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Definition of Significant Influence
The extent of influence of an investor over the operating and financial
Accounting method for an equity security in cases where the investor has sufficient
An identifying number assigned to a part that conveys
An identifying number assigned to an item that conveys
An entity whose management or operating policies can be controlled or significantly
The discount rate that reflects only the business risks of a project and abstracts from the
The ratio of total assets to stockholder equity.
A management style that de-emphasizes the significance of economic
A method of constructing a replicating portfolio in which the manager purchases a
Value of outstanding common shares at par, plus accumulated retained
The discount rate that equates the after-tax inflows with outflows for capital
In the balance of payments, counterpart items are analogous to unrequited transfers in the
The parties to an interest rate swap.
on the other side of a trade or transaction.
The risk that the other party to an agreement will default. In an options contract, the risk
Under this currency translation method, all foreign currency balance-sheet and income
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A common term for convertible bonds because of their equity component and the
Direct estimate method
A method of cash budgeting based on detailed estimates of cash receipts and cash
Dual syndicate equity offering
An international equity placement where the offering is split into two
Represents ownership interest in a firm. Also the residual dollar value of a futures trading account,
An agreement in which one party, for an upfront premium, agrees to compensate the other at
Also called a residual claim, a claim to a share of earnings after debt obligation have been
The simultaneous purchase of an equity floor and sale of an equity cap.
Equity contribution agreement
An agreement to contribute equity to a project under certain specified
An agreement in which one party agrees to pay the other at specific time periods if a specific
Used to refer to warrants because they are usually issued attached to privately placed bonds.
Total assets divided by total common stockholders' equity; the amount of total assets per
Securities that give the holder the right to buy or sell a specified number of shares of stock, at
A swap in which the cash flows that are exchanged are based on the total return on some stock
Related: Variable life
Those holding shares of the firm's equity.
Securities sold in the Euromarket. That is, securities initially sold to investors
The practice of reporting to shareholders using straight-line depreciation and
Foreign equity market
That portion of the domestic equity market that represents issues floated by foreign companies.
GEMs (growing-equity mortgages)
Mortgages in which annual increases in monthly payments are used to
A partner who has unlimited liability for the obligations of the partnership.
A partnership in which all partners are general partners.
The balance of a margin account. Related: buying on margin, initial margin requirement.
Law of large numbers
The mean of a random sample approaches the mean (expected value) of the
Stock in a firm that relies on financial leverage. Holders of leveraged equity face the
A partner who has limited legal liability for the obligations of the partnership.
A partnership that includes one or more partners who have limited liability.
Log-linear least-squares method
A statistical technique for fitting a curve to a set of data points. One of the
Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.
A partnership that includes one or more partners who have limited liability.
Master limited partnership (MLP)
A publicly traded limited partnership.
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
The practice of making a charge in the income account equivalent to the tax savings
A guaranteed investment contract where the policyholder is not guaranteed a crediting
The portion of total fees in a syndicated credit that go to the participating banks.
Shared ownership among two or more individuals, some of whom may, but do not necessarily,
Preferred equity redemption stock (PERC)
Preferred stock that converts automatically into equity at a
Accounting for an acquisition using market value for the consolidation of the two entities'
A method of allocating the purchase price for the acquisition of another firm among the
Return on equity (ROE)
Indicator of profitability. Determined by dividing net income for the past 12
This is a company's total assets minus total liabilities. A company's net worth is the
Simple compound growth method
A method of calculating the growth rate by relating the terminal value to
A method of cash budgeting that is organized along the lines of the statement of cash flows.
Balance sheet item that includes the book value of ownership in the corporation. It
The residual claims that stockholders have against a firm's assets, calculated by
Stratified equity indexing
A method of constructing a replicating portfolio in which the stocks in the index
Strip mortgage participation certificate (strip PC)
Ownership interests in specified mortgages purchased
Special category of foreign-source "unearned" income that is currently taxed by the IRS whether
Under this currency translation method, the choice of exchange rate depends on the
Top-down equity management style
A management style that begins with an assessment of the overall
Total debt to equity ratio
A capitalization ratio comparing current liabilities plus long-term debt to
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.
RATE OF RETURN ON STOCKHOLDERS’ EQUITY
The percentage return or profit that management made on each dollar stockholders invested in a company. Here’s how you figure it:
RATIO OF DEBT TO STOCKHOLDERS’ EQUITY
A ratio that shows which group—creditors or stockholders—has the biggest stake in or the most control of a company:
STOCKHOLDERS’ (OR OWNERS’) EQUITY
The value of the owners’ interests in a company.
Funds raised from shareholders.
A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
An account that reduces an equity account. An example is Treasury stock.
A method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows.
Direct write-off method
A method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers.
Amounts contributed to the company by the owners (contributed capital) plus the residual earnings of the business (retained earnings).
A method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities.
The total amount of contributed capital and retained earnings; synonymous with stockholders' equity.
The total amount of contributed capital and retained earnings; synonymous with shareholders’ equity.
A widely used financial statement ratio to assess the
Refers to one of the two basic sources of capital for a business, the
Refers to the capital invested in a business by its shareowners
return on equity (ROE)
This key ratio, expressed as a percent, equals net
stockholders' equity, statement of changes in
Although often considered
Cost of Equity
Same as the cost of common stock. Sometimes viewed as the
Return on Common Equity Ratio
A measure of the percentage return earned on the value of the
an organizational unit that performs management activities benefiting the entire organization;
a process of service department cost allocation
a service department cost allocation approach
dividend growth method
a method of computing the cost
FIFO method (of process costing)
the method of cost assignment that computes an average cost per equivalent
a technique used to determine the fixed
judgmental method (of risk adjustment)
an informal method of adjusting for risk that allows the decision maker
limited liability partnership
an organizational form that is a hybrid of the corporate and partnership organizational
method of least squares
see least squares regression analysis
method of neglect
a method of treating spoiled units in the
modified FIFO method (of process costing)
the method of cost assignment that uses FIFO to compute a cost per
net present value method
a process that uses the discounted
a budget that has been developed
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
an organizational unit that provides one or more specific functional tasks for other internal units
an iterative (sequential) algorithm used to solve multivariable, multiconstraint linear programming problems
a high-performance, data-driven approach to analyzing and solving the root causes of business problems
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