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Definition of Working capital
Defined as the difference in current assets and current liabilities (excluding short-term
Current assets less current liabilities. Money that revolves in the business as part of the process of buying, making and selling goods and services, particularly in relation to debtors, creditors, inventory and bank.
total current assets minus total current liabilities
The amount of a company’s current assets minus its current liabilities;
Current assets minus current liabilities
Funds invested in a company's cash, accounts receivable and inventory. Net working capital is current assets minus current liabilities.
Current assets minus current liabilities. Often simply referred to as working capital.
Current assets minus current liabilities.
The cash component of working capital.
The management of current assets and current liabilities to maximize shortterm liquidity.
working capital expressed as a percentage of sales.
A common element of a financial plan that describes projected capital spending and the
In general, the time between cash disbursement and cash collection. In net working capital
A feature of a debt or credit agreement that is designed to protect the lender or creditor. It is common to characterize covenants as either positive or negative covenants.
Cash not required for operations or for reinvestment. Often defined as earnings before
A format for the operating section of the cash-flow statement that
A measure of the ability of a business to pay its debts as they fall due – see also working capital.
A demand for additional funds because of adverse price movement. Maintenance margin
Earnings before depreciation minus taxes. It measures the cash generated from
Financing needed for the normal operation of a business, that is long term capital and working capital.
Provisions that place constraints on the operations of borrowers, such as restrictions on
Target rate of return pricing
A method of pricing that estimates the desired return on investment to be achieved from the
"Soft" Capital Rationing
capital rationing that under certain circumstances can be violated or even viewed
Additional paid-in capital
Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with capital in excess of par.
Additional paid-in capital
Any payment received from investors for stock that exceeds
additional paid-in capital
Difference between issue price and par value of stock. Also called capital surplus.
Aggressive Capitalization Policies
capitalizing and reporting as assets significant portions of
Aggressive Cost Capitalization
Cost capitalization that stretches the flexibility within generally
authorized share capital
Maximum number of shares that the company is permitted to issue, as specified in the firm’s articles of incorporation.
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
Money invested in a firm.
The money, raised by selling stock or bonds or taking out loans, that you use to start, operate, and grow a business.
The shareholders’ investment in the business; the difference between the assets and liabilities
A very broad term rooted in economic theory and referring to
The investment by a company’s owners in a business, plus the impact of any
a) Physical capital: buildings, equipment, and any materials used to produce other goods and services in the future rather than being consumed today.
Expenditures Purchases of productive long-lived assets, in particular, items of property,
Any asset or stock of assets, financial or physical, capable of producing income.
Net result of public and private international investment and lending activities.
That part of the balance of payments accounts that records demands for and supplies of a currency arising from purchases or sales of assets.
decision Allocation of invested funds between risk-free assets versus the risky portfolio.
an asset used to generate revenues or cost savings
A fixed asset, something that is expected to have long-term usage within
Capital asset pricing model (CAPM)
An economic theory that describes the relationship between risk and
Capital Asset Pricing Model (CAPM)
A model for estimating equilibrium rates of return and values of
capital asset pricing model (CAPM)
Theory of the relationship between risk and return which states that the expected risk
A firm's set of planned capital expenditures.
management’s plan for investments in longterm
List of planned investment projects.
The process of choosing the firm's long-term capital assets.
Refers generally to analysis procedures for ranking
The process of ranking and selecting investment alternatives and
a process of evaluating an entity’s proposed
The series of steps one follows when justifying the decision to purchase
capital budgeting decision
Decision as to which real assets the firm should acquire.
Capital Consumption Allowance
Capital Cost Allowance (CCA)
The annual depreciation expense allowed by the Canadian Income Tax Act.
The total of debt and equity, i.e. the total funds in the business.
Amount used during a particular period to acquire or improve long-term assets such as
Refers to investments by a business in long-term
The transfer of capital abroad in response to fears of political risk.
Purchase by foreigners of our assets (capital inflows) or our purchase of foreign assets (capital outflows).
When a stock is sold for a profit, it's the difference between the net sales price of securities and
The gain recognized on the sale of a capital item (fixed asset), calculated
An increase in the value of an asset.
The positive 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 more than you paid, you realize a capital gain.
Capital gains yield
The price change portion of a stock's return.
CAPITAL IN EXCESS OF PAR VALUE
What a company collected when it sold stock for more than the par value per share.
Capital in excess par
Amounts in excess of the par value or stated value that have been paid by the public to acquire stock in the company; synonymous with additional paid-in capital.
capital investment analysis
Refers to various techniques and procedures
Money used to purchase fixed assets for a business, such as land, buildings, or machinery. Also, money invested in a business on the understanding that it will be used to purchase permanent assets rather than to cover day-to-day operating expenses.
A lease obligation that has to be capitalized on the balance sheet.
A lease in which the lessee obtains some ownership rights over the asset
One where substantially all of the benefits and risks of ownership are transferred to the lessee. It must be reflected on the company's balance sheet as an asset and corresponding liability.
The difference between the net cost of a security and the net sale price, if that security is sold at a loss.
The 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.
The market for trading long-term debt instruments (those that mature in more than one year).
The market in which investors buy and sell shares of companies, normally associated with a Stock Exchange.
A market that specializes in trading long-term, relatively high risk
The market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded.
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.
Markets for long-term financing.
A situation in which assets can easily be purchased by foreigners.
Placing one or more limits on the amount of new investment undertaken by a firm, either
a condition that exists when there is an
Limit set on the amount of funds available for investment.
Refers to recouping, or regaining, invested capital over
Ownership shares issued by a business corporation. A business
The total amount of plant, equipment, and other physical capital.
The makeup of the liabilities and stockholders' equity side of the balance sheet, especially
The combination of debt, preferred stock, and common stock used
Firm’s mix of long-term financing.
The mix of the various types of debt and equity capital maintained by a firm. The more debt capital a firm has in its capital structure, the more highly leveraged the firm is considered to be.
capital structure, or capitalization
Terms that refer to the combination of
Amounts of directly contributed equity capital in excess of the par value.
An economic system in which the marketplace, through the pricing mechanism, determines the allocation and distribution of scarce goods and services, with a minimum of government involvement.
The debt and/or equity mix that fund a firm's assets.
The total amount of debt and equity issued by a company.
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