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Definition of Value-added tax
Method of indirect taxation whereby a tax is levied at each stage of production on the value
The sum of all the interest options in your policy, including interest.
An amount of money invested plus the interest earned on that money.
The net present value analysis of an asset if financed solely by equity
The ratio of net income to net sales.
Money after-tax rate of return minus the inflation rate.
a method of allocating joint cost to joint products using a
A situation wherein participants in a transaction have different net tax rates.
taxes as a fraction of income; total taxes divided by total taxable income.
Total taxes owed divided by total income.
The ratio of net income before taxes to net sales.
The amount of cash payable on a benefit.
With respect to convertible bonds, the value the security would have if it were not convertible
A company's book value is its total assets minus intangible assets and liabilities, such as debt. A
An asset’s cost basis minus accumulated depreciation.
The value of an asset as carried on the balance sheet of a
An asset’s original cost, less any depreciation that has been subsequently incurred.
Net worth of the firm’s assets or liabilities according
book value and book value per share
Generally speaking, these terms
BOOK VALUE OF COMMON STOCK
The theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals:
Book value per share
The ratio of stockholder equity to the average number of common shares. Book value
Book Value per Share
The book value of a company divided by the number of shares
Break-even tax rate
The tax rate at which a party to a prospective transaction is indifferent between entering
an activity that is necessary for the operation of the business but for which a customer would not want to pay
CAPITAL IN EXCESS OF PAR VALUE
What a company collected when it sold stock for more than the par value per share.
Cash flow after interest and taxes
Net income plus depreciation.
An amount the insurance company will pay if the policyholder ends a whole life
Cash Surrender Value
This is the amount available to the owner of a life insurance policy upon voluntary termination of the policy before it becomes payable by the death of the life insured. This does not apply to term insurance but only to those policies which have reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit usually has tax implications.
Cash Surrender Value
Benefit that entitles a policy owner to an amount of money upon cancellation of a policy.
Cash value added (CVA)
A method of investment appraisal that calculates the ratio of the net present value of an
Also called parity value, the value of a convertible security if it is converted immediately.
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
Current Income Tax Expense
That portion of the total income tax provision that is based on
Current Tax Payment Act of 1943
A federal Act requiring employers to withhold income taxes from employee pay.
Deferred Income Tax Expense
That portion of the total income tax provision that is the result
Deferred Tax Asset
Future tax benefit that results from (1) the origination of a temporary difference
Deferred Tax Liability
Future tax obligation that results from the origination of a temporary
A non-cash expense that provides a source of free cash flow. Amount allocated during the
Depreciation tax shield
The value of the tax write-off on depreciation of plant and equipment.
depreciation tax shield
Reduction in taxes attributable to the depreciation allowance.
Agreement between two countries that taxes paid abroad can be offset against
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.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working
EBDDT - Earnings before depreciation and deferred taxes
This measure is used principally by
Economic Value Added (EVA)
Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge
economic value added (EVA)
a measure of the extent to which income exceeds the dollar cost of capital; calculated
economic value added (EVA)
Term used by the consulting firm Stern Stewart for profit remaining after deduction of the cost
Effective Tax Rate
The total tax provision divided by pretax book income from continuing
Electronic Federal Tax Payment Systems (EFTPS)
An electronic funds transfer system used by businesses to remit taxes to the government.
Equivalent taxable yield
The yield that must be offered on a taxable bond issue to give the same after-tax
The amount of advantage over a current market transaction provided by an in-the-money
The value that an asset is expected to have at the time it is sold at a predetermined
The weighted average of a probability distribution.
The value of the possible outcomes of a variable weighted by the
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
Extraordinary positive value
A positive net present value.
See: Par value.
The nominal value of a security. Also called the par value.
The maturity value of a security. Also known as par value,
Payment at the maturity of the bond. Also called par value or maturity value.
The payoff value of a bond upon maturity. Also called par value. See principal.
The nominal value which appears on the face of a document recording an entitlement, generally an amount of money that has to be repaid on the maturity of a debt instrument.
Fair market value
The price that an asset or service will fetch on the open market.
Fair Market Value
The highest price available, expressed in terms of cash, in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to transact.
The amount at which an asset could be purchased or sold or a liability incurred or
Federal Unemployment Tax Act (FUTA)
A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a
Firm's net value of debt
Total firm value minus total firm debt.
Foreign tax credit
Home country credit against domestic income tax for foreign taxes paid on foreign
The amount of cash at a specified date in the future that is equivalent in value to a specified
The amount a given payment, or series of payments, will be worth
the amount to which one or more sums of
The value that a sum of money (the present value) earning
Amount to which an investment will grow after earning interest.
The amount to which a payment or series of payments will grow by a given future date when compounded by a given interest rate. FVIF future value interest factor.
Imputation tax system
Arrangement by which investors who receive a dividend also receive a tax credit for
What the business paid to the IRS.
A government tax on the income earned by an individual or corporation.
Income Tax Expense
See income tax provision.
Income Tax Provision
The expense deduction from pretax book income reported on the
taxes paid by consumers when they buy goods and services. A sales tax is an example.
The loss in purchasing power due to inflation eroding the real value of financial assets such as cash.
Interest equalization tax
tax on foreign investment by residents of the U.S. which was abolished in 1974.
Interest tax shield
The reduction in income taxes that results from the tax-deductibility of interest payments.
interest tax shield
tax savings resulting from deductibility of interest payments.
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the
Intrinsic value of an option
The amount by which an option is in-the-money. An option which is not in-themoney
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
Investment Tax Credit
A reduction in taxes offered to firms to induce them to increase investment spending.
Limited-tax general obligation bond
A general obligation bond that is limited as to revenue sources.
Net amount that could be realized by selling the assets of a firm after paying the debt.
The net proceeds (after taxes and expenses) of selling the assets
Net proceeds that would be realized by selling the firm’s assets and paying off its creditors.
The amount a policyholder may borrow against a whole life insurance policy at the interest rate
Margin Tax Rate
The tax rate applicable to the last unit of income.
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