|Simple compound growth method|
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Definition of Simple compound growth method
Simple compound growth method
A method of calculating the growth rate by relating the terminal value to
a process of service department cost allocation
A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
The inventory cost-flow assumption that assigns the average
The proportion of unemployment benefits paid to a company’s
The proportion of total taxable wages for laid off
An arithmetic method for backing an
A method of constructing a replicating portfolio in which the manager purchases a
A contract accounting method that recognizes contract revenue
Interest paid on previously earned interest as well as on the principal.
Interest paid on principal and on interest earned in previous
a 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
Interest earned on interest.
Interest 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.
Option on an option.
The process of accumulating the time value of money forward in time. For example, interest
When an asset generates earnings that are then reinvested and generate their own earnings.
The number of compounding periods in a year. For example, quarterly
The length of the time period (for example, a quarter in the case of quarterly
the time between each interest computation
constant-growth dividend discount model
Version of the dividend discount model in which dividends grow at a constant rate.
Also called the Gordon-Shapiro model, an application of the dividend discount
The process of accumulating the time value of money forward in time on a
The process of continuously adding interest to a principal plus
Critical Growth Periods
Times in a company's history when growth is essential and without which survival of the business might be in jeopardy.
Current rate method
Under this currency translation method, all foreign currency balance-sheet and income
Direct estimate method
A method of cash budgeting based on detailed estimates of cash receipts and cash
A method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows.
a service department cost allocation approach
A format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities.
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.
compounding the time value of money for discrete time intervals.
The process of adding interest to a principal plus interest amount
dividend growth method
a method of computing the cost
Dividend growth model
A model wherein dividends are assumed to be at a constant rate in perpetuity.
Accounting 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 Method
The inventory cost-flow assumption that
The practice of reporting to shareholders using straight-line depreciation and
A method of accounting for petroleum exploration and development expenditures
Mutual funds that seek long-term capital growth. This type of fund invests primarily in equity securities.
A money manager who seeks to buy stocks that are typically selling at relatively high P/E
Opportunity to invest in profitable projects.
A phase of development in which a company experiences rapid earnings growth as it produces
an estimate of the increase expected in dividends
compound annual growth rate for the number of full fiscal years shown. If there is a negative
Common stock of a company that has an opportunity to invest money and earn more than the
a technique used to determine the fixed
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.
A format for the operating section of the cash-flow statement that
Internal growth rate
Maximum rate a firm can expand without outside source of funding. growth generated
internal growth rate
Maximum 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 Method
The inventory cost-flow assumption that assigns the most recent inventory acquisition costs to cost of goods sold. The earliest inventory
Log-linear least-squares method
A statistical technique for fitting a curve to a set of data points. One of the
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
Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts
Moving average inventory method
An inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase.
net present value method
a process that uses the discounted
Net Present Value (NPV) Method
A 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 opportunities
A model valuing a firm in which net present value of new
The practice of making a charge in the income account equivalent to the tax savings
A capital budgeting analysis method that calculates the amount of
A 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.
Accounting for an acquisition using market value for the consolidation of the two entities'
An accounting method used to combine the financial statements of
Realized compound yield
Yield assuming that coupon payments are invested at the going market interest
A method of allocating the purchase price for the acquisition of another firm among the
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
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,
Interest calculated only on the initial investment. Related:compound interest.
Interest paid only on the principal; calculated by multiplying the
a method of determining interest in which interest is earned only on the original investment (or principal) amount
Interest earned only on the original investment; no interest is earned on interest.
Simple linear regression
A regression analysis between only two variables, one dependent and the other explanatory.
Simple linear trend model
An extrapolative statistical model that asserts that earnings have a base level and
Simple moving average
The mean, calculated at any time over a past period of fixed length.
An investment opportunity where a certain initial wealth is placed at risk and only two
a statistical technique that uses only one independent variable to predict a dependent variable
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
A method of cash budgeting that is organized along the lines of the statement of cash flows.
a 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 Method
A method of accounting for petroleum exploration and development
Sustainable growth rate
Maximum rate of growth a firm can sustain without increasing financial leverage.
sustainable growth rate
Steady rate at which a firm can grow without changing leverage; plowback ratio × return on equity.
Under 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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