Statement of Financial Accounting Standards No. 8

Similar financial terms

Cash flow statement
Alternative name for the statement of cash flow.

Statement of Financial Accounting Standards No. 52
This is the currency translation standard currently used by U.S. firms. It mandates the use of the current rate method.

Statement-of-cash-flows method
A method of cash budgeting that is organized along the lines of the cash flow statement.

Statement of cash flows
A financial statement showing a firm's cash receipts and cash payments during a specified period.

Statement billing
Billing method in which the sales for a period such as a month (for which a customer also receives invoices) are collected into a single statement and the customer must pay all of the invoices represented on the statement.

Registration statement
A legal document that is filed with the SEC to register securities for public offering.

Pro forma financial statements
Financial statements as adjusted to reflect a projected or planned transaction.

Pro forma statement
A financial statement showing the forecast or projected operating results and balance sheet, as in pro forma income statements, balance sheets, and statements of cash flows.

Official statement
A statement published by an issuer of a new municipal security describing itself and the issue

Notes to the financial statements
A detailed set of notes immediately following the financial statements in an annual report that explain and expand on the information in the financial statements.

Income Statement
This is company's accounting statement that shows its Income, Expenses, and Profit (or Loss) over a period of time. It is a picture of the financial performance of a company. It is sometimes referred to as a Profit & Loss (P&L) Statement. It allows a compay (or others) to compare its performance to that of other similar businesses. It tells shareholders how well their company is doing with respect to generating profits and earnings per share.

Common size statement
A statement in which all items are expressed as a percentage of a base figure, useful for purposes of analyzing trends and the changing relationship between financial statement items. For example, all items in each year's income statement could be presented as a percentage of net sales.

Convention statement
An annual statement filed by a life insurance company in each state where it does business in compliance with that state's regulations. The statement and supporting documents show, among other things, the assets, liabilities, and surplus of the reporting company.

Short-term financial plan
A financial plan that covers the coming fiscal year.

Perfectly competitive financial markets
Markets in which no trader has the power to change the price of goods or services. Perfect capital markets are characterized by the following conditions: a) trading is costless, and access to the financial markets is free, b) information about borrowing and lending opportunities is freely available, c) there are many traders, and no single trader can have a significant impact on market prices.

Non-financial services
Include such things as freight, insurance, passenger services, and travel.

Long-term financial plan
Financial plan covering two or more years of future operations.

London International Financial Futures Exchange
London International Financial Futures Exchange (LIFFE) is a London exchange where Eurodollar futures as well as futures-style options are traded.

Changes in Financial Position
Sources of funds internally provided from operations that alter a company's cash flow position: depreciation, deferred taxes, other sources, and capital expenditures.

Corporate financial management
The application of financial principals within a corporation to create and maintain value through decision making and proper resource management.

Corporate financial planning
Financial planning conducted by a firm that encompasses preparation of both long- and short-term financial plans.

Country financial risk
The ability of the national economy to generate enough foreign exchange to meet payments of interest and principal on its foreign debt.

Financial Institutions Reform (FIRREA)
In August of 1989 the Financial Institutions Reform Recovery and Enforcement Act (FIRREA) was created. FIRREA abolishes the Federal Home Loan Bank Board and FSLIC, switches Savings & Loan regulation to newly created Office of Thrift Supervision. Deposit insurance function shifted to the FDIC. A new entity, the Resolution Trust Corporation is created to resolve the insolvent S&Ls.

Other major provisions of FIRREA include: $50 billion of new borrowing authority, with most financed from ...

Financial Services Authority (FSA)
The Financial Services Authority was created by the incoming UK Labor Government in 1997 as the regulatory body for the whole financial services industry. A number of separate regulatory bodies were brought together into the FSA. The FSA also took over the responsibilities that the Bank of England had for supervising banks and other financial institutions. The Chairman of the FSA is Howard Davies, an ex deputy governor of the Bank, and now a member of the Court of Directors. The Bank and the FSA ...

Financial economies of scale
The ability of large firms to borrow money on more favourable terms than small firms.

Financial intermediaries
Institutions which channel funds from people and institutions wishing to lend to those wishing to borrow.

International Financial and Banking Centre (IFC)
A country identified as being a tax haven.

Accounting liquidity
The ease and quickness with which assets can be converted into cash

Accounting reference date
The date to which accounts are made up for a company. When a company is incorporated, it will normally have an accounting reference date which is the last day of the month in which the anniversary of its incorporation falls. Directors can change the accounting reference date by filing an appropriate form with the Registrar of Companies.

Accounting
The process of recording a firm's financial transactions in appropriate bookkeeping records, and the summary of this information in the form of accounting (annual, interim)reports.

Accounting exposure
The change in the value of a firm's foreign currency denominated accounts due to a change in exchange rates.

Accounting earnings
Earnings of a firm as reported on its income statement.

Accounting insolvency
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on the books.

Regulatory accounting procedures
Accounting principals required by the FHLB that allow S&Ls to elect annually to defer gains and losses on the sale of assets and amortize these deferrals over the average life of the asset sold.

Purchase accounting
Method of accounting for a merger in which the acquirer is treated as having purchased the assets and assumed liabilities of the acquiree, which are all written up or down to their respective fair market values, the difference between the purchase price and the net assets acquired being attributed to goodwill.

Creative accounting
The reporting of profit and asset figures in a way that is flattering to the company. A company's senior managers can 'window dress' the profits for any trading period to impress shareholders - however, interpretation of accounting data in this way is actively discouraged by the professional accounting bodies.

American National Standards (ANSI)
ANSI is a private, non-profit organization that administers and coordinates the U.S. voluntary standardization and conformity assessment.

Non-amortizing securities
Securities that do not have an amortization schedule.

De novo entry
Entry into an industry by forming a new company as opposed to combining with an existing firm in the industry.

Abnormal return
In event studies, the part of the return that is not predicted; the change in value caused by the event. Also referred to as excess return, benchmark adjusted.

NOI
Net operating income. Revenue minus all operating costs including depreciation.

NOPAT
Net operating profit after taxes. Can be calculated as: NOI x (1 - T) where NOI is the net operating income and T is the marginal tax rate applicable to a line of business. NOPAT is essential to the calculation of economic value added (EVA)

No-shop agreement
The target company involved in merger or acquisition agrees not to consider other offers while negotiating with a particular bidder.

Announcement Date
The date on which a company makes it public that they will do a split.

Lognormal distribution
A varaible has a lognormal distribution when the logarithm of the variable has a normal distribution.

Economic cycle
The economic cycle are predictable long-term pattern changes in national income. As for business cycles, the economic cycle has four (similar) stages:
- expansion
- prosperity
- contraction
- recession
After a recession, an expansion can start again. Some economists believe that major stock price movement patterns precede the stages of the economic cycle.

NOK
Norwegian Krone from Norway. Also used in Antarctica, Bouvet Islands, Svalbard and Jan Mayen Islands.

The introduction of the krone as the legal tender in Norway, 1875 was a result of the Scandinavian Monetary Union, which lasted until the First World War. The parties to the monetary union was the Scandinavian countries of Sweden and Denmark from the start in 1873, with Norway joining two years later.

The name of the currency was Krone in Denmark and Norway, and Krona in S ...

Economic indicators
Statistical indexes, rates, and other measurements of national financial and social trends, used to predict overall business climate and growth patterns.

Abnormal returns
Part of the return that is not due to systematic influences (market wide influences). In other words, abnormal returns are above those predicted by the market movement alone.

Accounts receivable turnover
The ratio of net credit sales to average accounts receivable, a measure of how quickly customers pay their bills.

All or none
Requirement that none of an order be executed unless all of it can be executed at the specified price.

All-or-none underwriting
An arrangement whereby a security issue is canceled if the underwriter is unable to re-sell the entire issue.

Nostro accounts
As there is no dollar cleraing and settlement system outside the USA, all eurodoolar transactions must take place through banks in New York using their clearing house system. Therefore all banks operating outside the USA and dealing in eurodollars must hold demand deposit accounts with US-based banks in New York through which receipts and payments can be effected.

These accounts, known as Nostro accounts, are also used to settle banks' foreign exchange transactions and to enable them to ...

U.S. Treasury note
U.S. government debt with a maturity of one to 10 years.

Turnover
In managerial finance it is the number of times a given asset, such as inventory, is replaced during the accounting period, usually a year.

In corporate corporate finance it is the ratio of annual sales to net worth, representing the extent to which a company can growth without outside capital.

In financial markets it is the volume of shares traded as a percent of total shares listed during a specified period, usually a day or a year.

For mutual funds it is a measu ...

Treynor Index
Treynor's T is a measure of the excess return per unit of risk, where excess return is defined as the difference between the portfolio's return and the risk-free rate of return over the same evaluation period and where the unit of risk is the portfolio's beta.

Total asset turnover
The ratio of net sales to total assets.

Thus, the total asset turnover ratio compares the turnover with the assets that the business has used to generate that turnover.

In other words, we are just saying that for every 1 of assets, the turnover is x.

Tenor
Maturity of a loan.

TBA (to be announced)
A contract for the purchase or sale of a MBS to be delivered at an agreed-upon future date but does not include a specified pool number and number of pools or precise amount to be delivered.

Synchronous data
Data available at the same time. In testing option-pricing models, the price of the option and of the underlying should be synchronous, representing the same moment in the market.

Standardized normal distribution
A normal distribution with a mean of 0 and a standard deviation of 1.

Receivables turnover ratio
Total operating revenues divided by average receivables. Used to measure how effectively a firm is managing its accounts receivable.

Promissory note
Written promise to pay.

Project notes (PNs)
Project notes are issued by municipalities to finance federally sponsored programs in urban renewal and housing and are guaranteed by the US Department of Housing and Urban Development.

Portfolio turnover rate
For an investment company, an annualized rate found by dividing the lesser of purchases and sales by the average of portfolio assets.

Option not to deliver
In the mortgage pipeline, an additional hedge placed in tandem with the forward or substitute sale.

Novation
Defeasance whereby the firm's debt is canceled.

Notional principal amount
In an interest rate swap, the predetermined dollar principal on which the exchanged interest payments are based.

Notification date
The day the option is either exercised or expires.

Notice day
A day on which notices of intent to deliver pertaining to a specified delivery month may be issued.

Note issuance facility (NIF)
An agreement by which a syndicate of banks indicates a willingness to accept short-term notes from borrowers and resell these notes in the Eurocurrency markets.

Note agreement
A contract for privately placed debt.

Note
Debt instruments with initial maturities greater than one year and less than 10 years.

Normalizing method
The practice of making a charge in the income account equivalent to the tax savings realized through the use of different depreciation methods for shareholder and income tax purposes, thus washing out the benefits of the tax savings reported as final net income to shareholders.

Normal random variable
A random variable that has a normal probability distribution.

Normal portfolio
A customized benchmark that includes all the securities from which a manager normally chooses, weighted as the manager would weight them in a portfolio.

Normal probability distribution
A probability distribution for a continuous random variable that is forms a symmetrical bell-shaped curve around the mean.

Normal backwardation theory
Holds that the futures price will be bid down to a level below the expected spot price.

Normal annuity form
The manner in which retirement benefits are paid out.

Nonsystematic risk
Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk or diversifiable risk. Systematic risk refers to risk factors common to the entire economy.

Nonrefundable
Not permitted, under the terms of indenture, to be refundable.

Nonredeemable
Not permitted, under the terms of indenture, to be redeemed.

Nonrecourse
Without recourse, as in a non-recourse lease.

Nonmarketed claims
Claims that cannot be easily bought and sold in the financial markets, such as those of the government and litigants in lawsuits.

Nondiversifiable risk
Risk that cannot be eliminated by diversification.

Nondiversifiability of human capital
The difficulty of diversifying one's human capital (the unique capabilities and expertise of individuals) and employment effort.

Noncompetitive bid
In a Treasury auction, bidding for a specific amount of securities at the price, whatever it may turn out to be, equal to the average price of the accepted competitive bids.

Noncash charge
A cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow.

Non-tradables
Refer to goods and services produced and consumed domestically that are not close substitutes to import or export goods and services.

Non-reproducible assets
A tangible asset with unique physical properties, like a parcel of land, a mine, or a work of art.

Non-parallel shift in the yield curve
A shift in the yield curve in which yields do not change by the same number of basis points for every maturity.

Non-insured plans
Defined benefit pension plans that are not guaranteed by life insurance products.

Non-cumulative preferred stock
Preferred stock whose holders must forgo dividend payments when the company misses a dividend payment.

Nominal price
Price quotations on futures for a period in which no actual trading took place.

Nominal interest rate
The interest rate unadjusted for inflation.

Nominal exchange rate
The actual foreign exchange quotation in contrast to the real exchange rate that has been adjusted for changes in purchasing power.

Nominal cash flow
A cash flow expressed in nominal terms if the actual dollars to be received or paid out are given.

Nominal annual rate
An effective rate per period multiplied by the number of periods in a year.

Nominal
In name only. Differences in compounding cause the nominal rate to differ from the effective interest rate. Inflation causes the purchasing power of money to differ from one time to another.

No-load fund
A mutual fund that does not impose a sales commission.

Noise
Price and volume fluctuations that can confuse interpretation of market direction.

No load mutual fund
An open-end investment company, shares of which are sold without a sales charge. There can be other distribution charges, however, such as Article 12B-1 fees. A true "no load" fund will have neither a sales charge nor a distribution fee.

Negotiable order of withdrawal (NOW)
Demand deposits that pay interest.

Municipal notes
Short-term notes issued by municipalities in anticipation of tax receipts, proceeds from a bond issue, or other revenues.

Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.

Monetary / non-monetary method
Under this translation method, monetary items (e.g. cash, accounts payable and receivable, and long-term debt) are translated at the current rate while non-monetary items (e.g. inventory, fixed assets, and long-term investments) are translated at historical rates.

Minority interest
An outside ownership interest in a subsidiary that is consolidated with the parent for financial reporting purposes.

Medium-term note (MTN)
A corporate debt instrument that is continuously offered to investors over a period of time by an agent of the issuer. Investors can select from the following maturity bands: 9 months to 1 year, more than 1 year to 18 months, more than 18 months to 2 years, etc., up to 30 years.

Liquid yield option note (LYON)
Zero-coupon, callable, putable, convertible bond invented by Merrill Lynch & Co.

Leading economic indicators
Economic series that tend to rise or fall in advance of the rest of the economy.

Knock-in option
An option that begins to function as a normal option ("knocks in") once a certain price level is reached before expiration. Might not knock in at all.

Knock-out option
An option with a built in mechanism to expire worthless should a specified price level be exceeded.

European Economic Area (EEA)
The European Economic Area (EEA) came into being on 1 January 1, 1994 following an agreement between the European Free Trade Association (EFTA) and the European Union (EU). It was designed to allow EFTA countries to participate in the European Single Market without having to join the EU. In a referendum, Switzerland (ever keen on neutrality) chose not to participate in the EEA (although it is linked to the European Union by bilateral agreements similar in content to the EEA agreement), so the cu ...

Xenocurrency
Xeno means foreign or strange. A Xenocurrency is one that trades outside its domestic boundaries.

Macroeconomics
The subdivision of the discipline of economics that studies and strives to explain the functioning of the economy as a whole -- the total output of the economy, the overall level of employment or unemployment, movements in the average level of prices (inflation or deflation), total savings and investment, total consumption and so on. The focus of much of macroeconomic theory is analysis of the ways in which conscious government policies (and the unintended secondary consequences of these policie ...

Keynesian Economics
The economic theory that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.

Bank anticipation notes (BAN)
Notes issued by states and municipalities to obtain interim financing for projects that will eventually be funded long term through the sale of a bond issue.

Binomial option pricing model
An option pricing model in which the underlying asset can take on only two possible, discrete values in the next time period for each value that it can take on in the preceding time period.

Country economic risk
Developments in a national economy that can affect the outcome of an international financial transaction.

Cumulative abnormal return (CAR)
Sum of the differences between the expected return on a stock and the actual return that comes from the release of news to the market.

Current / noncurrent method
Under this currency translation method, all of a foreign subsidiary's current assets and liabilities are translated into home currency at the current exchange rate while noncurrent assets and liabilities are translated at the historical exchange rate, that is, the rate in effect at the time the asset was acquired or the liability incurred.

Give the nod
Give approval to a plan; perceive as having an advantage.

Barter economy
Trading of goods or services directly for other goods or services, without using money or any other similar unit of account or medium of exchange. Although barter represents the earliest form of trade discovered by primitive man that made possible a more extensive division of labor beyond the limited bounds of a family or small clan grouping, it quickly encounters some practical limits to its efficiency as the division of labor becomes still more extensive and more specialized. Bartering require ...

Reaganomics
A school of thought within the economics profession emphasizing that the main source of a country's economic growth is constant improvement in the efficiency with which resources are allocated for production. While the policy recommendations of the rival Keynesian school tend to focus almost entirely on what government can do to stimulate or restrain aggregate demand in the short-run so as to even out the business cycle, supply-side policy analysts focus on barriers to higher productivity -- ide ...

Microeconomics
The subdivision of the discipline of economics that studies the behavior of individual households and firms interacting through markets, how prices and levels of output of individual products are determined in these markets, the interconnections by which different markets affect each other, and how the price mechanism allocates resources and distributes income.

Remuneration and Nomination Committee
A committee that advises the Supervisory Board in a company on compensation policies and the composition of the Supervisory Board and Executive Board. The committee also advises the Supervisory Board on the compensation packages of the members of the Executive Board and the Supervisory Board.

Monopsony
Literally, single buyer. A situation in which a single firm or individual is the only buyer of a particular good or service within a given market.

Don't know (DK, DKed)
"Don't know the trade." A Wall Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party. Also, an unscrupulous claim made by one party denying that the trade had been agreed to and made after the trade goes adversely against that party.

Classical Economics
The dominant theory of economics from the 18th century to the 20th century, when it evolved into neo-classical economics. Classical economists, who included Adam Smith, David Ricardo and John Stuart Mill, believed that the pursuit of individual self-interest produced the greatest possible economic benefits for society as a whole through the power of the "Invisible hand". They also believed that an economy is always in equilibrium or moving towards it. Equilibrium was ensured in the labor mar ...

Notice of default
A formal written notice to a borrower that a default has occurred and that legal action may be taken.

Free market economy
A system where resources are owned by households: markets allocate resources through the price mechanism; and income depends upon the value of resources owned by an individual.

Green economics
The study of environmental issues including the depletion of non renewable resources.

NedCo (Non-executive directors committee of BoE)
NedCo is a committee of the non-executive directors of the Bank of England. NedCo was established by the Bank of England Act 1998, and is responsible for reviewing the Bank's performance in relation to its objectives and strategy. They also determine the pay and conditions of the Governor, Deputy Governors and the four independent members of the Monetary Policy Committee.

Nominal rate of interest
The annual return form lending money expressed as a percentage, without having taken account of the rate of inflation.

Economic rent
A surplus paid to any factor of production over its supply price. Economic rent is the difference between what a factor of production is earning (its return) and what it would need to be earning to keep it in its present use. It is in other words the amount a factor is earning over and above what it could be earning in its next best alternative use (its transfer earnings).

Known price item
When a good whose price is widely known by members of the public is priced to attract customers.

Donor
A transferor. One who transfers title to an asset by gifting.

European Economic Community (EEC)
Now incorporated in the European Union (EU).

Nonresident of the US alien (NRA)
Not a U.S. person as defined under the Internal Revenue Code (IRC).

Societe Anonyme (SA) or Sociedad Anonima (SA)
A Societe Anonyme is a limited liability corporation established under French Law. Requires a minimum of seven shareholders. In Spanish speaking countries, it is known as the Sociedad Anonima. Important characteristic of both is that the liability of the shareholder is limited up to the amount of their capital contribution.

Deposit Notes
A term deposit in a bank. Deposit notes, like medium-term notes, may serve as the basis for an equity or currency-linked risk management structure.

Equity-Linked Note (ELN)
An equity-linked note combines the characteristics of a zero or low coupon bond or note with a return component based on the performance of a single equity security, a basket of equity securities, or an equity index. In the latter case, the security would typically be called an equity index-linked note. Equity-linked notes come in a variety of styles. The minimum return may be nil with all of what would normally be an interest payment going to pay for upside equity participation. Alternatively, ...

Horizontal merger wave (1895-1904)
The first merger wave began right after the 1883 depression in a period of rapid economic expansion. The combination movement consisted mainly of horizontal mergers, which resulted in high concentration in many industries, including heavy manufacturing industries. Accomplished with this merger wave was the completion of the transcontinental railroad system, the advent of electricity and a major increase in the use of coal. The completed rail system resulted in the development of a national econo ...

G-8
The Group of Eight countries (G-8) comprises the G-7 countries + Russia.

Tax Reform Act of 1986
A 1986 law involving a major overhaul of the U.S. tax code.

Section 482
United States Department of Treasury regulations governing transfer prices.

The 800 pound gorilla
Slang for the most important party to a transaction/or in a group

Foreign Investor in Real Property Tax Act of 1980
Under FIRPTA (Foreign Investor in Real Property Tax Act of 1980), and the Economic Recovery Act of 1981, unless an exemption is granted by the IRS, upon the sale of real property owned by offshore (foreign) persons, the agency, attorney or escrow officer handling the transaction is required to withhold capital gains taxes at the closing of the sale transaction. Unless withheld and submitted to the IRS, the party handling the sale transaction is personally liable for the taxes.