See Also: Loan Term 5 C’s of Credit (5 C’s of Banking) How to manage your banking relationship Bank Charge Financial Instruments Term Deposit Definition A term deposit, also referred to as a time deposit or a certificate of deposit (CD), is an amount of money invested into a financial institution for a set amount
See Also: Federal Unemployment Tax Act (FUTA) Tax Brackets Prepaid Income Tax Marginal Tax Rate Cash Flow After Tax Ad Valorem Tax Tax Efficiency Definition Tax efficiency, defined as the process of organizing an investment so that it receives the least possible taxation, is as important in general investment as it is in business. Business,
See Also: Sunk costs: How should they affect your future business decisions? Variable vs Fixed Cost Replacement Costs Joint Costs Service Department Costs Ten In-House Secrets for Reducing Your Company’s Legal Costs Capital Budgeting Methods Sunk Cost Definition What is sunk cost? A sunk cost is a cost that has been incurred and cannot be
See Also: Efficient Market Theory Effective Rate of Interest Calculation Coupon Rate Bond Discount Rate Federal Funds Rate Definition Sharpe Ratio Definition The sharpe ratio definition is the excess return or risk premium of a well diversified portfolio or investment per unit of risk. Measure sharpe ratio using standard deviation. You may also know this
See Also: New York Stock Exchange (NYSE) Generally Accepted Accounting Principles (GAAP) American Institute of Certified Public Accountants – AICPA Financial Accounting Standards Board (FASB) Full Disclosure Principle Corporate Veil Investment Banks Treasury Stock Accounting Fraud Targeted Securities and Exchange Commission (SEC) Definition The Securities and Exchange Commission (SEC) is a U.S. government agency that
See Also: Operating Profit Margin Ratio Analysis Free Cash Flow Analysis Cost Volume Profit Model General Ledger Reconciliation and Analysis How to Prepare a Break Even Analysis Sensitivity Analysis Definition Sensitivity analysis consists of studying the effects of changes in variables on the outcomes of a mathematical model. Furthermore, a model may consist of numerous
The rule of 72 is an approximation tool used to determine the amount of time it will take for money to double on the earnings of compound interest. Rule of 72 Explained The rule of 72 is essentially an estimation for determining the amount of years or the doubling time of an investment. Do this
See Also: Ten In-House Secrets for Reducing Your Company’s Legal Costs Board of Directors Benefits of an Advisory Board How to Form an Advisory Board Why is Intellectual Property Risk Everybody’s Problem Red Herring Definition The red herring definition, or preliminary prospectus, is a legal document that must be submitted to the SEC for approval
See Also: Economic Indicators Stagflation What are the ‘Twin Deficits’? Supply and Demand Elasticity London Interbank Offered Rate (Libor) Controversy Recession Definition A recession definition is a period of slowed economic activity. The term describes a contracting economy. It is typically defined as two consecutive quarters of declining gross domestic product. Characterize a recession by
See Also: Profitability Index Method Profitability Index Method Formula Use the following formula where PV = the present value of the future cash flows in question. Profitability Index = (PV of future cash flows) ÷ Initial investment Or = (NPV + Initial investment) ÷ Initial Investment: As one would expect, the NPV stands for the Net Present Value of
See Also: Profitability Index Method Formula Net Present Value Method Net Present Value versus Internal Rate of Return Time Value of Money Adjusted Present Value (APV) Method of Valuation Future Value Profitability Index Definition Profitability index method measures the present value of benefits for every dollar investment. In other words, it involves the ratio that
See Also: Valuation Methods Arbitrage Pricing Theory Capital Budgeting Methods Discount Rates NPV Internal Rate of Return Method Required Rate of Return The required rate of return, defined as the minimum return the investor will accept for a particular investment, is a pivotal concept to evaluating any investment. It is supposed to compensate the investor
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