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Capital Flows |
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Definition of Capital FlowsCapital FlowsPurchase by foreigners of our assets (capital inflows) or our purchase of foreign assets (capital outflows).
Related Terms:NPV (net present value of cash flows)Same as PV, but usually includes a subtraction for an initial cash outlay. PV (present value of cash flows)the value in today’s dollars of cash flows that occur in different time periods. Average cost of capitalA firm's required payout to the bondholders and to the stockholders expressed as a CapitalMoney invested in a firm. Capital accountNet result of public and private international investment and lending activities. Capital allocationdecision Allocation of invested funds between risk-free assets versus the risky portfolio. Capital asset pricing model (CAPM)An economic theory that describes the relationship between risk and Capital budgetA firm's set of planned capital expenditures. Capital budgetingThe process of choosing the firm's long-term capital assets. Capital expendituresAmount used during a particular period to acquire or improve long-term assets such as Capital flightThe transfer of capital abroad in response to fears of political risk. Capital gainWhen a stock is sold for a profit, it's the difference between the net sales price of securities and Capital gains yieldThe price change portion of a stock's return. Capital leaseA lease obligation that has to be capitalized on the balance sheet. Capital lossThe difference between the net cost of a security and the net sale price, if that security is sold at a loss. Capital marketThe market for trading long-term debt instruments (those that mature in more than one year). Capital market efficiencyReflects the relative amount of wealth wasted in making transactions. An efficient Capital market imperfections viewThe 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. Capital rationingPlacing one or more limits on the amount of new investment undertaken by a firm, either Capital structureThe makeup of the liabilities and stockholders' equity side of the balance sheet, especially Capital surplusAmounts of directly contributed equity capital in excess of the par value. CapitalizationThe debt and/or equity mix that fund a firm's assets. Capitalization methodA method of constructing a replicating portfolio in which the manager purchases a Capitalization ratiosAlso called financial leverage ratios, these ratios compare debt to total capitalization Capitalization tableA table showing the capitalization of a firm, which typically includes the amount of CapitalizedRecorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures Capitalized interestInterest that is not immediately expensed, but rather is considered as an asset and is then Complete capital marketA market in which there is a distinct marketable security for each and every Cost of capitalThe required return for a capital budgeting project. Cost of limited partner capitalThe discount rate that equates the after-tax inflows with outflows for capital Dedicated capitalTotal par value (number of shares issued, multiplied by the par value of each share). Also Efficient capital marketA market in which new information is very quickly reflected accurately in share Expected future cash flowsProjected future cash flows associated with an asset of decision. Free cash flowsCash not required for operations or for reinvestment. Often defined as earnings before Hard capital rationingcapital rationing that under no circumstances can be violated. Human capitalThe unique capabilities and expertise of individuals. Incremental cash flowsDifference between the firm's cash flows with and without a project. Issued share capitalTotal amount of shares that are in issue. Related: outstanding shares. Legal capitalValue at which a company's shares are recorded in its books. Long-term debt/capitalizationIndicator of financial leverage. Shows long-term debt as a proportion of the Market capitalizationThe total dollar value of all outstanding shares. Computed as shares times current Market capitalization rateExpected return on a security. The market-consensus estimate of the appropriate Net working capitalCurrent assets minus current liabilities. Often simply referred to as working capital. Nondiversifiability of human capitalThe difficulty of diversifying one's human capital (the unique Opportunity cost of capitalExpected return that is foregone by investing in a project rather than in Other capitalIn the balance of payments, other capital is a residual category that groups all the capital Outstanding share capitalIssued share capital less the par value of shares that are held in the company's treasury. Pecking-order view (of capital structure)The argument that external financing transaction costs, especially Perfect capital marketA market in which there are never any arbitrage opportunities. Perfect market view (of capital structure)Analysis of a firm's capital structure decision, which shows the Personal tax view (of capital structure)The argument that the difference in personal tax rates between Pie model of capital structureA model of the debt/equity ratio of the firms, graphically depicted in slices of Planned capital expenditure programcapital expenditure program as outlined in the corporate financial plan. Pro forma capital structure analysisA method of analyzing the impact of alternative capital structure Real capitalWealth that can be represented in financial terms, such as savings account balances, financial Scheduled cash flowsThe mortgage principal and interest payments due to be paid under the terms of the "Soft" Capital Rationingcapital rationing that under certain circumstances can be violated or even viewed Statement of cash flowsA financial statement showing a firm's cash receipts and cash payments during a Statement-of-cash-flows methodA method of cash budgeting that is organized along the lines of the statement of cash flows. Static theory of capital structureTheory that the firm's capital structure is determined by a trade-off of the Venture capitalAn investment in a start-up business that is perceived to have excellent growth prospects but Weighted average cost of capitalExpected return on a portfolio of all the firm's securities. Used as a hurdle Working capitalDefined as the difference in current assets and current liabilities (excluding short-term Working capital managementThe management of current assets and current liabilities to maximize shortterm liquidity. Working capital ratioWorking capital expressed as a percentage of sales. CAPITALThe money, raised by selling stock or bonds or taking out loans, that you use to start, operate, and grow a business. CAPITAL IN EXCESS OF PAR VALUEWhat a company collected when it sold stock for more than the par value per share. CASH FLOWS FROM FINANCING ACTIVITIESA section on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations. CASH FLOWS FROM INVESTING ACTIVITIESA section on the cashflow statement that shows how much cash came in and went out because of various investing activities like purchasing machinery. CASH FLOWS FROM OPERATIONSA section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business. CapitalThe shareholders’ investment in the business; the difference between the assets and liabilities Capital employedThe total of debt and equity, i.e. the total funds in the business. CapitalizeTo make a payment that might otherwise be an expense (in the Profit and Loss account) an asset Capital marketThe market in which investors buy and sell shares of companies, normally associated with a Stock Exchange. Cost of capitalThe costs incurred by an organization to fund all its investments, comprising the risk-adjusted Return on capital employed (ROCE)The operating profit before interest and tax as a percentage of the total shareholders’ funds plus Weighted average cost of capitalSee cost of capital. Working capitalCurrent 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. Additional paid-in capitalAmounts 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. Capital in excess parAmounts 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. Contributed capitalThe amount put into the business by the owners by purchasing stock and by paying more than the par value for the stock (additional paid-in capital or capital in excess of par). Statement of Cash FlowsOne of the basic financial statements; it lists the cash inflows and cash outflows of the company, grouped into the categories of operating activities, financing activities, and investing activities. The Statement of Cash flows is prepared for a specified period of time. capitalA very broad term rooted in economic theory and referring to capital budgetingRefers generally to analysis procedures for ranking capital expendituresRefers to investments by a business in long-term capital investment analysisRefers to various techniques and procedures capital recoveryRefers to recouping, or regaining, invested capital over capital stockOwnership shares issued by a business corporation. A business capital structure, or capitalizationTerms that refer to the combination of capitalization of costsWhen a cost is recorded originally as an increase statement of cash flowsOne of the three primary financial statements cost of capitalRefers to the interest cost of debt capital used by a business market capitalization, or market capCurrent market value per share of weighted-average cost of capitalWeighted means that the proportions of Capital Asset Pricing Model (CAPM)A model for estimating equilibrium rates of return and values of Capital BudgetingThe process of ranking and selecting investment alternatives and Capital MarketA market that specializes in trading long-term, relatively high risk Capital StructureThe combination of debt, preferred stock, and common stock used Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |