherwise not take place. Financial intermediariesInstitutions that provide the market function of matching borrowers and lenders or financial intermediaryFirm that raises money from many small investors and provides financing to businesses or other Financial IntermediaryAny institution, such as a bank, that takes deposits from savers and loans them to borrowers. Financial IntermediationThe process whereby financial intermediaries channel funds from lender/savers to borrower/spenders. Financial leaseLong-term, non-cancelable lease. Financial LeaseLease in which the service provided by the lessor to the lessee is limited to financing equipment. All other responsibilities related to the possession of equipment, such as maintenance, insurance, and taxes, are borne by the lessee. A financial lease is usually noncancellable and is fully paid out amortized over its term. Financial leverageUse of debt to increase the expected return on equity. financial leverage is measured by financial leverageThe equity (ownership) capital of a business can serve financial leverageDebt financing amplifies the effects of changes in operating income on the returns to stockholders. Financial leverage clienteleA group of investors who have a preference for investing in firms that adhere to Financial leverage ratiosRelated: capitalization ratios. Financial marketAn organized institutional structure or mechanism for creating and exchanging financial assets. financial marketsMarkets in which financial assets are traded. Financial Numbers GameThe use of creative accounting practices to alter a financial statement Financial objectivesObjectives of a financial nature that the firm will strive to accomplish during the period Financial planA financial blueprint for the financial future of a firm. Financial planningThe process of evaluating the investing and financing options available to a firm. It Financial PositionStatus of a firm's assets, liabilities, and equity accounts as of a certain time, as shown in its financial statement. Financial pressThat portion of the media devoted to reporting financial news. Financial ratioThe result of dividing one financial statement item by another. Ratios help analysts interpret financial reports and statementsfinancial means having to do with Financial reports or statementsThe Profit and Loss account, Balance Sheet and Cash Flow statement of a business. Financial riskThe risk that the cash flow of an issuer will not be adequate to meet its financial obligations. financial riskRisk to shareholders resulting from the use of debt. financial slackReady access to cash or debt financing. Financial Trend AnalysisProcess of analyzing financial statements of a company for any continuing relationship. Financial yearThe accounting period adopted by a business for the production of its financial statements. Fixed-exchange rateA country's decision to tie the value of its currency to another country's currency, gold Fixed Exchange RateAn exchange rate held constant by a government promise to buy or sell dollars at the fixed rate on the foreign exchange market. Flexible Exchange RateAn exchange rate whose value is determined by the forces of supply and demand on the foreign exchange market. Floating exchange rateA country's decision to allow its currency value to freely change. The currency is not Floating Exchange RateSee flexible exchange rate. Foreign exchangeCurrency from another country. Foreign ExchangeThe currency of a foreign country. Foreign exchange controlsVarious forms of controls imposed by a government on the purchase/sale of Foreign exchange dealerA firm or individual that buys foreign exchange from one party and then sells it to Foreign Exchange MarketA worldwide market in which one country's currency is bought or sold in exchange for another country's currency. Foreign Exchange ReservesA fund containing the central bank's holdings of foreign currency or claims thereon. Foreign exchange riskThe risk that a long or short position in a foreign currency might have to be closed out Foreign exchange swapAn agreement to exchange stipulated amounts of one currency for another currency Forward Exchange MarketA market in which foreign exchange can be bought or sold for delivery (and payment) at some specified future date but at a price agreed upon now. 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