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Value-added tax |
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Definition of Value-added taxValue-added taxMethod of indirect taxation whereby a tax is levied at each stage of production on the value
Related Terms:NPV (net present value of cash flows)Same as PV, but usually includes a subtraction for an initial cash outlay. PV (present value of cash flows)the value in today’s dollars of cash flows that occur in different time periods. Adjusted present value (APV)The net present value analysis of an asset if financed solely by equity 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. Asymmetric taxesA situation wherein participants in a transaction have different net tax rates. Average tax ratetaxes as a fraction of income; total taxes divided by total taxable income. Before-tax profit marginThe ratio of net income before taxes to net sales. Bond valueWith respect to convertible bonds, the value the security would have if it were not convertible Book valueA company's book value is its total assets minus intangible assets and liabilities, such as debt. A Book value per shareThe ratio of stockholder equity to the average number of common shares. Book value Break-even tax rateThe tax rate at which a party to a prospective transaction is indifferent between entering Carrying valueBook value. Cash flow after interest and taxesNet income plus depreciation. Cash-surrender valueAn amount the insurance company will pay if the policyholder ends a whole life Conversion valueAlso called parity value, the value of a convertible security if it is converted immediately. Corporate tax viewThe argument that double (corporate and individual) taxation of equity returns makes Corporate taxable equivalentRate of return required on a par bond to produce the same after-tax yield to Deferred taxesA non-cash expense that provides a source of free cash flow. Amount allocated during the Depreciation tax shieldThe value of the tax write-off on depreciation of plant and equipment. Double-tax agreementAgreement between two countries that taxes paid abroad can be offset against Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Equivalent taxable yieldThe yield that must be offered on a taxable bond issue to give the same after-tax Exercise valueThe amount of advantage over a current market transaction provided by an in-the-money Expected valueThe weighted average of a probability distribution. Expected value of perfect informationThe expected value if the future uncertain outcomes could be known Extraordinary positive valueA positive net present value. Face valueSee: Par value. Firm's net value of debtTotal firm value minus total firm debt. Foreign tax creditHome country credit against domestic income tax for foreign taxes paid on foreign Future valueThe amount of cash at a specified date in the future that is equivalent in value to a specified Imputation tax systemArrangement by which investors who receive a dividend also receive a tax credit for Interest equalization taxtax on foreign investment by residents of the U.S. which was abolished in 1974. Interest tax shieldThe reduction in income taxes that results from the tax-deductibility of interest payments. Intrinsic value of an optionThe amount by which an option is in-the-money. An option which is not in-themoney Intrinsic value of a firmThe present value of a firm's expected future net cash flows discounted by the Investment tax creditProportion of new capital investment that can be used to reduce a company's tax bill Investment valueRelated:straight value. Limited-tax general obligation bondA general obligation bond that is limited as to revenue sources. Liquidation valueNet amount that could be realized by selling the assets of a firm after paying the debt. Loan valueThe amount a policyholder may borrow against a whole life insurance policy at the interest rate Marginal tax rateThe tax rate that would have to be paid on any additional dollars of taxable income earned. Market value1) The price at which a security is trading and could presumably be purchased or sold. Market value ratiosRatios that relate the market price of the firm's common stock to selected financial Market value-weighted indexAn index of a group of securities computed by calculating a weighted average Maturity valueRelated: par value. Net adjusted present valueThe adjusted present value minus the initial cost of an investment. Net asset value (NAV)The value of a fund's investments. For a mutual fund, the net asset value per share Net book valueThe current book value of an asset or liability; that is, its original book value net of any Net present value (NPV)The present value of the expected future cash flows minus the cost. Net present value of growth opportunitiesA model valuing a firm in which net present value of new Net present value of future investmentsThe present value of the total sum of NPVs expected to result from Net present value ruleAn investment is worth making if it has a positive NPV. Projects with negative NPVs Net salvage valueThe after-tax net cash flow for terminating the project. Original face valueThe principal amount of the mortgage as of its issue date. Par valueAlso called the maturity value or face value, the amount that the issuer agrees to pay at the maturity date. Parity valueRelated:conversion value Personal tax view (of capital structure)The argument that the difference in personal tax rates between Present valueThe amount of cash today that is equivalent in value to a payment, or to a stream of payments, Present value factorFactor used to calculate an estimate of the present value of an amount to be received in Present value of growth opportunities (NPV)Net present value of investments the firm is expected to make Price value of a basis point (PVBP)Also called the dollar value of a basis point, a measure of the change in Progressive tax systemA tax system wherein the average tax rate increases for some increases in income but Relative valueThe attractiveness measured in terms of risk, liquidity, and return of one instrument relative to Replacement valueCurrent cost of replacing the firm's assets. Residual valueUsually refers to the value of a lessor's property at the time the lease expires. Salvage valueScrap value of plant and equipment. Short-term tax exemptsShort-term securities issued by states, municipalities, local housing agencies, and Split-rate tax systemA tax system that taxes retained earnings at a higher rate than earnings that are Standardized valueAlso called the normal deviate, the distance of one data point from the mean, divided by Straight valueAlso called investment value, the value of a convertible security without the con-version option. TANs (tax anticipation notes)tax anticipation notes issued by states or municipalities to finance current Tax anticipation bills (TABs)Special bills that the Treasury occasionally issues that mature on corporate Tax booksSet of books kept by a firm's management for the IRS that follows IRS rules. The stockholder's Tax clawback agreementAn agreement to contribute as equity to a project the value of all previously Tax differential view ( of dividend policy)The view that shareholders prefer capital gains over dividends, Tax-exempt sectorThe municipal bond market where state and local governments raise funds. Bonds issued Tax free acquisitionA merger or consolidation in which 1) the acquirer's tax basis in each asset whose Tax havenA nation with a moderate level of taxation and/or liberal tax incentives for undertaking specific Tax Reform Act of 1986A 1986 law involving a major overhaul of the U.S. tax code. Tax shieldThe reduction in income taxes that results from taking an allowable deduction from taxable income. Tax swapSwapping two similar bonds to receive a tax benefit. Tax deferral optionThe feature of the U.S. Internal Revenue Code that the capital gains tax on an asset is Tax-deferred retirement plansEmployer-sponsored and other plans that allow contributions and earnings to Tax-timing optionThe option to sell an asset and claim a loss for tax purposes or not to sell the asset and Taxable acquisitionA merger or consolidation that is not a tax-fee acquisition. The selling shareholders are Taxable incomeGross income less a set of deductions. Taxable transactionAny transaction that is not tax-free to the parties involved, such as a taxable acquisition. Terminal valueThe value of a bond at maturity, typically its par value, or the value of an asset (or an entire Time value of an optionThe portion of an option's premium that is based on the amount of time remaining Time value of moneyThe idea that a dollar today is worth more than a dollar in the future, because the dollar Two-tier tax systemA method of taxation in which the income going to shareholders is taxed twice. Utility valueThe welfare a given investor assigns to an investment with a particular return and risk. Value-at-Risk model (VAR)Procedure for estimating the probability of portfolio losses exceeding some Value additivity principalPrevails when the value of a whole group of assets exactly equals the sum of the Value dateIn the market for Eurodollar deposits and foreign exchange, value date refers to the delivery date Value datingRefers to when value or credit is given for funds transferred between banks. Value managerA manager who seeks to buy stocks that are at a discount to their "fair value" and sell them at Withholding taxA tax levied by a country of source on income paid, usually on dividends remitted to the
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