Balance
Sheet
A statement
of the firm's financial position at a specific point in time.
Base
Case
An analysis
in which all of the input variables are set at their most likely values.
Base-Case
NPV
The NPV
when sales and other input variables are set equal to their most likely
(or base-case) values.
Basic
Earning Power (BEP) Ratio
This ratio
indicates the ability of the firm's assets to generate operating income;
calculated by dividing EBIT by total assets.
Benchmarking
The process
of comparing a particular company with a group of "benchmark" companies.
Best-Case
Scenario
An analysis
in which all of the input variables are set at their best reasonably
forecasted values.
Beta
coefficient, b
A measure
of the extent to which the returns on a given stock move with the stock
market.
Bird-in-the-Hand
Theory
MM's name
for the theory that a firm's value will be maximized by setting a high
dividend payout ratio.
Bond
A long-term
debt instrument.
Bracket
Creep
A situation
that occurs when progressive tax rates combine with inflation to cause
a greater portion of each taxpayer's real income to be paid as taxes.
Break
Point (BP)
The dollar
value of new capital that can be raised before an increase in the firm's
weighted average cost of capital occurs.
Breakeven
Point
The volume
of sales at which total costs equal total revenues, causing operating
profits (or EBIT) to equal zero.
Breakup
Value
A firm's
value if its assets are sold off in pieces.
Business
Ethics
A company's
attitude and conduct toward its employees, customers, community, and
stockholders
Business
Risk
The risk
associated with projections of a firm's future returns on assets.
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