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Adjusted Present Value (APV) is a business valuation method. APV is the net present value of a project if financed solely by ownership equity plus the present value of all the benefits of financing. It was first studied by Stewart Myers, a professor at the MIT Sloan School of Management and...

Business valuation is a processed set of procedures used to estimate the economic value of an owner’s interest in a business. Valuation is used by financial market participants to determine the price they are willing to pay or receive to perfect a sale of a business. In addition to estimating...

A measure of a company's valuation after liabilities, including off-balance sheet liabilities, and assets are adjusted to reflect true fair market value. The potential downside of using an adjusted book value is that a business could be worth more than its stated assets and/or liabilities...

Activity based costing is a costing method that has been developed to deal with the perceived weaknesses of traditional absorption costing. Traditional absorption costing is based on the principal that production overheads are driven by the level of production. This is reflected in the choice of...

Activity-based costing (ABC) is a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more indirect costs (overhead) into direct costs...

Activities based budgets ("ABB") are based on the same concept as activities based costing ("ABC"). I.e. a budgeting/costing system that is based on all activities performed rather than, say, income statement line items or COGS elements. I.e. identify all the activities in the organization (e.g...

A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and...

A measure of a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by subtracting inventories from current assets and dividing the quantity by its current liabilities. A higher acid-test ratio indicates greater short-term financial health. The...

In finance, Accrued Interest is the interest that has accumulated since the principal investment, or since the previous interest payment if there has been one already. For a financial instrument such as a bond, interest is calculated and paid in set intervals. Accrued income is an income which...

An accrual bond is a fixed-interest bond that is issued at its face value and repaid at the end of the maturity period together with the accrued interest. In Germany, the accrued interest is compounded. In contrast to zero-coupon bonds, accrual bonds have a clearly stated coupon rate. A bond...

Receivable Turnover Ratio is one of the accounting activity ratios, a financial ratio. This ratio measures the Sources:- a) Receivables Turnover Ratio = Net receivable sales/ Average net receivables b) Average Collection Period = 365 / Receivables Turnover Ratio c)Average Debtor collection...

Generally, each organization provides credit facility to its customers. In such cases, the money owed to the business by its customers (individual or corporation) on account of products/services that have been delivered or used is referred to as accounts receivable. Accounts Receivable is...

Not always does a company make upfront payments for the material (raw material etc.) it buys, accounts payable is essentially the amount owed by an organization for the purchase of raw materials etc. Accounts Payable can be found under the “Current Liabilities” heading of the Liabilities...

Accounting Introduction of Accounting. Accounting refers to the practice of systematically recording the financial transactions of a business, analyzing the information for internal development by the management, summarizing and interpreting them for the sake of reporting to the concerned...

Accelerated Depreciation Definition of accelerated depreciation. Accelerated Depreciation refers to a method in which an organization depreciates its fixed assets in such a way that it allocates unequal amounts for each year. This primarily means that a larger portion of the cost is...

Absorption Costing What is meant by Absorption Costing. As the name suggests, absorption costing is the method of costing in which the entire cost of manufacturing a product or providing a service is absorbed in it. In contrast to the variable costing (Activity based costing) method, it...

Abnormal return is defined as the difference between the actual return and the expected return which can be attributed to the non-systematic influences. Abnormal returns may be positive or negative depending on the expected returns. Expected returns are primarily calculated by using of the asset...