| Term | Definition |
|---|
| Net Cash Flow (NCF) | Cash receipts minus cash disbursements over a given period. |
| Capital Budgeting | The process of evaluating alternative capital investment proposals in terms of the cash outlays that the proposals require and the present values of the cash inflows that the proposals are liely to generate. |
| Operating Expenditures | Disbursements for assets that will be consumed in a relatively short period, usually within one year or a single accounting period. |
| Capital Expenditures | Disbursements for assets that will be consumed over a relatively long period, usually over multiple accounting periods. |
| Time Value of Money | The ability to invest and generate income over time on a dollar available today. |
| Rate of Return | An asset's or activity's annual profit or surplus, expressed as a percentage of its original cost. |
| Present Value | The value today or money that will be received in the future. |
| Opportunity Cost | The rate of return that money could have earned had it been put to the best alternative use that entails comparable risk. |
| Cost of Capital | The opportunity cost of funds provdeed by investors. |
| Salvage Value | The residual value of an original investment at the end of its useful life. |
| Net Present Value (NPV) | The present value of all future net cash flows (including salvage value) discounted at the cost of capital, minus the cost of the initial investment, also discounted at the cost of capital. |
| Differential annual after-tax net cash flow | The change in an organization's aggregate annual net cash flows resulting from implementing a proposal. |
| Internal Rate of Return (IRR) | The discount rate at which the net present value of all net cash flows equals zero. |
| Profitability Index | The present value of future net cash flows divided by the present value of the initial investment. |
| Depreciation | A noncash expense used to allocate the cost of long-term assets over multiple accounting periods. |
| Straight-line Depreciation Method | An accounting method of calculating depreciation by taking an equal amount of an asset's cost as an expense for each year of the asset's expected useful life. |
| Loss Adjustment Expenses | Expenses the insurer incurs to investigate, defend, or settle claims. |
Combine with other sets
Share on Facebook
Share on MySpace
!