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Competence |
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Definition of CompetenceCompetenceSufficient ability or fitness for ones needs. Possessing the necessary abilities to be qualified to
Related Terms:Core competencyPrimary area of competence. Narrowly defined fields or tasks at which a company or Z scoreStatistical measure that quantifies the distance (measured in standard deviations) a data point is from Balanced ScorecardA system of non-financial performance measurement that links innovation, customer and process measures to financial performance. balanced scorecard (BSC)an approach to performance Core EarningsA measure of earnings that includes only the results of the primary operating DLOM (discount for lack of marketability)an amount or percentage deducted from an equity interest to reflect lack of marketability. QMDM (quantitative marketability discount model)model for calculating DLOM for minority interests r the discount rate Asset/liability managementAlso called surplus management, the task of managing funds of a financial Availability floatChecks deposited by a company that have not yet been cleared. Base probability of lossThe probability of not achieving a portfolio expected return. Basic business strategiesKey strategies a firm intends to pursue in carrying out its business plan. Blue-chip companyLarge and creditworthy company. Business cycleRepetitive cycles of economic expansion and recession. Business failureA business that has terminated with a loss to creditors. Business riskThe risk that the cash flow of an issuer will be impaired because of adverse economic Certainty equivalentAn amount that would be accepted in lieu of a chance at a possible higher, but Company-specific riskRelated: Unsystematic risk Complete capital marketA market in which there is a distinct marketable security for each and every Complete portfolioThe entire portfolio, including risky and risk-free assets. Contingent pension liabilityUnder ERISA, the firm is liable to the plan participants for up to 39% of the net Conventional projectA project with a negative initial cash flow (cash outflow), which is expected to be Cost company arrangementArrangement whereby the shareholders of a project receive output free of Cumulative probability distributionA function that shows the probability that the random variable will Current liabilitiesAmount owed for salaries, interest, accounts payable and other debts due within 1 year. Defined benefit planA pension plan in which the sponsor agrees to make specified dollar payments to Defined contribution planA pension plan in which the sponsor is responsible only for making specified Depository Trust Company (DTC)DTC is a user-owned securities depository which accepts deposits of Dow Jones industrial averageThis is the best known U.S.index of stocks. It contains 30 stocks that trade on Holding companyA corporation that owns enough voting stock in another firm to control management and Independent projectA project whose acceptance or rejection is independent of the acceptance or rejection of Inflation uncertaintyThe fact that future inflation rates are not known. It is a possible contributing factor to Intercompany loanLoan made by one unit of a corporation to another unit of the same corporation. Intercompany transactionTransaction carried out between two units of the same corporation. LiabilityA financial obligation, or the cash outlay that must be made at a specific time to satisfy the Liability funding strategiesInvestment strategies that select assets so that cash flows will equal or exceed Liability swapAn interest rate swap used to alter the cash flow characteristics of an institution's liabilities so Limited liabilityLimitation of possible loss to what has already been invested. Limited-liability instrumentA security, such as a call option, in which the owner can only lose his initial Long-term liabilitiesAmount owed for leases, bond repayment and other items due after 1 year. Limited-liability instrumentA security, such as a call option, in which the owner can only lose his initial investment. MarketabilityA negotiable security is said to have good marketability if there is an active secondary market Nondiversifiability of human capitalThe difficulty of diversifying one's human capital (the unique Normal probability distributionA probability distribution for a continuous random variable that is forms a Other long term liabilitiesValue of leases, future employee benefits, deferred taxes and other obligations Primary marketThe first buyer of a newly issued security buys that security in the Primary market. All Primary offeringA firm selling some of its own newly issued shares to investors. ProbabilityThe relative likelihood of a particular outcome among all possible outcomes. Probability density functionThe probability function for a continuous random variable. Probability distributionAlso called a probability function, a function that describes all the values that the random variable can Probability functionA function that assigns a probability to each and every possible outcome. Profitability indexThe present value of the future cash flows divided by the initial investment. Also called Profitability ratiosRatios that focus on the profitability of the firm. Profit margins measure performance Project loan certificate (PLC)A Primary program of Ginnie Mae for securitizing FHA-insured and coinsured Project loan securitiesSecurities backed by a variety of FHA-insured loan types - primarily multi-family Project loansUsually FHA-insured and HUD-guaranteed mortgages on multiple-family housing complexes, Project notes (PNs)project notes are issued by municipalities to finance federally sponsored programs in Projected maturity dateWith CMOs, final payment at the end of the estimated cash flow window. Risk-adjusted profitabilityA probability used to determine a "sure" expected value (sometimes called a Subjective probabilitiesProbabilities that are determined subjectively (for example, on the basis of Unlimited liabilityFull liability for the debt and other obligations of a legal entity. The general partners of a Current liabilitiesBills a company must pay within the next twelve months. LIABILITIESWhat a company owes to its creditors. In other words, debts. LONG-TERM LIABILITIESBills that are payable in more than one year, such as a mortgage or bonds. AccountabilityThe process of satisfying stakeholders in the organization that managers have acted in the best interests of the stakeholders, a result of the stewardship function of managers, which takes place through accounting. Current liabilitiesAmounts due and payable by the business within a period of 12 months, e.g. bank overdraft, creditors and accruals. LiabilitiesDebts that the business owns. Long-term liabilitiesAmounts owing after more than one year. Profitability indexSee cash value added. LiabilitiesAmounts owed by the company. current liabilitiesCurrent means that these liabilities require payment in spontaneous liabilitiesSee operating liabilities. Companyspecific RiskSee asset-specific risk Independent ProjectsA situation where an increase (or decrease) in the benefits of one Primary MarketMarket where debt and equity securities are sold by an issuing Probability DistributionA list of all possible outcomes and the chance of each outcome Profitability IndexA method for determining the profitability of an investment. It is ProjectAn investment opportunity for a company business intelligence (BI) systema formal process for gathering and analyzing information and producing intelligence to meet decision making needs; requires information about business process reengineering (BPR)the process of combining information technology to create new and more effective business-value-added activityan activity that is necessary for the operation of the business but for which a customer would not want to pay design for manufacturability (DFM)a process that is part of the project management of a new product; concerned with finding optimal solutions to minimizing product failures goala desired abstract achievement goal congruencea circumstance in which the personal and independent projectan investment project that has no specific Internet business modela model that involves limited liability companyan organizational form that is a hybrid of the corporate and partnership organizational limited liability partnershipan organizational form that is a hybrid of the corporate and partnership organizational mutually exclusive projectsa set of proposed capital projects from which one is chosen, causing all the others to be rejected mutually inclusive projectsa set of proposed capital projects that are all related and that must all be chosen if the Primary project is chosen probability distributiona range of possible values for which each value has an assigned likelihood of occurrence profitability index (Pl)a ratio that compares the present value of net cash flows to the present value of the net investment projectthe purchase, installation, and operation of a capital asset service companyan individual or firm engaged in a high or moderate degree of conversion that results in service output total expected value (for a project)the sum of the individual cash flows in a probability distribution multiplied by their related probabilities units started and completedthe difference between the number of units completed for the period and the units in beginning inventory; it can also be computed as the number of units started during the period minus the units in ending inventory Current liabilityThis is typically the accounts payable, short-term notes payable, and LiabilityA dollar amount of obligation payable to another entity. Parent companyA company that retains control over one or more other companies. Subsidiary companyA company that is controlled by another company through ownership availability floatChecks already deposited that have not yet been cleared. company cost of capitalExpected rate of return demanded by investors in a company, determined by the average risk of the company’s assets and operations. Dow Jones Industrial AverageIndex of the investment performance of a portfolio of 30 “blue-chip” stocks. limited liabilityThe owners of the corporation are not personally responsible for its obligations. mutually exclusive projectsTwo or more projects that cannot be pursued simultaneously.
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