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Definition of Structural Deficit
The budget deficit in excess of the deficit that in the long run keeps constant the ratio of the publically held national debt to GDP.
The amount by which government spending exceeds government revenues.
The excess of government spending over tax receipts.
An excess of liabilities over assets, of losses over profits, or of expenditure over income.
Anegative balance in the retained earnings account that is caused by cumulative
See budget deficit.
Unemployment due to a mismatch between the skills or location of labor and the skills or location required by firms.
deficit on the balance of merchandise trade.
The trade deficit and the government budget deficit.
Capital rationing that under certain circumstances can be violated or even viewed
Schedule of depreciation rates allowed for tax purposes.
Clause causing repayment of a debt, if specified events occur or are not met.
Belief that an effort to keep unemployment below its natural rate results in an accelerating inflation.
The ratio of net credit sales to average accounts receivable, a measure of how
A ratio computed by dividing annual
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid
A ratio that shows how well a company could pay its current debts using only its most liquid or “quick” assets. It’s a more pessimistic—but also realistic—measure of safety than the current ratio, because it ignores sluggish, hard-toliquidate current assets like inventory and notes receivable. Here’s the formula:
See quick ratio
acid test ratio (also called the quick ratio)
The sum of cash, accounts receivable, and short-term marketable
Adjusted Cash Flow Provided by Continuing Operations
Cash flow provided by operating
After-tax profit margin
The ratio of net income to net sales.
After-tax real rate of return
Money after-tax rate of return minus the inflation rate.
Allowance for bad debts
An offset to the accounts receivable balance, against which
American Depositary Receipts (ADRs)
Certificates issued by a U.S. depositary bank, representing foreign
the amount of overhead that has been assigned to Work in Process Inventory as a result of productive activity; credits for this amount are to an overhead account
The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard
Articles of incorporation
Legal document establishing a corporation and its structure and purpose.
Asset activity ratios
ratios that measure how effectively the firm is managing its assets.
Extent to which a company's net assets cover a particular debt obligation, class of preferred stock, or equity position.
A bond indenture restriction that permits additional borrowing on if the ratio of assets to
The ratio of total assets to stockholder equity.
The ratio of net sales to total assets.
a ratio measuring asset productivity and showing the number of sales dollars generated by each dollar of assets
asset turnover ratio
A broad-gauge ratio computed by dividing annual
A situation wherein participants in a transaction have different net tax rates.
Average tax rate
taxes as a fraction of income; total taxes divided by total taxable income.
average tax rate
Total taxes owed divided by total income.
An account receivable that cannot be collected.
The amount of accounts receivable that is not expected to be collected.
Refers to accounts receivable from credit sales to customers
Bank for International Settlements (BIS)
An international bank headquartered in Basel, Switzerland, which
Money owed to the bank in a cheque account where payments exceed receipts.
Basic Earnings Power Ratio
Percentage of earnings relative to total assets; indication of how
Before-tax profit margin
The ratio of net income before taxes to net sales.
Benefit Ratio Method
The proportion of unemployment benefits paid to a company’s
Benefit Wage Ratio Method
The proportion of total taxable wages for laid off
The managing underwriter for a new issue. The book runner maintains the book of securities sold.
Break-even tax rate
The tax rate at which a party to a prospective transaction is indifferent between entering
Canadian Deposit Insurance Corporation
Better known as CDIC, this is an organization which insures qualifying deposits and GICs at savings institutions, mainly banks and trust companys, which belong to the CDIC for amounts up to $60,000 and for terms of up to five years. Many types of deposits are not insured, such as mortgage-backed deposits, annuities of duration of more than five years, and mutual funds.
CAPITAL IN EXCESS OF PAR VALUE
What a company collected when it sold stock for more than the par value per share.
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.
Placing one or more limits on the amount of new investment undertaken by a firm, either
a condition that exists when there is an
Limit set on the amount of funds available for investment.
Refers to recouping, or regaining, invested capital over
Also called financial leverage ratios, these ratios compare debt to total capitalization
Cash flow after interest and taxes
Net income plus depreciation.
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash Flow–to–Income Ratio (CFI)
Adjusted cash flow provided by continuing operations
CASH FLOWS FROM OPERATIONS
A section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business.
The proportion of a firm's assets held as cash.
ratio of cash and cash equivalents to liabilities; in the case of a bank, the ratio of cash to total deposit liabilities.
Cash receipts journal
A journal used to record the transactions that result in a debit to cash.
The number of cash cycles completed in one year.
Common stock ratios
ratios that are designed to measure the relative claims of stockholders to earnings
A single centralized account into which funds collected at regional locations
System whereby customers make payments to a regional collection center which transfers funds to
Movement of cash from different lockbox locations into a single concentration
A review of all engineering documentation used as the basis
Verifying that a delivered product matches authorizing
Constant dollar accounting
A method for restating financial statements by reducing or
See real dollars.
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
contribution margin ratio
the proportion of each revenue dollar remaining after variable costs have been covered;
Controlled foreign corporation (CFC)
A foreign corporation whose voting stock is more than 50% owned
The number of shares of common stock that the security holder will receive from
Corporate tax view
The argument that double (corporate and individual) taxation of equity returns makes
Corporate taxable equivalent
Rate of return required on a par bond to produce the same after-tax yield to
A legal "person" that is separate and distinct from its owners. A corporation is allowed to own
A legal entity, organized under state laws, whose investors purchase
Business owned by stockholders who are not personally
The net present value of an investment divided by the investment's initial cost. Also called
Cost of Debt
The cost of debt (bonds, loans, etc.) that a company is charged for
Cost Plus Estimated Earnings in Excess of Billings
Revenue recognized to date under the percentage-of-completion method in excess of amounts billed. Also known as unbilled accounts
The purchase of a contract to offset a previously established short position.
ratios used to test the adequacy of cash flows generated through earnings for purposes of
Coverdell Education IRA
A form of individual retirement account whose earnings
A short call option position in which the writer owns the number of shares of the underlying
Covered call writing strategy
A strategy that involves writing a call option on securities that the investor
Covered interest arbitrage
A portfolio manager invests dollars in an instrument denominated in a foreign
Covered or hedge option strategies
Strategies that involve a position in an option as well as a position in the
A put option position in which the option writer also is short the corresponding stock or has
A decline in the ability or willingness of banks to lend.
Restriction of loans by lenders so that not all borrowers willing to pay the current interest rate are able to obtain loans.
The return at which two alternative projects have the same net present value.
Current Income Tax Expense
That portion of the total income tax provision that is based on
Indicator of short-term debt paying ability. Determined by dividing current assets by current
A ratio that shows how many times a company could pay its current debts if it used its current assets to pay them. The formula:
Calculated to assess the short-term solvency, or debt-paying
A measure of the ability of a company to use its current assets to
Current assets divided by current liabilities. This ratio indicates the extent to which the claims of short-term creditors are covered by assets expected to be converted to cash in the near future.
Current Tax Payment Act of 1943
A federal Act requiring employers to withhold income taxes from employee pay.
Customary payout ratios
A range of payout ratios that is typical based on an analysis of comparable firms.
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
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