The amount by which an option is in-the-money. Generally Accepted Accounting Principals (GAAP)Ī technical accounting term that encompasses theĬonventions, rules, and procedures necessary to define accepted accounting practice at a particular time. The amount of cash at a specified date in the future that is equivalent in value to a specified Minus the expected value with no additional information. The expected value if the future uncertain outcomes could be known The weighted average of a probability distribution. The amount of advantage over a current market transaction provided by an in-the-money Per share should not be thought of as an indicator of economic worth, since it reflects accounting valuationĪn amount the insurance company will pay if the policyholder ends a whole lifeĪlso called parity value, the value of a convertible security if it is converted immediately. The ratio of stockholder equity to the average number of common shares. AĬompany's book value might be more or less than its market value. With respect to convertible bonds, the value the security would have if it were not convertibleĪ company's book value is its total assets minus intangible assets and liabilities, such as debt. This analysis is often used for highly leveraged Other investment tax credits are calculated separately. In other words, the various tax shields provided by the deductibility of interest and the benefits of (present value of un-levered cash flows), plus the present value of any financing decisions (levered cashįlows). The net present value analysis of an asset if financed solely by equity Present value factor equal to the formula 1/(1 - r)n, where n is the number of years from the valuation date to the cash flow and r is the discount rate.įor business valuation, n should usually be midyear, i.e., n = 0.5, 1.5. The value in today’s dollars of cash flows that occur in different time periods. Same as PV, but usually includes a subtraction for an initial cash outlay. If a discount bond pays no interest, it is called a Present value of a set of independent projects is just the sum of the net present values of the individual projects.ĭebt sold for less than its principal value. Stated differently, the principle that the net Values of the individual assets that make up the group of assets. Prevails when the value of a whole group of assets exactly equals the sum of the Related Terms: Value additivity principal Main Page: money, stock trading, tax advisor, financial advisor, inventory, credit, payroll, financial, SEARCH Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
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