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Definition of Political Business Cycle

Political Business Cycle Image 1

Political Business Cycle

A business cycle caused by policies undertaken to help a government be re-elected.



Related Terms:

Basic business strategies

Key strategies a firm intends to pursue in carrying out its business plan.


Business cycle

Repetitive cycles of economic expansion and recession.


Business failure

A business that has terminated with a loss to creditors.


Business risk

The risk that the cash flow of an issuer will be impaired because of adverse economic
conditions, making it difficult for the issuer to meet its operating expenses.


Cash conversion cycle

The length of time between a firm's purchase of inventory and the receipt of cash
from accounts receivable.


Cash cycle

In general, the time between cash disbursement and cash collection. In net working capital
management, it can be thought of as the operating cycle less the accounts payable payment period.


Expiration cycle

An expiration cycle relates to the dates on which options on a particular security expire. A
given option will be placed in 1 of 3 cycles, the January cycle, the February cycle, or the March cycle. At any
point in time, an option will have contracts with 4 expiration dates outstanding, 2 in near-term months and 2
in far-term months.


Political Business Cycle Image 2

Market cycle

The period between the 2 latest highs or lows of the S&P 500, showing net performance of a
fund through both an up and a down market. A market cycle is complete when the S&P is 15% below the
highest point or 15% above the lowest point (ending a down market). The dates of the last market cycle are:
12/04/87 to 10/11/90 (low to low).


Operating cycle

The average time intervening between the acquisition of materials or services and the final
cash realization from those acquisitions.


Political risk

Possibility of the expropriation of assets, changes in tax policy, restrictions on the exchange of
foreign currency, or other changes in the business climate of a country.


Product cycle

The time it takes to bring new and/or improved products to market.


Replacement cycle

The frequency with which an asset is replaced by an equivalent asset.


Budget cycle

The annual period over which budgets are prepared.


Lifecycle costing

An approach to costing that estimates and accumulates the costs of a product/service over
its entire lifecycle, i.e. from inception to abandonment.


business intelligence (BI) system

a formal process for gathering and analyzing information and producing intelligence to meet decision making needs; requires information about
internal processes as well as knowledge, technologies, and competitors


business process reengineering (BPR)

the process of combining information technology to create new and more effective
business processes to lower costs, eliminate unnecessary
work, upgrade customer service, and increase
speed to market


business-value-added activity

an activity that is necessary for the operation of the business but for which a customer would not want to pay


cycle time

the time between the placement of an order to
the time the goods arrive for usage or are produced by
the company; it is equal to value-added time plus nonvalue-
added time


Internet business model

a model that involves
(1) few physical assets,
(2) little management hierarchy, and
(3) a direct pipeline to customers


life cycle costing

the accumulation of costs for activities that
occur over the entire life cycle of a product from inception
to abandonment by the manufacturer and consumer


manufacturing cycle efficiency (MCE)

a ratio resulting from dividing the actual production time by total lead time;
reflects the proportion of lead time that is value-added


product life cycle

a model depicting the stages through
which a product class (not necessarily each product) passes


cash conversion cycle

Period between firm’s payment for materials
and collection on its sales.


operating risk (business risk)

Risk in firm’s operating income.


Business Cycle

Fluctuations of GDP around its long-run trend, consisting of recession, trough, expansion, and peak.


Real Business Cycle Theory

Belief that business cycles arise from real shocks to the economy, such as technology advances and natural resource discoveries, and have little to do with monetary policy.


Payroll Cycle

The period of service for which a company compensates its employees.


Political Costs

The costs of additional regulation, including higher taxes, borne by large and
high-profile firms.


Cycle counting

The frequent, scheduled counting of a subset of all inventories,
with the intent of spotting inventory record inaccuracies, investigating root
causes, and correcting those problems.


Business Expansion Investment

The use of capital to create more money through the addition of fixed assets or through income producing vehicles.


Cash Cycle

The length of time between a purchase of materials and collection of accounts receivable generated by the sale of the products made from the materials.


High-Risk Small Business

Firm viewed as being particularly subject to risk from an investors perspective.


Commercial Business Loan (Credit Insurance)

An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for business purposes.


 

 

 

 

 

 

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