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Financial Terms | |
Underground Economy |
Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
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Definition of Underground EconomyUnderground EconomyEconomic activity not observed by tax collectors and government statisticians.
Related Terms:Closed EconomyAn economy in which imports and exports are very small relative to GDP and so are ignored in macroeconomic analysis. Contrast with open economy. global economyan economy characterized by the international Open EconomyAn economy which engages in a significant amount of trade. Contrast with closed economy. Closed-end fundAn investment company that sells shares like any other corporation and usually does not Closed-end mortgageMortgage against which no additional debt may be issued. Global bondsBonds that are designed so as to qualify for immediate trading in any domestic capital market Global fundA mutual fund that can invest anywhere in the world, including the U.S. ![]() GlobalizationTendency toward a worldwide investment environment, and the integration of national capital globalizationa changeover in market focus from competition "Soft" Capital Rationingcapital rationing that under certain circumstances can be violated or even viewed Absolute AdvantageThe ability to produce a good or service with fewer resources than competitors. See also comparative advantage. Absolute priorityRule in bankruptcy proceedings whereby senior creditors are required to be paid in full Absolute Right of Returngoods may be returned to the seller by the purchaser without restrictions. Absorption costingA method of costing in which all fixed and variable production costs are charged to products or services using an allocation base. absorption costinga cost accumulation and reporting Absorption costingA methodology under which all manufacturing costs are assigned ![]() Accelerated cost recovery system (ACRS)Schedule of depreciation rates allowed for tax purposes. Accounting insolvencyTotal liabilities exceed total assets. A firm with a negative net worth is insolvent on acid test ratio (also called the quick ratio)The sum of cash, accounts receivable, and short-term marketable activitya repetitive action performed in fulfillment of business functions activity analysisthe process of detailing the various repetitive actions that are performed in making a product or Activity-based budgetingA method of budgeting that develops budgets based on expected activities and cost drivers – see also activity-based costing. activity-based budgeting (ABB)planning approach applying activity drivers to estimate the levels and costs of activities necessary to provide the budgeted quantity and Activity-based costingA method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers. activity based costing (ABC)A relatively new method advocated for the activity-based costing (ABC)a process using multiple cost drivers to predict and allocate costs to products and services; Activity-based costing (ABC)A cost allocation system that compiles costs and assigns ![]() activity-based management (ABM)a discipline that focuses on the activities incurred during the production/performance process as the way to improve the value received activity centera segment of the production or service activity drivera measure of the demands on activities and, Additional paid-in capitalAmounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with capital in excess of par. Additional paid-in capitalAny payment received from investors for stock that exceeds additional paid-in capitalDifference between issue price and par value of stock. Also called capital surplus. After-tax profit marginThe ratio of net income to net sales. After-tax real rate of returnMoney after-tax rate of return minus the inflation rate. Aggressive Capitalization Policiescapitalizing and reporting as assets significant portions of Aggressive Cost CapitalizationCost capitalization that stretches the flexibility within generally Allocation base A measure of activity or volume such as labourhours, machine hours or volume of production Asset activity ratiosRatios that measure how effectively the firm is managing its assets. Asymmetric informationinformation that is known to some people but not to other people. Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. authorized share capitalMaximum number of shares that the company is permitted to issue, as specified in the firm’s articles of incorporation. Average cost of capitalA firm's required payout to the bondholders and to the stockholders expressed as a Average Propensity to ConsumeRatio of consumption to disposable income. See also marginal propensity to consume. Average Propensity to SaveRatio of saving to disposable income. See also marginal propensity to save. Average tax ratetaxes as a fraction of income; total taxes divided by total taxable income. average tax rateTotal taxes owed divided by total income. Balance of Merchandise TradeThe difference between exports and imports of goods. Balance of tradeNet flow of goods (exports minus imports) between countries. Balance of TradeSee balance of merchandise trade. Bank for International Settlements (BIS)An international bank headquartered in Basel, Switzerland, which BARRA's performance analysis (PERFAN)A method developed by BARRA, a consulting firm in Basket tradesRelated: Program trades. Before-tax profit marginThe ratio of net income before taxes to net sales. Block tradeA large trading order, defined on the New York Stock Exchange as an order that consists of Break-even analysisAn analysis of the level of sales at which a project would make zero profit. break-even analysisanalysis of the level of sales at which the company breaks even. Break-Even AnalysisAn 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). Break-even tax rateThe tax rate at which a party to a prospective transaction is indifferent between entering business-value-added activityan activity that is necessary for the operation of the business but for which a customer would not want to pay Buy on openingTo buy at the beginning of a trading session at a price within the opening range. Canadian Life and Health Insurance Association (CLHIA)An association of most of the life and health insurance companies in Canada that conducts research and compiles information about the life and health insurance industry in Canada. CapitalMoney invested in a firm. CAPITALThe money, raised by selling stock or bonds or taking out loans, that you use to start, operate, and grow a business. CapitalThe shareholders’ investment in the business; the difference between the assets and liabilities capitalA very broad term rooted in Economic theory and referring to CapitalThe investment by a company’s owners in a business, plus the impact of any Capitala) Physical capital: buildings, equipment, and any materials used to produce other goods and services in the future rather than being consumed today. CapitalExpenditures Purchases of productive long-lived assets, in particular, items of property, CapitalAny asset or stock of assets, financial or physical, capable of producing income. Capital accountNet result of public and private international investment and lending activities. Capital AccountThat part of the balance of payments accounts that records demands for and supplies of a currency arising from purchases or sales of assets. Capital allocationdecision Allocation of invested funds between risk-free assets versus the risky portfolio. capital assetan asset used to generate revenues or cost savings Capital assetA fixed asset, something that is expected to have long-term usage within Capital asset pricing model (CAPM)An Economic theory that describes the relationship between risk and Capital Asset Pricing Model (CAPM)A model for estimating equilibrium rates of return and values of capital asset pricing model (CAPM)Theory of the relationship between risk and return which states that the expected risk Capital budgetA firm's set of planned capital expenditures. capital budgetmanagement’s plan for investments in longterm capital budgetList of planned investment projects. Capital budgetingThe process of choosing the firm's long-term capital assets. capital budgetingRefers generally to analysis procedures for ranking Capital BudgetingThe process of ranking and selecting investment alternatives and capital budgetinga process of evaluating an entity’s proposed Capital budgetingThe series of steps one follows when justifying the decision to purchase capital budgeting decisionDecision as to which real assets the firm should acquire. Capital Consumption AllowanceSee depreciation. Capital Cost Allowance (CCA)The annual depreciation expense allowed by the Canadian Income tax Act. Capital employedThe total of debt and equity, i.e. the total funds in the business. Capital expendituresAmount used during a particular period to acquire or improve long-term assets such as capital expendituresRefers to investments by a business in long-term Capital flightThe transfer of capital abroad in response to fears of political risk. Capital FlowsPurchase by foreigners of our assets (capital inflows) or our purchase of foreign assets (capital outflows). Capital gainWhen a stock is sold for a profit, it's the difference between the net sales price of securities and Capital gainThe gain recognized on the sale of a capital item (fixed asset), calculated Capital GainAn increase in the value of an asset. capital gainThe positive difference between the adjusted cost base of an investment held as a capital property and the proceeds of disposition you receive when you sell it. When you sell such an investment for more than you paid, you realize a capital gain. Capital gains yieldThe price change portion of a stock's return. CAPITAL IN EXCESS OF PAR VALUEWhat a company collected when it sold stock for more than the par value per share. Capital in excess parAmounts 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. capital investment analysisRefers to various techniques and procedures Capital InvestmentsMoney used to purchase fixed assets for a business, such as land, buildings, or machinery. Also, money invested in a business on the understanding that it will be used to purchase permanent assets rather than to cover day-to-day operating expenses. Capital leaseA lease obligation that has to be capitalized on the balance sheet. Capital leaseA lease in which the lessee obtains some ownership rights over the asset Capital LeaseOne where substantially all of the benefits and risks of ownership are transferred to the lessee. It must be reflected on the company's balance sheet as an asset and corresponding liability. Capital lossThe difference between the net cost of a security and the net sale price, if that security is sold at a loss. capital lossThe negative difference between the adjusted cost base of an investment held as a capital property and the proceeds of disposition you receive when you sell it. When you sell such an investment for less than you paid, you incur a capital loss. Capital marketThe market for trading long-term debt instruments (those that mature in more than one year). Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |