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Definition of shrinkage
a decrease in units arising from an inherent characteristic
The excess of inventory listed in the accounting books of record, but which
Any uncontrolled loss of inventory, such as through evaporation or theft.
A term describing the loss of products from inventory
A shortfall between inventory based on actual physical counts and inventory
The expected loss of some proportion of an item during the
The change in the value of a firm's foreign currency denominated accounts due to a
Earnings of a firm as reported on its income statement.
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on
The ease and quickness with which assets can be converted to cash.
The physical commodity underlying a futures contract. Cash commodity, physical.
Mortgage pass-through securities whose principal and interest payments are
An annuity with n payments, wherein the first payment is made at time t = 0 and the last
Dollar deposits held in Singapore or other Asian centers.
The average project earnings after taxes and depreciation divided by the average
The probability of not achieving a portfolio expected return.
A secured loan that gives the lender a lien against all the borrower's inventories.
Large and creditworthy compAny.
The difference between the net cost of a security and the net sale price, if that security is sold at a loss.
The market model applied to a single security. The slope of the line is a security's beta.
Related: Unsystematic risk
Comprehensive due diligence investigation
The investigation of a firm's business in conjunction with a
Also called private-label pass-throughs, Any mortgage pass-through security not
Corporate processing float
The time that elapses between receipt of payment from a customer and the
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
Date of record
Date on which holders of record in a firm's stock ledger are designated as the recipients of
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
Depository Trust Company (DTC)
DTC is a user-owned securities depository which accepts deposits of
Devaluation A decrease in the spot price of the currency
A conception of the way a stock's price changes that assumes that the price takes on all
An instrument evidencing the obligation of a seller to deliver securities sold to the buyer.
Any excess of actual reserves above required reserves.
Excess return on the market portfolio
The difference between the return on the market portfolio and the
Also called abnormal returns, returns in excess of those required by some asset pricing model.
An account for the investment credit to show all income statement benefits of the credit
The practice of reporting to shareholders using straight-line depreciation and
Fully modified pass-throughs
Agency pass-throughs that guarantee the timely payment of both interest and
Generally Accepted Accounting Principals (GAAP)
A technical accounting term that encompasses the
The date on which holders of record in a firm's stock ledger are designated as the
A corporation that owns enough voting stock in another firm to control management and
Loan made by one unit of a corporation to another unit of the same corporation.
Transaction carried out between two units of the same corporation.
For companies: Raw materials, items available for sale or in the process of being made ready for
A secured short-term loan to purchase inventory. The three basic forms are a blanket
The ratio of annual sales to average inventory which measures the speed that inventory
In-house processing float
Refers to the time it takes the receiver of a check to process the payment and
Just-in-time inventory systems
Systems that schedule materials/inventory to arrive exactly as they are
Release of information to some persons before official public announcement.
Stocks that are traded on an exchange.
Stocks that are traded on an exchange.
Agency pass-throughs that guarantee (1) timely interest payments and (2) principal
Mortgage pass-through security
Also called a passthrough, a security created when one or more mortgage
Net operating losses
losses that a firm can take advantage of to reduce taxes.
Paper gain (loss)
Unrealized capital gain (loss) on securities held in portfolio, based on a comparison of
The net interest rate passed through to investors after deducting servicing, management,
A pool of fixed-income securities backed by a package of assets (i.e. mortgages)
Pass-through coupon rate
The interest rate paid on a securitized pool of assets, which is less than the rate
Payable through drafts
A method of making payment that is used to maintain control over payments made
Price discovery process
The process of determining the prices of the assets in the marketplace through the
Related: Conventional pass-throughs.
Production payment financing
A method of nonrecourse asset-based financing in which a specified
An agreement by the loan purchaser to allow the monthly loan quota to be
Method of accounting for a merger in which the acquirer is treated as having purchased
1) Date by which a shareholder must officially own shares in order to be entitled to a dividend.
Regulatory accounting procedures
accounting principals required by the FHLB that allow S&Ls to elect
Lost wealth of the shareholders due to divergent behavior of the managers.
Security characteristic line
A plot of the excess return on a security over the risk-free rate as a function of
Statement of Financial Accounting Standards No. 8
This is a currency translation standard previously in
Statement of Financial Accounting Standards No. 52
This is the currency translation standard currently
Set of books kept by firm management for its annual report that follows Financial
An order to sell a stock when the price falls to a specified level.
Set of books kept by a firm's management for the IRS that follows IRS rules. The stockholder's
An agreement to put a specified amount of product per period through a particular
CAPITAL IN EXCESS OF PAR VALUE
What a compAny collected when it sold stock for more than the par value per share.
The number of times a compAny sold out and replaced its average stock of goods in a year. The formula is:
The value of the products that a retailing or wholesaling compAny intends to resell for a profit.
UNITS OF PRODUCTION
A depreciation method that relates a machineâ€™s depreciation to the number of units it makes each
A collection of systems and processes used to record, report and interpret business transactions.
The representation of the double-entry system of accounting such that assets are equal to liabilities plus capital.
The period of time for which financial statements are produced â€“ see also financial year.
Accounting rate of return (ARR)
A method of investment appraisal that measures
A set of accounts that summarize the transactions of a business that have been recorded on source documents.
A method of accounting in which profit is calculated as the difference between income when it is earned and expenses when they are incurred.
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
A method of accounting in which profit is calculated as the difference between income
The production of financial statements, primarily for those interested parties who are external to the business.
Goods bought or manufactured for resale but as yet unsold, comprising raw materials, work-in-progress and finished goods.
The production of financial and non-financial information used in planning for the future; making decisions about products, services, prices and what costs to incur; and ensuring that plans are implemented and achieved.
A general term referring to period costs, such as selling, administration and financial expenses.
A method of costing for continuous manufacture in which costs for an accounting compared are compared with production for the same period to determine a cost per unit produced.
A general term referring to indirect costs.
Profit and Loss account
A financial statement measuring the profit or loss of a business â€“ income less expenses â€“ for an accounting period.
Strategic management accounting
The provision and analysis of management accounting data about a business and its competitors, which is of use in the development and monitoring of strategy (Simmonds).
Sales revenue less the cost of materials.
The formula Assets = Liabilities + Equity.
Capital in excess par
Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the compAny; synonymous with additional paid-in capital.
The cost of the goods that a compAny has available for resale.
Periodic inventory system
An inventory system in which the balance in the inventory account is adjusted for the units sold only at the end of the period.
Perpetual inventory system
An inventory system in which the balance in the inventory account is adjusted for the units sold each time a sale is made.
The date used to decide which shareholders will receive the dividend. The owners of the shares at the end of this day are entitled to the dividend.
A broad, all-inclusive term that refers to the methods and procedures
An equation that reflects the two-sided nature of a
Well, frankly, accrual is not a good descriptive
See accrual-basis accounting.
extraordinary gains and losses
No pun intended, but these types of gains
generally accepted accounting principles (GAAP)
This important term
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