Term
| What is the difference between the Cash Conversion Cycle (CCC) and the operating cycle? |
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Definition
| the difference indicates the amount of time for which suppliers are willing to extend credit. |
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Term
| In what ways can a company shorten the CCC? |
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Definition
1) Turnover inventory as fast as possible
2) Collect Accounts as fast as possible
3) delaying paying on an accounts
4) reduce mail and processing - clearing time for orders |
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Term
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Definition
| An inventory control system that segregates inventory into items requiring the largest dollar investment and the most intensive control |
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Term
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Definition
| CCC = OC - APP = AAI + ACP = APP |
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Term
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Definition
| The elapsed time between the points at which a firm pays for raw materials and at which it receives payment for finished goods. |
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Term
| What are the five C's for Credit? |
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Definition
| Character, Capacity, Capital, Collateral, and Conditions |
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Term
| What do the five C's of credit do? |
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Definition
| They provide a framework for performing in depth credit analysis. But, they DO NOT, provide specific accept or reject decisions. |
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Term
| Within the five C's what does Character stand for? |
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Definition
| Refers to the applicant's record of meeting past obligations. |
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Term
| Within the five C's what does Capacity stand for? |
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Definition
| Refers to the applicant's ability to repay the requested credit. |
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Term
| Within the five C's what does Capital stand for? |
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Definition
| Refers to the financial strength of the applicant as reflected by its capital structure. |
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Term
| Within the five C's what does Collateral stand for? |
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Definition
| Consists of the assets the applicant has available for securing the credit. |
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Term
| Within the five C's what does Conditions stand for? |
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Definition
| Refer to current general and industry-specific economic conditions. |
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Term
| A FLOAT is funds that have been sent by the payer but are not yet usable for the payee. |
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Definition
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Term
| Because in the CCC its presence increases both the firm's average collection period and its average payment period. |
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Definition
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Term
| What are the different kinds of FLOAT? |
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Definition
| Mail, Processing, Availability, and Clearing |
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Term
| The delay between when payment is place in he mail and when payment is received. |
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Definition
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Term
| The time between receipt of the payment and its deposit into the firm's account. |
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Definition
| What is PROCESSING FLOAT? |
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Term
| The time between deposit of the check and availability of the funds in the firm. |
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Definition
| What is AVAILABILITY FLOAT? |
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Term
| The time between deposit of the check and presentation of the check back to the bank of which it is drawn. |
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Definition
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Term
| The primary cash management tasks related to the collection, concentration, and disbursement of funds for the company are generally referred to as what? |
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Definition
| What is Cash Position Management |
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Term
| What is the collection system characterized by many collection points, each of which may have a depository account at a local bank? |
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Definition
| What is Field Banking system |
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Term
| A collection system in business-to-business transactions under which business customers are sent bills in an electronic format and can pay them via electronic means. |
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Definition
| What is Electronic Invoice Presentment and Payment (EIPP) |
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Term
| A technique for speeding up collections that affects all three components of float. Customers mail payments to a post office box, which is emptied regularly by the firm's bank, which processes and deposits the payments. |
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Definition
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Term
Currencies float freely in this system, and exchange rates (prices) are set by supply and demand.
Examples include:
$US, Japanese Yen, British Pound, Swiss Franc float freely. |
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Definition
| What is the floating exchange rate system |
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Term
Currency value is fixed (pegged) in terms of another currency.
If demand for currency increases (decreases), government must sell (buy) currency to maintain fixed rate. |
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Definition
| What is the fixed exchanged rate system |
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Term
| The exchange rate that applies to currency trades that occur immediately. |
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Definition
| What is the spot exchange rate |
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Term
| The fixed price that applies for contracts with delivery in the future. |
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Definition
| What is the forward exchange rate |
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Term
| When one currency buys more of another on the forward market than it buys on the spot market. |
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Definition
| What is the forward premium |
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Term
| When one currency buys less of another on the forward market than it buys on the spot market. |
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Definition
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Term
| Annual cash dividend per share divided by the current stock price. |
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Definition
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Term
| The percentage of current earnings available for common stockholders paid out as dividends. Calculated by dividing the firm's cash dividend paid per share by its earnings per share in a given period. |
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Definition
| What is a dividend payout ratio |
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Term
| This refers to actions taken by a government that have a negative impact on the value of foreign companies operating that country, such as raising taxes on a firm's activities or erecting barriers that prevent a firm from repatriating profits back to the home country. |
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Definition
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Term
| What is the formula for COE? |
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Definition
| (Dper Share / CMVS) + GRD |
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Term
| What is the formula for Future Value? |
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Definition
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Term
| What are the Percentage of Sales calculations? |
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Definition
CIACN Divide/Net Income by Tax/Tax
CIACN / Sales, Dividends/Net Income, Taxable Income/Tax |
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Term
| What is the formula for Growth of Retained Earnings (GRE)? |
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Definition
GRE = N-D/N
Net Income - Dividends / Net Income |
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Term
| What is the formula for ROI? |
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Definition
ROI = G-C/C
Rate of Return = Gain - Cost / Cost |
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Term
| What is the formula for Forward Price Rate (FPR)? |
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Definition
FPR = (FR-S) / S
Forward Price = Forward - Spot / Spot |
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Term
| What is the formula for Forward Discount Rate (FDR)? |
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Definition
FDR = (FR-S) / S * (365/n)
Forward Discount = FPR * (365/days) |
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Term
| What is the formula for Forward Value (FV)? |
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Definition
FV = A(1+r)^n
Forward Value = Investment(1+%)raised by number of years |
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Term
| What is the formula and check for the Cash Conversion Cycle (CCC)? |
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Definition
CCC = OC-APP or AAI + ACP - APP
CCC = Operating Cycle - Average Payment Period
CCC = Average Age Inventory + Average Collection Period - Average Payment Period |
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Term
| What is the formula for Operating Cycle (OC)? |
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Definition
OC = AAI + ACP
OC = Average Age Inventory + Average Collection Period |
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Term
| What is the Dividend formula? |
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Definition
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Term
| What is the Float Valuation formula? |
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Definition
FVR = S * ra / 365
Float = Sales * reduction in days / 365 |
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Term
| What is the Float Cost of Capital formula? |
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Definition
FCC = S*ra/365 * LC
FCC = FVR * Cost of Capital % (changed to a decimal) |
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Term
| What are the five C's of credit? |
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Definition
| Character, Capacity, Capital, Collateral, Conditions |
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Term
| What is the formula for Current Ratio? |
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Definition
CR = CA/CL
Current Assets / Current Liabilities |
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Term
| What is the formula for Quick Ratio? |
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Definition
QR = C&E + STI + AR / CL
Cash & Equivalents + Short-Term Investments + Accounts Receivable / Current Liabilities |
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Term
| What does Current Ratio do? |
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Definition
| It's a formula to test a company's liquidity or working capital position. |
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Term
| Quick Ratio is also known by what other term? |
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Definition
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Term
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Definition
CR = C + CE + IF / CL
Cash + Cash Equivalents + Invested Funds / Current Liabilities |
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Term
| What is the Cost of Sales Per Day formula? |
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Definition
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Term
| What is the formula for Average Accounts Payable (AAP)? |
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Definition
| Add the year's beginning balance and the ending AP amount and divide by 2 |
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Term
| What is the formula for Days Payable Outstanding? |
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Definition
DPO = CSPD / AAP
Determines how long it takes a company to pay its debts |
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Term
| Profit Margin Analysis is always calculated using what? |
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Definition
| the division of the item by Net Sales (Revenue) |
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Term
| What are the different profit ratios? |
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Definition
| Gross Profit, Operating Profit, Pretax Profit, Net Profit |
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Term
| How do you calculate Return on Assets (ROA)? |
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Definition
| ROA = Net Income / Average Total Assets |
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Term
| How do you calculate Return on Equity (ROE)? |
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Definition
| ROE = Net Income / Average Shareholders Equity |
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Term
| How do you calculate Debt Ratio? |
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Definition
| DR = Total liabilities / Total Assets |
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Term
| How do you calculate Debt to Equity? |
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Definition
|
|
Term
| How do you calculate Fixed Asset Turnover? |
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Definition
|
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Term
| How do you calculate Price/Earnings Ratio? |
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Definition
P/E = Stock Price Per share / EPS
EPS = Net Income - Dividends / Average Outstanding Shares |
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Term
| How do you calculate Asset to Equity Ratio? |
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Definition
| A&E = Total Assets / Stockholder Equity |
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Term
| How do you calculate Total Asset Turnover? |
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Definition
| TAT = Net Sales (Revenue) / Average Total Assets |
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Term
| How do you calculate Shareholders Equity? |
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Definition
| SE = Total Assets - Total Liabilities |
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