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special order decision

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Definition of special order decision

Special Order Decision Image 1

special order decision

a situation in which management must determine a sales price to charge for manufacturing or service jobs outside the company’s normal production/service market



Related Terms:

Asset allocation decision

The decision regarding how an institution's funds should be distributed among the
major classes of assets in which it may invest.


Buy limit order

A conditional trading order that indicates a security may be purchased only at the designated
price or lower.
Related: Sell limit order.


Cross-border risk

Refers to the volatility of returns on international investments caused by events associated
with a particular country as opposed to events associated solely with a particular economic or financial agent.


Day order

An order to buy or sell stock that automatically expires if it can't be executed on the day it is entered.


Decision tree

Method of representing alternative sequential decisions and the possible outcomes from these decisions.


Economic order quantity (EOQ)

The order quantity that minimizes total inventory costs.


Extra or special dividends

A dividend that is paid in addition to a firm's "regular" quarterly dividend.


Special Order Decision Image 2

Fill or kill order

A trading order that is canceled unless executed within a designated time period.
Related: open order.


Financing decisions

decisions concerning the liabilities and stockholders' equity side of the firm's balance
sheet, such as the decision to issue bonds.


Investment decisions

decisions concerning the asset side of a firm's balance sheet, such as the decision to
offer a new product.


Limit order

An order to buy a stock at or below a specified price or to sell a stock at or above a specified
price. For instance, you could tell a broker "Buy me 100 shares of XYZ Corp at $8 or less" or to "sell 100
shares of XYZ at $10 or better." The customer specifies a price and the order can be executed only if the
market reaches or betters that price. A conditional trading order designed to avoid the danger of adverse
unexpected price changes.


Limit order book

A record of unexecuted limit orders that is maintained by the specialist. These orders are
treated equally with other orders in terms of priority of execution.


Managerial decisions

decisions concerning the operation of the firm, such as the choice of firm size, firm
growth rates, and employee compensation.


Market order

This is an order to immediately buy or sell a security at the current trading price.


Mutually exclusive investment decisions

Investment decisions in which the acceptance of a project
precludes the acceptance of one or more alternative projects.


Negotiable order of withdrawal (NOW)

Demand deposits that pay interest.


Open (good-til-cancelled) order

An individual investor can place an order to buy or sell a security. That
open order stays active until it is completed or the investor cancels it.


Pecking-order view (of capital structure)

The argument that external financing transaction costs, especially
those associated with the problem of adverse selection, create a dynamic environment in which firms have a
preference, or pecking-order of preferred sources of financing, when all else is equal. Internally generated
funds are the most preferred, new debt is next, debt-equity hybrids are next, and new equity is the least
preferred source.


Security selection decision

Choosing the particular securities to include in a portfolio.


Sell limit order

Conditional trading order that indicates that a, security may be sold at the designated price or
higher. Related: buy limit order.


Special dividend

Also referred to as an extra dividend. Dividend that is unlikely to be repeated.


Special drawing rights (SDR)

A form of international reserve assets, created by the IMF in 1967, whose
value is based on a portfolio of widely used currencies.


Specialist

On an exchange, the member firm that is designated as the market maker (or dealer for a listed
common stock). Only one specialist can be designated for a given stock, but dealers may be specialists for
several stocks. In contrast, there can be multiple market makers in the OTC market.


Stop-loss order

An order to sell a stock when the price falls to a specified level.


Stop order (or stop)

An order to buy or sell at the market when a definite price is reached, either above (on a
buy) or below (on a sell) the price that prevailed when the order was given.


Stop-limit order

A stop order that designates a price limit. In contrast to the stop order, which becomes a
market order once the stop is reached, the stop-limit order becomes a limit order once the stop is reached.


Specialized journals

Journals that are used to aid in segregating duties and making the accounting function efficient.


decision making

the process of choosing among the alternative
solutions available to a course of action or a problem
situation


decision variable

an unknown item for which a linear programming
problem is being solved


economic order quantity (EOQ)

an estimate of the number
of units per order that will be the least costly and provide
the optimal balance between the costs of ordering
and the costs of carrying inventory


engineering change order (ECO)

a business mandate that changes the way in which a product is manufactured or a
service is performed by modifying the design, parts,
process, or even quality of the product or service


financing decision

a judgment made regarding the method
of raising funds that will be used to make acquisitions; it
is based on an entity’s ability to issue and service debt and
equity securities


investment decision

a judgment about which assets will be
acquired by an entity to achieve its stated objectives


job order cost sheet

a source document that provides virtually
all the financial information about a particular job;
the set of all job order cost sheets for uncompleted jobs
composes the Work in Process Inventory subsidiary ledger


job order costing system

a system of product costing used
by an entity that provides limited quantities of products or
services unique to a customer’s needs; focus of recordkeeping
is on individual jobs


make-or-buy decision

a decision that compares the cost of
internally manufacturing a component of a final product
(or providing a service function) with the cost of purchasing
it from outside suppliers (outsourcing) or from another
division of the company at a specified transfer price


open purchase ordering

a process by which a single purchase
order that expires at a set or determinable future
date is prepared to authorize a supplier to provide a large
quantity of one or more specified items on an as-requested
basis by the customer


ordering cost

the variable cost associated with preparing,
receiving, and paying for an order


order point

the level of inventory that triggers the placement
of an order for additional units; it is determined based
on usage, lead time, and safety stock


outsourcing decision

see make-or-buy decision


preference decision

the second decision made in capital project evaluation in which projects are ranked according to their impact on the achievement of company objectives


screening decision

the first decision made in evaluating capital
projects; it indicates whether a project is desirable based
on some previously established minimum criterion or criteria
(see also preference decision)


capital budgeting decision

decision as to which real assets the firm should acquire.


decision tree

Diagram of sequential decisions and possible outcomes.


economic order quantity

order size that minimizes total inventory costs.


financing decision

decision as to how to raise the money to pay for investments in real assets.


pecking order theory

Firms prefer to issue debt rather than equity if internal finance is insufficient.


Special Items

Significant credits or charges resulting from transactions or events that, in the
view of management, are not representative of normal business activities of the period and that
affect comparability of earnings. This term is often used interchangeably with nonrecurring
items.


Special Charges

Nonrecurring losses or expenses resulting from transactions or events which,
in the view of management, are not representative of normal business activities of the period and
which affect comparability of earnings.


Discrete order picking

A picking method requiring the sequential completion of
each order before one begins picking the next order.


Make-to-order

A production scheduling system under which products are only
manufactured once a customer order has been received.


Order penetration point

The point in the production process when a product is
reserved for a specific customer.


Order picking

The process of moving items from stock for shipment to customers.


money order

A guaranteed form of payment in amounts up to and including $5,000. You might request a money order in order to pay for tuition fees at a university or a college, or for a magazine subscription.


 

 

 

 

 

 

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