|Working capital ratio|
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Definition of Working capital ratio
Working capital ratio
working capital expressed as a percentage of sales.
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid
The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard
Legal document establishing a corporation and its structure and purpose.
The ratio of total assets to stockholder equity.
ratios that measure how effectively the firm is managing its assets.
A firm's required payout to the bondholders and to the stockholders expressed as a
Money invested in a firm.
Net result of public and private international investment and lending activities.
decision Allocation of invested funds between risk-free assets versus the risky portfolio.
An economic theory that describes the relationship between risk and
A firm's set of planned capital expenditures.
The process of choosing the firm's long-term capital assets.
Amount used during a particular period to acquire or improve long-term assets such as
The transfer of capital abroad in response to fears of political risk.
When a stock is sold for a profit, it's the difference between the net sales price of securities and
Capital gains yield
The price change portion of a stock's return.
A lease obligation that has to be capitalized on the balance sheet.
The difference between the net cost of a security and the net sale price, if that security is sold at a loss.
The market for trading long-term debt instruments (those that mature in more than one year).
Capital market efficiency
Reflects the relative amount of wealth wasted in making transactions. An efficient
Capital market imperfections view
The view that issuing debt is generally valuable but that the firm's
Capital market line (CML)
The line defined by every combination of the risk-free asset and the market portfolio.
Placing one or more limits on the amount of new investment undertaken by a firm, either
The makeup of the liabilities and stockholders' equity side of the balance sheet, especially
Amounts of directly contributed equity capital in excess of the par value.
The debt and/or equity mix that fund a firm's assets.
A method of constructing a replicating portfolio in which the manager purchases a
Also called financial leverage ratios, these ratios compare debt to total capitalization
A table showing the capitalization of a firm, which typically includes the amount of
Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures
Interest that is not immediately expensed, but rather is considered as an asset and is then
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
The proportion of a firm's assets held as cash.
Common stock ratios
ratios that are designed to measure the relative claims of stockholders to earnings
Complete capital market
A market in which there is a distinct marketable security for each and every
A single centralized account into which funds collected at regional locations
Movement of cash from different lockbox locations into a single concentration
Controlled foreign corporation (CFC)
A foreign corporation whose voting stock is more than 50% owned
The number of shares of common stock that the security holder will receive from
A legal "person" that is separate and distinct from its owners. A corporation is allowed to own
Cost of capital
The required return for a capital budgeting project.
Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital
The net present value of an investment divided by the investment's initial cost. Also called
ratios used to test the adequacy of cash flows generated through earnings for purposes of
Indicator of short-term debt paying ability. Determined by dividing current assets by current
Customary payout ratios
A range of payout ratios that is typical based on an analysis of comparable firms.
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
Indicator of financial leverage. Compares assets provided by creditors to assets provided
Total debt divided by total assets.
Debt-service coverage ratio
Earnings before interest and income taxes plus one-third rental charges, divided
The date on which a firm's directors meet and announce the date and amount of the next
Total par value (number of shares issued, multiplied by the par value of each share). Also
Dividend payout ratio
Percentage of earnings paid out as dividends.
The product of modified duration and the initial price.
Domestic International Sales Corporation (DISC)
A U.S. corporation that receives a tax incentive for
A common gauge of the price sensitivity of an asset or portfolio to a change in interest rates.
Earnings retention ratio
Specialized banking institutions, authorized and chartered by the Federal Reserve Board
The duration calculated using the approximate duration formula for a bond with an
Efficient capital market
A market in which new information is very quickly reflected accurately in share
The percentage of the assets that were spent to run a mutual fund (as of the last annual
The time when the option contract ceases to exist (expires).
An expiration cycle relates to the dates on which options on a particular security expire. A
The last day (in the case of American-style) or the only day (in the case of European-style)
Feasible target payout ratios
Payout ratios that are consistent with the availability of excess funds to make
Federal Deposit Insurance Corporation (FDIC)
A federal institution that insures bank deposits.
Financial leverage ratios
Related: capitalization ratios.
The result of dividing one financial statement item by another. ratios help analysts interpret
Fisher's separation theorem
The firm's choice of investments is separate from its owner's attitudes towards
Fixed asset turnover ratio
The ratio of sales to fixed assets.
Fixed-charge coverage ratio
A measure of a firm's ability to meet its fixed-charge obligations: the ratio of
Foreign Sales Corporation (FSC)
A special type of corporation created by the Tax Reform Act of 1984 that
Freddie Mac (Federal Home Loan Mortgage Corporation)
A Congressionally chartered corporation that
The ratio of a pension plan's assets to its liabilities.
Funds From Operations (FFO)
Used by real estate and other investment trusts to define the cash flow from
Hard capital rationing
capital rationing that under no circumstances can be violated.
Hedge ratio (delta)
The ratio of volatility of the portfolio to be hedged and the return of the volatility of the
The unique capabilities and expertise of individuals.
Income statement (statement of operations)
A statement showing the revenues, expenses, and income (the
Interest coverage ratio
The ratio of the earnings before interest and taxes to the annual interest expense. This
Irrational call option
The implied call imbedded in the MBS. Identified as irrational because the call is
Issued share capital
Total amount of shares that are in issue. Related: outstanding shares.
Value at which a company's shares are recorded in its books.
Measures of the relative contribution of stockholders and creditors, and of the firm's ability
ratios that measure a firm's ability to meet its short-term financial obligations on time.
Indicator of financial leverage. Shows long-term debt as a proportion of the
Long-term debt ratio
The ratio of long-term debt to total capitalization.
Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.
Low price-earnings ratio effect
The tendency of portfolios of stocks with a low price-earnings ratio to
ratios that measure a firm's ability to meet its short-term financial obligations on time.
The weighted-average term to maturity of the cash flows from the bond, where the
The total dollar value of all outstanding shares. Computed as shares times current
Market capitalization rate
Expected return on a security. The market-consensus estimate of the appropriate
Market value ratios
ratios that relate the market price of the firm's common stock to selected financial
Market price of a share divided by book value per share.
The ratio of Macaulay duration to (1 + y), where y = the bond yield. Modified duration is
A modification of standard duration to account for the impact on duration of MBSs of
Mortgage-Backed Securities Clearing Corporation
A wholly owned subsidiary of the Midwest Stock
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