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Definition of Transparency
The full and fair disclosure of all material items that have implications for the
The use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result.
A characterization used by the Securities and Exchange
earnings of a firm as reported on its income statement.
The sum of cash, accounts receivable, and short-term marketable
the process of detailing the various repetitive actions that are performed in making a product or
Net income adjusted to exclude selected nonrecurring and noncash items of reserve, gain, expense, and loss.
Very early orders for materials before the completion
The discount rate that reflects only the business risks of a project and abstracts from the
Total costs, explicit and implicit.
Requirement that none of an order be executed unless all of it can be executed at the specified price.
An arrangement whereby a security issue is canceled if the underwriter is unable
assign based on the use of a cost driver, a cost predictor,
the systematic assignment of an amount to a recipient
The process of storing costs in one account and shifting them to other
hours, machine hours or volume of production
Allowance for bad debts
An offset to the accounts receivable balance, against which
Allowance for doubtful accounts
A contra account related to accounts receivable that represents the amounts that the company expects will not be collected.
Allowance for Doubtful Accounts
An estimate of the uncollectible portion of accounts receivable
A method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
approximated net realizable value at split-off allocation
a method of allocating joint cost to joint products using a
Asset allocation decision
The decision regarding how an institution's funds should be distributed among the
Any large principal payment due at maturity for a bond or loan with or without a a sinking
BARRA's performance analysis (PERFAN)
A method developed by BARRA, a consulting firm in
basic earnings per share (EPS)
This important ratio equals the net
Basic Earnings Power Ratio
Percentage of earnings relative to total assets; indication of how
Bill of materials
A listing of all the materials and quantities that go to make up a completed product.
bill of materials
a document that contains information about
Bill of materials
An itemization of the parts and subassemblies required to create a
Bill of materials (BOM)
A listing of all parts and subassemblies required to produce one
In the mortgage pipeline, the risk that prospective borrowers of loans committed to be
An analysis of the level of sales at which a project would make zero profit.
analysis of the level of sales at which the company breaks even.
An analytical technique for studying the relationships between fixed cost, variable cost, and profits. A breakeven chart graphically depicts the nature of breakeven analysis. The breakeven point represents the volume of sales at which total costs equal total revenues (that is, profits equal zero).
Breeder bill of materials
A bill of material that accounts for the generation and
An option that gives the right to buy the underlying futures contract.
a. An option to buy a certain quantity of a stock or commodity for a
Call an option
To exercise a call option.
A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
Call money rate
Also called the broker loan rate , the interest rate that banks charge brokers to finance
An option contract that gives its holder the right (but not the obligation) to purchase a specified
A contract that gives the holder the right to buy an asset for a
Right to buy an asset at a specified exercise price on or before the exercise date.
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
A feature of some callable bonds that establishes an initial period when the bonds may not be
An embedded option granting a bond issuer the right to buy back all or part of the issue prior
The combination of cash flow uncertainty and reinvestment risk introduced by a call provision.
A swaption in which the buyer has the right to enter into a swap as a fixed-rate payer. The
A financial security such as a bond with a call option attached to it, i.e., the issuer has the right to
A bond that allows the issuer to buy back the bond at a
Bond that may be repurchased by the issuer before maturity at specified call price.
decision allocation of invested funds between risk-free assets versus the risky portfolio.
Capital Consumption Allowance
Capital Cost Allowance (CCA)
The annual depreciation expense allowed by the Canadian Income Tax Act.
capital investment analysis
Refers to various techniques and procedures
Temporary investments of currently excess cash in short-term, high-quality
Changes in Financial Position
Sources of funds internally provided from operations that alter a company's
chief financial officer (CFO)
Officer who oversees the treasurer and controller and sets overall financial strategy.
Communication barrier between financiers (investment bankers) and traders. This barrier is
Clear a position
To eliminate a long or short position, leaving no ownership or obligation.
A statistical technique that identifies clusters of stocks whose returns are highly correlated
The representing of accounting information over multiple years as percentages
Comparative credit analysis
A method of analysis in which a firm is compared to others that have a desired
Voluntary arrangement to restructure a firm's debt, under which payment is reduced.
A measure of earnings that includes only the results of the primary operating
Corporate financial management
The application of financial principals within a corporation to create and
Corporate financial planning
financial planning conducted by a firm that encompasses preparation of both
an analytical technique that uses statistical
the assignment, using some reasonable basis,
The calculation and comparison of the costs and benefits of a policy or project.
cost-benefit analysis the analytical process of comparing the
relative costs and benefits that result from a specific course
cost driver analysis
the process of investigating, quantifying,
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
Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
costs of financial distress
Costs arising from bankruptcy or distorted business decisions before bankruptcy.
In the balance of payments, counterpart items are analogous to unrequited transfers in the
Country financial risk
The ability of the national economy to generate enough foreign exchange to meet
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
The process of analyzing information on companies and bond issues in order to estimate the
Procedure to determine the likelihood a customer will pay its bills.
Under certain circumstances, taxation rules assume that a transfer of property has occurred, even though there has not been an actual purchase or sale. This could happen upon death or transfer of ownership.
A provision that prohibits the company from calling the bond before a certain date. During this
Tax deductions that businesses can claim when they spend money on investment goods.
The practice of reporting conflicting or markedly different information in official
diluted earnings per share (EPS)
This measure of earnings per share
a readily identifiable part of a product; the cost of such a part
Direct materials cost
The cost of all materials used in a cost object, such as finished goods.
Direct materials mix variance
The variance between the budgeted and actual mixes of
Additional information attached to a company’s financial statements, usually
A statistical process that links the probability of default to a specified set of financial ratios.
Dupont system of financial control
Highlights the fact that return on assets (ROA) can be expressed in terms
Dynamic asset allocation
An asset allocation strategy in which the asset mix is mechanistically shifted in
Inventory that has been physically marked as being for a
Net income for the company during the period.
In general, refers to a company's total sales less cost of sales and operating expenses, including interest and income tax.
earnings before interest and income tax (EBIT)
A measure of profit that
Earnings before interest and taxes (EBIT)
A financial measure defined as revenues less cost of goods sold
Earnings before interest and taxes (EBIT)
The operating profit before deducting interest and tax.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
The operating profit before deducting interest, tax, depreciation and amortization.
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