Terms
Concept that means a dollar today is worth more than a dollar tomorrow
What is time value of money
The amount of time a firm holds inventory in stock is referred to as the
What is inventory period
The potential benefit lost by choosing a specific alternative course of action among two or more.
What is opportunity cost
An agreement to exchange one currency for another
What is swap
The measurement of key relationships among financial statement items is known as
What is ratio analysis
A company's required rate of return, typically its cost of capital is also called the
What is the hurdle or discount rate
The period of time between the sale of inventory and the receipt of cash for the sale
What is accounts receivable collections period
A private source of funding for a new business
What is venture capital
An agreement to exchange securities at a specific rate sometime in the future
What is forward rate
The largest financial market in the world
What is the foreign exchange market
Net income/shares outstanding
What is EPS (earnings per share)
The length of time a retailer takes to pay a supplier for an inventory purchase is called
What is accounts payable period
What is the advertisement, commonly found in financial newspapers, that announces a public offering of securities and provides the name of the underwriters called?
What is tombstone
The ability to generate a cash return by exchanging funds through three different currencies
What is triangle arbitrage
Assets are listed this way on a balance sheet
What is order of liquidity
Restocking quantity that minimizes the total cost of inventory
What is EOQ (economic order quantity)
Increasing customer discounts for cash payments within a certain number of days has does what to the accounts receivable collection period
What is decreases it
If the market price of existing publicly traded shares declines due to the announcement of a seasoned issue of stock, the decline is referred to as which one of the following?
What is abnormal return
Price of one country's currency expressed in terms of another country's currency
What is exchange rate
The maximum growth rate that a firm can achieve without any additional external funding
What is the internal growth rate
The relationship between nominal returns, real returns, and inflation
What is the Fischer effect
A short-term investment (marketable security) that can only be offered by large corporations and serves as a short-term loan to that corporation
What is commercial paper
An agreement that allows underwriters to purchase more shares if a sale of stock is oversubscribed
What is green shoe agreement
This type of risk occurs when there is a difference between the currency a company uses for operations and the currency they use for their prepared financial statements
What is translation risk
Minimum rate of return a firm must earn on its assets if it is to maintain the current value of its securities
What is weighted average cost of capital