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Definition of VariableVariableA value determined within the context of a model. Also called endogenous variable.
Related Terms:Continuous random variableA random value that can take any fractional value within specified ranges, as decision variablean unknown item for which a linear programming dependent variablean unknown variable that is to be predicted Discrete random variableA random variable that can take only a certain specified set of discrete possible Endogenous variableA value determined within the context of a model. Exogenous variableA variable whose value is determined outside the model in which it is used. Also called independent variablea variable that, when changed, will key variablea critical factor that management believes will Normal random variableA random variable that has a normal probability distribution. Random variableA function that assigns a real number to each and every possible outcome of a random experiment. Semi-variable costsCosts that have both fixed and variable components. slack variablea variable used in a linear programming problem surplus variablea variable used in a linear programming problem that represents overachievement of a minimum requirement; it is associated with greater-than-or-equal-to constraints Variable annuitiesAnnuity contracts in which the issuer pays a periodic amount linked to the investment Variable AnnuityA form of annuity policy under which the amount of each benefit is not guaranteed or specified. The amounts fluctuate according to the earnings of a separate investment account. Variable costA cost that is directly proportional to the volume of output produced. When production is zero, Variable costA cost that increases or decreases in proportion with increases or decreases in the volume of production of goods or services. variable costa cost that varies in total in direct proportion Variable costA cost that changes in amount in relation to changes in a related activity. variable cost ratiothe proportion of each revenue dollar Variable costingA method of costing in which only variable production costs are treated as product costs and in which all fixed (production and non-production) costs are treated as period costs. variable costinga cost accumulation and reporting method variable costsCosts that change as the level of output changes. VARIABLE EXPENSESThose that vary with the amount of goods you produce or sell. These may include utility bills, labor, etc. variable expensesExpenses that change with changes in either sales volume Variable life insurance policyA whole life insurance policy that provides a death benefit dependent on the variable overhead efficiency variancethe difference between budgeted variable overhead based on actual input activity and variable overhead applied to production variable overhead spending variancethe difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity Variable price securityA security, such as stocks or bonds, that sells at a fluctuating, market-determined price. Variable rate CDsShort-term certificate of deposits that pay interest periodically on roll dates. On each roll Variable rate loanLoan made at an interest rate that fluctuates based on a base interest rate such as the Variable rated demand bond (VRDB)Floating rate bond that can be sold back periodically to the issuer. 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 Alternative mortgage instrumentsVariations of mortgage instruments such as adjustable-rate and variablerate AutocorrelationThe correlation of a variable with itself over successive time intervals. Autonomous ExpenditureElements of spending that do not vary systematically with variables such as GDP that are explained by the theory. See also exogenous expenditure. Average inventoryThe beginning inventory for a period, plus the amount at the end of balancing itemvariable that adjusts to maintain the consistency 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 charta graph that depicts the relationships among revenues, variable costs, fixed costs, and profits (or losses) carrying costthe total variable cost of carrying one unit of coefficient of correlationa measure of dispersion that indicates the degree of relative association existing between two variables Coefficient of determinationA measure of the goodness of fit of the relationship between the dependent and ContributionAlso the difference between the selling price and variable costs, which can be expressed either per Contribution marginThe difference between variable revenue and variable cost. contribution marginAn intermediate measure of profit equal to sales revenue contribution marginthe difference between selling price and Contribution marginThe margin that results when variable production costs are subtracted contribution margin ratiothe proportion of each revenue dollar remaining after variable costs have been covered; CorrelationThe simultaneous change in value of two random numeric variables. correlation analysisan analytical technique that uses statistical Correlation coefficientA standardized statistical measure of the dependence of two random variables, Correlation CoefficientA measure of the tendency of two variables to change values Cost behaviourThe idea that fixed costs and variable costs react differently to changes in the volume of cost containmentthe practice of minimizing, to the extent cost structurethe relative composition of an organization’s CovarianceA statistical measure of the degree to which random variables move together. Cumulative probability distributionA function that shows the probability that the random variable will Current DollarsA variable like GDP is measured in current dollars if each year's value is measured in prices prevailing during that year. In contrast, when measured in real or constant dollars, each year's value is measured in a base year's prices. direct costingsee variable costing Direct materials mix varianceThe variance between the budgeted and actual mixes of Equity-linked policiesRelated: variable life ExogenousAn adjective indicating that something is determined by forces unrelated to the theory determining the variables under investigation. Expected ValueThe value of the possible outcomes of a variable weighted by the Floating-rate contractA guaranteed investment contract where the credit rating is tied to some variable gross margin, or gross profitThis first-line measure of profit high-low methoda technique used to determine the fixed input-output coefficienta number (prefaced as a multiplier integer programminga mathematical programming technique in which all solutions for variables must be restricted to whole numbers Interest rate swapA binding agreement between counterparties to exchange periodic interest payments on Inverse floating rate noteA variable rate security whose coupon rate increases as a benchmark interest rate declines. LagPayment of a financial obligation later than is expected or required, as in lead and lag. Also, the number Leading IndicatorA variable that reaches a turning point (a peak or a trough) before the economy reaches a turning point. least squares regression analysisa statistical technique that investigates the association between dependent and independent variables; it determines the line of "best fit" for a set of observations by minimizing the sum of the squares LIBORThe London Interbank Offered Rate; the rate of interest that major international banks in London linear programminga method of mathematical programming used to solve a problem that involves an objective function and multiple limiting factors or constraints long-term variable cost a cost that was traditionally viewed as a fixed cost Log-linear least-squares methodA statistical technique for fitting a curve to a set of data points. One of the Lognormal distributionA distribution where the logarithm of the variable follows a normal distribution. Long runA period of time in which all costs are variable; greater than one year. Long runA period of time in which all costs are variable; greater than one year. MeanThe expected value of a random variable. Measurement errorErrors in measuring an explanatory variable in a regression that leads to biases in mixed costa cost that has both a variable and a fixed component; Moving averageUsed in charts and technical analysis, the average of security or commodity prices Multiple regressionThe estimated relationship between a dependent variable and more than one explanatory variable. multiple regressiona statistical technique that uses two or MultiplierChange in the equilibrium value of a variable of interest per change in a variable over which one has control. "The" multiplier is the change in equilibrium income per change in government spending. Neutrality of MoneyThe doctrine that the money supply affects only the price level, with no long-run impact on real variables. Normal (bell-shaped) distributionIn statistics, a theoretical frequency Normal probability distributionA probability distribution for a continuous random variable that is forms a operating leveragethe proportionate relationship between Optimum selling priceThe price at which profit is maximized, which takes into account the cost behaviour of fixed and variable costs and the relationship between price and demand for a product/service. ordering costthe variable cost associated with preparing, Ordinary least squares (OLS)regression analysis a statistical technique that minimizes the sum of the squared deviations between a dependent variable and one or more independent variables and provides the user overhead costsOverhead generally refers to indirect, in contrast to direct, overhead efficiency variancethe difference between total budgeted overhead at actual hours and total budgeted overhead spending variancethe difference between total actual overhead and total budgeted overhead at actual ParameterA representation that characterizes a part of a model (e.g. a growth rate), the value of which is
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