Glossary of Finance Terms

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An action whereby a person or group succeeds in ousting a firm's management and taking control of the company.
Target (Optimal) Capital Structure
The percentages of debt, preferred stock, and common equity that will maximize the firm's stock price.
Target Capital Structure
The mix of debt, preferred stock, and common equity with which the firm plans to raise capital.
Target Cash Balance
The desired cash balance that a firm plans to maintain in order to conduct business.
Target Company
A firm that another company seeks to acquire.
Target Payout Ratio
The percentage of net income paid out as cash dividends.
Tax Loss Carry-Back and Carry-Forward
Ordinary corporate operation losses can be carried backward for 3 years or forward for 15 years to offset taxable income in a given year.
Taxable Income
Gross income minus exemptions and allowable deductions as set forth in the Tax Code.
Temporary Current Assets
Current assets that fluctuate with seasonal or cyclical variations in sales.
Tend Analysis
An analysis of a firm's financial ratios over time; used to estimate the likelihood of improvement or deterioration in its financial situation.
Tender Offer
The offer of one firm to buy the stock of another by going directly to the stockholders, frequently (but not always) over the opposition of the target company's management.
Term Structure of Interest Rates
The relationship between bond yields and maturities.
Terminal Value
The future value of an uneven cash flow stream.
Time Line
An important tool used in time value of money analysis; it is a graphical representation used to show the timing of cash flows.
Time Preferences for Consumption
The preferences of consumers for current consumption as opposed to saving for future consumption.
Times-Interest-Earned (TIE) Ratio
The ratio of earnings before interest and taxes (EBIT) to interest charges; measures the ability of the firm to meet its annual interest payments.
Times-Interest-Earned (TIE) Ratio
A ratio that measures the firm's ability to meet its annual interest obligations calculated by dividing earnings before interest and taxes by interest charges: TIE = EBIT/I.
Total Assets Turnover Ratio
The ratio calculated by dividing sales by total assets.
Trade Credit
Debt arising from credit sales and recorded as an account receivable by the seller and as an account payable by the buyer.
Trade Deficit
A situation where a country imports more than it exports.
Trade Discount
A price reduction that suppliers offer customer for early payment of bills.
Transactions Balance
A cash balance associated with payments and collection; the balance necessary for day-to-day operations.
Treasury Bonds
Bonds issued by there federal government, sometimes referred to as government bonds.
Two-Bin Method
An inventory control procedure in which an order is placed when one of two inventory-stocked bins is empty.

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