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Simple compound growth method |
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Definition of Simple compound growth methodSimple compound growth methodA method of calculating the growth rate by relating the terminal value to
Related Terms:algebraic methoda process of service department cost allocation Allowance methodA method of adjusting accounts receivable to the amount that is expected to be collected based on company experience. Average-Cost Inventory MethodThe inventory cost-flow assumption that assigns the average Benefit Ratio MethodThe proportion of unemployment benefits paid to a company’s Benefit Wage Ratio MethodThe proportion of total taxable wages for laid off Bootstrapping, bootstrap methodAn arithmetic method for backing an Capitalization methodA method of constructing a replicating portfolio in which the manager purchases a Completed-Contract MethodA contract accounting method that recognizes contract revenue Compound interestInterest paid on previously earned interest as well as on the principal. Compound InterestInterest paid on principal and on interest earned in previous compound interesta method of determining interest in which interest that was earned in prior periods is added to the original investment so that, in each successive period, interest is earned on both principal and interest compound interestInterest earned on interest. Compound InterestInterest earned on an investment at periodic intervals and added to principal and previous interest earned. Each time new interest earned is calculated it is on a combined total of principal and previous interest earned. Essentially, interest is paid on top of interest. Compound optionOption on an option. CompoundingThe process of accumulating the time value of money forward in time. For example, interest compoundingWhen an asset generates earnings that are then reinvested and generate their own earnings. Compounding frequencyThe number of compounding periods in a year. For example, quarterly Compounding periodThe length of the time period (for example, a quarter in the case of quarterly compounding periodthe time between each interest computation constant-growth dividend discount modelVersion of the dividend discount model in which dividends grow at a constant rate. Constant-growth modelAlso called the Gordon-Shapiro model, an application of the dividend discount Continuous compoundingThe process of accumulating the time value of money forward in time on a Continuous CompoundingThe process of continuously adding interest to a principal plus Critical Growth PeriodsTimes in a company's history when growth is essential and without which survival of the business might be in jeopardy. Current rate methodUnder this currency translation method, all foreign currency balance-sheet and income Direct estimate methodA method of cash budgeting based on detailed estimates of cash receipts and cash Direct methodA method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows. direct methoda service department cost allocation approach Direct-Method FormatA format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities. Direct write-off methodA method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers. Discrete compoundingcompounding the time value of money for discrete time intervals. Discrete CompoundingThe process of adding interest to a principal plus interest amount dividend growth methoda method of computing the cost Dividend growth modelA model wherein dividends are assumed to be at a constant rate in perpetuity. Equity MethodAccounting method for an equity security in cases where the investor has sufficient FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent First in, first-out costing method (FIFO)A process costing methodology that assigns the earliest First-In, First-Out (FIFO) Inventory MethodThe inventory cost-flow assumption that Flow-through methodThe practice of reporting to shareholders using straight-line depreciation and Full-Cost MethodA method of accounting for petroleum exploration and development expenditures growth fundsMutual funds that seek long-term capital growth. This type of fund invests primarily in equity securities. Growth managerA money manager who seeks to buy stocks that are typically selling at relatively high P/E Growth opportunityOpportunity to invest in profitable projects. Growth phaseA phase of development in which a company experiences rapid earnings growth as it produces growth ratean estimate of the increase expected in dividends Growth ratescompound annual growth rate for the number of full fiscal years shown. If there is a negative Growth stockCommon stock of a company that has an opportunity to invest money and earn more than the high-low methoda technique used to determine the fixed Indirect methodA 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. Indirect-Method FormatA format for the operating section of the cash-flow statement that Internal growth rateMaximum rate a firm can expand without outside source of funding. growth generated internal growth rateMaximum rate of growth without external financing. judgmental method (of risk adjustment)an informal method of adjusting for risk that allows the decision maker Last-In, First-Out (LIFO) Inventory MethodThe inventory cost-flow assumption that assigns the most recent inventory acquisition costs to cost of goods sold. The earliest inventory Log-linear least-squares methodA statistical technique for fitting a curve to a set of data points. One of the method of least squaressee least squares regression analysis method of neglecta 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 Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Moving average inventory methodAn inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase. net present value methoda process that uses the discounted Net Present Value (NPV) MethodA method of ranking investment proposals. NPV is equal to the present value of the future returns, discounted at the marginal cost of capital, minus the present value of the cost of the investment. Net present value of growth opportunitiesA model valuing a firm in which net present value of new Normalizing methodThe practice of making a charge in the income account equivalent to the tax savings Payback methodA capital budgeting analysis method that calculates the amount of Percentage-of-Completion MethodA contract accounting method that recognizes contract Present value of growth opportunities (NPV)Net present value of investments the firm is expected to make present value of growth opportunities (PVGO)Net present value of a firm’s future investments. Purchase methodAccounting for an acquisition using market value for the consolidation of the two entities' Purchase methodAn accounting method used to combine the financial statements of Realized compound yieldYield assuming that coupon payments are invested at the going market interest Residual methodA method of allocating the purchase price for the acquisition of another firm among the risk-adjusted discount rate methoda 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 Savings Incentive Match Plan for Employees (SIMPLE)An IRA set up by an employer with no other retirement plan and employing fewer than 100 employees, Simple interestInterest calculated only on the initial investment. Related:compound interest. Simple InterestInterest paid only on the principal; calculated by multiplying the simple interesta method of determining interest in which interest is earned only on the original investment (or principal) amount simple interestInterest earned only on the original investment; no interest is earned on interest. Simple linear regressionA regression analysis between only two variables, one dependent and the other explanatory. Simple linear trend modelAn extrapolative statistical model that asserts that earnings have a base level and Simple moving averageThe mean, calculated at any time over a past period of fixed length. Simple prospectAn investment opportunity where a certain initial wealth is placed at risk and only two simple regressiona statistical technique that uses only one independent variable to predict a dependent variable simplex methodan iterative (sequential) algorithm used to solve multivariable, multiconstraint linear programming problems six-sigma methoda high-performance, data-driven approach to analyzing and solving the root causes of business problems Statement-of-cash-flows methodA method of cash budgeting that is organized along the lines of the statement of cash flows. step methoda process of service department cost allocation strict FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the Successful Efforts MethodA method of accounting for petroleum exploration and development Sustainable growth rateMaximum rate of growth a firm can sustain without increasing financial leverage. sustainable growth rateSteady rate at which a firm can grow without changing leverage; plowback ratio × return on equity. Temporal methodUnder this currency translation method, the choice of exchange rate depends on the weighted average method (of process costing)the method of cost assignment that computes an average cost per
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