Cost company arrangement

Similar financial terms

Agency costs
The cost of resolving the agency problem. These might include stock options and bonus schemes to managers.

Transactions costs
The transactions costs are the expenses to the execution of a trade. It includes the commissions plus the difference between the price obtained and the midpoint of the bid-offer spread.

Storage costs
The cost of storing commodity.

Cost of sales
The costs associated with generating reported sales, including merchandise, direct labor, and other costs attributed to current sales activity.

Direct costs
Costs related directly to sales.

Dollar cost averaging
A system of investing in which an unchanging dollar amount is invested at regular intervals, regardless of share price.

Accelerated cost recovery system (ACRS)
Schedule of depreciation rates allowed for tax purposes.

Agency cost view
The argument that specifies that the various agency costs create a complex environment in which total agency costs are at a minimum with some, but less than 100%, debt financing.

All-in cost
Total costs, explicit and implicit.

Weighted average cost of capital
The weighted average cost of capital (WACC) is the expected return on a portfolio of all the firm's securities when debt, equity and tax shields are taken into account. Used as a hurdle rate for capital investment.

Variable cost
A cost that is directly proportional to the volume of output produced. When production is zero, the variable cost is equal to zero. A variable is a cost of producing the product which a company sells. It would include such items as materials and labor that go directly into producing the shipped item. Another term for this is direct cost. These costs are usually shown directly under revenues on an income statement as the first costs associated with producing the revenues that are recorded.

True interest cost
For a security such as commercial paper that is sold on a discount basis, the coupon rate required to provide an identical return assuming a coupon-bearing instrument of like maturity that pays interest in arrears.

Trading costs
Costs of buying and selling marketable securities and borrowing. Trading costs include commissions, slippage, and the bid/ask spread. See: transaction costs.

Sunk costs
Costs that have been incurred and cannot be reversed.

Shortage cost
Costs that fall with increases in the level of investment in current assets.

Search costs
Costs associated with locating a counterparty to a trade, including explicit costs (such as advertising) and implicit costs (such as the value of time).

Round-trip transactions costs
Costs of completing a transaction, including commissions, market impact costs, and taxes.

Replacement cost
Cost to replace a firm's assets.

Opportunity costs
The difference in the performance of an actual investment and a desired investment adjusted for fixed costs and execution costs. The performance differential is a consequence of not being able to implement all desired trades. Most valuable alternative that is given up.

Opportunity cost of capital
Expected return that is foregone by investing in a project rather than in comparable financial securities.

Net financing cost
Also called the cost of carry or, simply, carry, the difference between the cost of financing the purchase of an asset and the asset's cash yield. Positive carry means that the yield earned is greater than the financing cost; negative carry means that the financing cost exceeds the yield earned.

Market timing costs
Costs that arise from price movement of the stock during the time of the transaction which is attributed to other activity in the stock.

Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.

Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other benefits from leverage so that the optimal amount of leverage is less than 100% debt finaning.

Carring costs
Costs that increase with increases in the level of investment in current assets.

Cost of capital
The required return for a capital budgeting project.

Cost of funds
Interest rate associated with borrowing money.

Cost of lease financing
A lease's internal rate of return.

Cost of limited partner capital
The discount rate that equates the after-tax inflows with outflows for capital raised from limited partners.

Cost-benefit ratio
The net present value of an investment divided by the investment's initial cost. Also called the profitability index.

Avoided cost
In context of project financing, the capital and expense that would have to be spent if the project did not proceed.

Replacement cost
What it would cost today to replace a company’s existing assets.

Fixed costs
Production expenses that are independent of the level of output. Fixed costs could include debt repayments, security costs and marketing and administration costs.

Zero Cost Collar
Is a transaction which has little or zero cash outlay or cost for the initiating person. Often, a security is held and some protection is sought via a hedging transaction. One example, would be the purchase of an out-of-the-money put (debit) and the sale of an out-of-the-money call (credit). Here, the premiums for the debit and credit are nearly the same. Therefore, there would be little or no cost for the person seeking the hedge. However, this position places a cap on the potential reward for ...

PLC (Public Limited Company)
Under UK law there must be a minimum of seven shareholders in a PLC. There is no maximum number of shareholders allowed. Shares in PLCs can be bought or sold on the Stock Market by the general public. By implication, most big companies choose this route to growth as it provides access to large amounts of capital that can be used for investment, expansion and acquisition. Although technically owned by the shareholders, its management determines the affairs of the company. The US equivalents are I ...

Shell Company
This term refers to a company that is listed on the Stock Market but not actively trading. Shell companies can be an attractive proposition for a non-listed company that wishes to gain a listing on the Stock Market through acquisition. Shares in Shell companies are often valued lowly.

Blue-chip company
Large and creditworthy company.

International Business Company (IBC)
An IBC is a corporation formed (incorporated) under a Company Act of a tax haven, but not authorized to do business within that country of incorporation; intended to be used for global operations. Owned by member(s)/shareholder(s). Has the usual corporate attributes.

Limited Company
A domestic business company with limited liabilities.

Limited Liability Company (LLC)
Consists of member owners and a manager, at a minimum. Similar to a corporation that is taxed as a partnership or as an S-corporation. More specifically, it combines the more favorable characteristics of a corporation and a partnership. The LLC structure permits the complete pass-through of tax advantages and operational flexibility found in a partnership, operating in a corporate-style structure, with limited liability as provided by the state's laws.

Arrangement Fee
Whilst some lenders charge an administration fee others may charge an arrangement fee. The arrangement fee is charged to cover administration and primarily reserving the funds for fixed rate and/or discounted rate mortgages. This fee may be paid separately added to the mortgage or in rarer cases taken from the mortgage loan.
Arrangement fee is commonly added to the spread in eurosyndicated and syndicated loans.

Target zone arrangement
A monetary system under which countries pledge to maintain their exchange rates within a specific margin around agreed-upon, fixed central exchange rates.

Agency incentive arrangement
A means of compensating the broker of a program trade using benchmark prices for issues to be traded in determining commissions or fees.