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Financial Terms | |
What If Scenarios |
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Definition of What If ScenariosWhat If ScenariosAnalysis of the economic effect of possible future situations such as economic downturns, loss of key customers, changes in interest rates or price levels, new competitors or technologies.
Related Terms:Accrued interestThe accumulated coupon interest earned but not yet paid to the seller of a bond by the Accrued InterestThe amount of interest accumulated on a debt security between Accrued InterestThe amount of interest owing but not paid. activity analysisthe process of detailing the various repetitive actions that are performed in making a product or Allocation base A measure of activity or volume such as labourhours, machine hours or volume of production Amortizing interest rate swapSwap in which the principal or national amount rises (falls) as interest rates Antidilutive effectResult of a transaction that increases earnings per common share (e.g. by decreasing the ![]() Arm's length priceThe price at which a willing buyer and a willing unrelated seller would freely agree to Ask priceA dealer's price to sell a security; also called the offer price. Bargain-purchase-price optionGives the lessee the option to purchase the asset at a price below fair market BARRA's performance analysis (PERFAN)A method developed by BARRA, a consulting firm in Base interest rateRelated: Benchmark interest rate. Base probability of lossThe probability of not achieving a portfolio expected return. Basis priceprice expressed in terms of yield to maturity or annual rate of return. Benchmark interest rateAlso called the base interest rate, it is the minimum interest rate investors will Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization ![]() Bid priceThis is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit CommitteesA committee formed in response to SEC chairman Arthur Levitt's initiative to improve the financial 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). Calendar effectThe tendency of stocks to perform differently at different times, including such anomalies as Call priceThe price, specified at issuance, at which the issuer of a bond may retire part of the bond at a Call priceThe price for which a bond can be repaid before maturity under a call provision. capital investment analysisRefers to various techniques and procedures 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. ![]() Capitalized interestinterest that is not immediately expensed, but rather is considered as an asset and is then Capitalized Interestinterest incurred during the construction period on monies invested in Cash flow after interest and taxesNet income plus depreciation. Changes in Financial PositionSources of funds internally provided from operations that alter a company's Classical MacroeconomicsThe school of macroeconomic thought prior to the rise of keynesianism. Clean priceBond price excluding accrued interest. Clientele effectThe grouping of investors who have a preference that the firm follow a particular financing Cluster analysisA statistical technique that identifies clusters of stocks whose returns are highly correlated Coinsurance effectRefers to the fact that the merger of two firms decreases the probability of default on Cold-Turkey PolicyDecreasing inflation by immediately decreasing the money growth rate to a new, low rate. Contrast with gradualism. Common-base-year analysisThe representing of accounting information over multiple years as percentages Comparative credit analysisA method of Analysis in which a firm is compared to others that have a desired Compound interestinterest paid on previously earned interest as well as on the principal. Compound Interestinterest paid on principal and on interest earned in previous compound interesta method of determining interest in which interest that was earned in prior periods is added to the original investment so that, in each successive period, interest is earned on both principal and interest compound interestinterest earned on interest. Compound Interestinterest earned on an investment at periodic intervals and added to principal and previous interest earned. Each time new interest earned is calculated it is on a combined total of principal and previous interest earned. Essentially, interest is paid on top of interest. Consumer Price Index (CPI)The CPI, as it is called, measures the prices of consumer goods and services and is a Consumer Price Index (CPI)An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation. continuous lossany reduction in units that occurs uniformly Conversion parity priceRelated:Market conversion price Convertible priceThe contractually specified price per share at which a convertible security can be correlation analysisan analytical technique that uses statistical Cost-Benefit AnalysisThe calculation and comparison of the costs and benefits of a policy or project. cost-benefit analysis the analytical process of comparing therelative costs and benefits that result from a specific course cost driver analysisthe process of investigating, quantifying, Cost–volume–profit analysis (CVP)A method for understanding the relationship between revenue, cost and sales volume. Covered interest arbitrageA portfolio manager invests dollars in an instrument denominated in a foreign Credit analysisThe process of analyzing information on companies and bond issues in order to estimate the credit analysisProcedure to determine the likelihood a customer will pay its bills. Credit LossA loan receivable that has proven uncollectible and is written off. Cross ratesThe exchange rate between two currencies expressed as the ratio of two foreign exchange rates Cumulative-Effect AdjustmentThe cumulative, after-tax, prior-year effect of a change in accounting Cumulative Effect of a Change in Accounting PrincipleThe change in earnings of previous years Cumulative Effect of Accounting ChangeThe change in earnings of previous years assuming Currency futureA financial future contract for the delivery of a specified foreign currency. Daily Interest AccumulationAccount in which interest is accrued daily and credited to the account at the end of a specified time. Deferred futuresThe most distant months of a futures contract. A bond that sells at a discount and does not Delivery priceThe price fixed by the Clearing house at which deliveries on futures are in invoiced; also the Devaluation A decrease in the spot price of the currency
Dilutive effectResult of a transaction that decreases earnings per common share. Dirty priceBond price including accrued interest, i.e., the price paid by the bond buyer. discrete lossa reduction in units that occurs at a specific Discriminant analysisA statistical process that links the probability of default to a specified set of financial ratios. Dollar price of a bondPercentage of face value at which a bond is quoted. 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 Economic assumptionseconomic environment in which the firm expects to reside over the life of the economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. Economic defeasanceSee: in-substance defeasance. Economic dependenceExists when the costs and/or revenues of one project depend on those of another. Economic earningsThe real flow of cash that a firm could pay out forever in the absence of any change in Economic exposureThe extent to which the value of the firm will change because of an exchange rate change. Economic incomeCash flow plus change in present value. economic integrationthe creation of multi-country markets Economic lifeThe period over which a company expects to be able to use an asset. economic order quantityOrder size that minimizes total inventory costs. Economic order quantity (EOQ)The order quantity that minimizes total inventory costs. economic order quantity (EOQ)an estimate of the number economic production run (EPR)an estimate of the number Economic rentsProfits in excess of the competitive level. Economic riskIn project financing, the risk that the project's output will not be salable at a price that will Economic surplusFor any entity, the difference between the market value of all its assets and the market Economic unionAn agreement between two or more countries that allows the free movement of capital, 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 economically reworkedwhen the incremental revenue from the sale of reworked defective units is greater than EconomicsThe study of the allocation and distribution of scare resources among competing wants. Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |