|value-added (VA) activity|
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Definition of value-added (VA) activity
value-added (VA) activity
an activity that increases the worth of the product or service to the customer
an activity that is necessary for the operation of the business but for which a customer would not want to pay
an activity that increases the time spent on a product or service but that does not increase its worth or value to the customer
Same as PV, but usually includes a subtraction for an initial cash outlay.
the value in today’s dollars of cash flows that occur in different time periods.
Money owed by customers.
The ratio of net credit sales to average accounts receivable, a measure of how
The net present value analysis of an asset if financed solely by equity
A promise to sell an asset before the seller has lined up purchase of the asset. This
Ratios that measure how effectively the firm is managing its assets.
Checks deposited by a company that have not yet been cleared.
The weighted-average age of all of the firm's outstanding invoices.
The ratio of accounts receivables to sales, or the total
A devaluation that is designed to cheapen a nation's currency and thereby
Bond yield calculated on an annual percentage rate method. Differs from annual
With respect to convertible bonds, the value the security would have if it were not convertible
The method used for computing the bond-equivalent yield.
The annualized yield to maturity computed by doubling the semiannual yield.
A company's book value is its total assets minus intangible assets and liabilities, such as debt. A
Book value per share
The ratio of stockholder equity to the average number of common shares. Book value
Cash and equivalents
The value of assets that can be converted into cash immediately, as reported by a
A short-term security that is sufficiently liquid that it may be considered the financial
Temporary investments of currently excess cash in short-term, high-quality
An amount the insurance company will pay if the policyholder ends a whole life
An amount that would be accepted in lieu of a chance at a possible higher, but
Common stock equivalent
A convertible security that is traded like an equity issue because the optioned
Continuous random variable
A random value that can take any fractional value within specified ranges, as
Also called parity value, the value of a convertible security if it is converted immediately.
Corporate taxable equivalent
Rate of return required on a par bond to produce the same after-tax yield to
Coupon equivalent yield
True interest cost expressed on the basis of a 365-day year.
A statistical measure of the degree to which random variables move together.
Days in receivables
Average collection period.
Contracts such as options and futures whose price is derived from the price of the
Markets for derivative instruments.
A financial security, such as an option, or future, whose value is derived in part from the
Devaluation A decrease in the spot price of the currency
Discrete random variable
A random variable that can take only a certain specified set of discrete possible
A value determined within the context of a model.
Equivalent annual annuity
The equivalent amount per year for some number of years that has a present
Equivalent annual benefit
The equivalent annual annuity for the net present value of an investment project.
Equivalent annual cash flow
Annuity with the same net present value as the company's proposed investment.
Equivalent annual cost
The equivalent cost per year of owning an asset over its entire life.
Equivalent bond yield
Annual yield on a short-term, non-interest bearing security calculated so as to be
Given the after-tax stream associated with a lease, the maximum amount of conventional
Equivalent taxable yield
The yield that must be offered on a taxable bond issue to give the same after-tax
The time interval over which a money manager's performance is evaluated.
The amount of advantage over a current market transaction provided by an in-the-money
A variable whose value is determined outside the model in which it is used. Also called
The weighted average of a probability distribution.
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.
Firm's net value of debt
Total firm value minus total firm debt.
Also called a busted convertible, a convertible security that is trading like a straight
The amount of cash at a specified date in the future that is equivalent in value to a specified
Publicly owned stock in a firm is replaced with complete equity ownership by a
Trades in which an investor believes he or she possesses pertinent
Intrinsic value of an option
The amount by which an option is in-the-money. An option which is not in-themoney
Intrinsic value of a firm
The present value of a firm's expected future net cash flows discounted by the
The Modigliani and Miller theorem that a firm's capital structure is irrelevant to the firm's
John Lintner's work (1956) suggested that dividend policy is related to a target level of
Net amount that could be realized by selling the assets of a firm after paying the debt.
The amount a policyholder may borrow against a whole life insurance policy at the interest rate
1) The price at which a security is trading and could presumably be purchased or sold.
Market value ratios
Ratios that relate the market price of the firm's common stock to selected financial
Market value-weighted index
An index of a group of securities computed by calculating a weighted average
Related: par value.
Evaluation of risky prospects based on the expected value and variance of possible outcomes.
The selection of portfolios based on the means and variances of their returns. The
Mean-variance efficient portfolio
Related: Markowitz efficient portfolio
Graph of the lowest possible portfolio variance that is attainable for a given
The portfolio of risky assets with lowest variance.
Net adjusted present value
The adjusted present value minus the initial cost of an investment.
Net advantage of refunding
The net present value of the savings from a refunding.
Net advantage to leasing
The net present value of entering into a lease financing arrangement rather than
Net advantage to merging
The difference in total post- and pre-merger market value minus the cost of the merger.
Net asset value (NAV)
The value of a fund's investments. For a mutual fund, the net asset value per share
Net book value
The 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 opportunities
A model valuing a firm in which net present value of new
Net present value of future investments
The present value of the total sum of NPVs expected to result from
Net present value rule
An investment is worth making if it has a positive NPV. Projects with negative NPVs
Net salvage value
The after-tax net cash flow for terminating the project.
Normal random variable
A random variable that has a normal probability distribution.
Defeasance whereby the firm's debt is canceled.
Original face value
The principal amount of the mortgage as of its issue date.
Also called the maturity value or face value, the amount that the issuer agrees to pay at the maturity date.
The evaluation of a manager's performance which involves, first, determining
A term that refers to a relatively simple derivative financial instrument, usually a swap or other
Weighted sum of the covariance and variances of the assets in a portfolio.
The amount of cash today that is equivalent in value to a payment, or to a stream of payments,
Present value factor
Factor 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
Private Export Funding Corporation (PEFCO)
Company that mobilizes private capital for financing the
Related: Conventional pass-throughs.
The sale of a bond or other security directly to a limited number of investors.
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