Capital calls are requests for additional money required of investors to fund a deficit. A corporate stockholder has no legal obligation to meet a capital call.
Capital Consumption Allowance (CCA) represents the allowance for depreciation included in the Gross Domestic Product (GDP). It accounts for around 11% of GDP and is subtracted to calculate the Net National Product (NNP).
Capital contributed in excess of par value represents the amount paid for stock above its stated par value, as reflected in the owner's equity section of a balance sheet.
Capital contribution refers to the cash or property acquired by a corporation from a shareholder without the receipt of additional stock. This amount is added to the basis of the shareholder's existing stock, and the corporation's basis is carried over from the shareholder.
Capital costs refer to the expenses incurred to acquire, upgrade, and maintain physical assets such as properties, industrial buildings, or equipment. Often, these costs are major, one-time expenses that have long-term benefits.
Capital cover is a crucial financial metric indicating the capital value of a portfolio relative to the capital sum required to finance it. It serves as a risk assessment tool, with lower capital cover indicating higher investment risk.
Capital deepening refers to the process of increasing the amount of capital per worker in an economy. This typically means that each worker has more tools, equipment, or technology to use in their work, leading to higher productivity and economic growth.
Capital distribution refers to the distribution of company’s funds to its shareholders. This usually happens in the form of dividend payments, share buybacks, or return of capital. It signifies how a company returns value to its shareholders.
Capital Employed is the total amount of capital that a company uses to generate profits and includes shareholder's equity and long-term debt, or the sum of fixed and net current assets. This metric is pivotal in ratio analysis for assessing the efficiency and profitability of a company's capital investments.
Capital expenditure, often referred to as capital costs or capital investment, pertains to substantial expenses incurred by an organization for purchasing or enhancing fixed assets. These costs are capitalized on the balance sheet and depreciated over the asset's useful life.
Capital Expenditure (CapEx) refers to the funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. It is often used to undertake new projects or investments by the firm.
Capital Expenditure (CAPEX) refers to funds used by a business to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. These expenditures are capitalized and either depreciated or depleted over their useful life, as opposed to repairs, which are deducted from the current year's income.
A Capital Expenditure Budget plans for significant investments in long-term assets, covering the costs of major projects or purchases essential for sustaining or growing an organization's operations.
A Capital Expense is any expenditure made by a business to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. These expenses are typically substantial and offer a long-term benefit.
Capital flight refers to the large-scale exit of financial assets and capital from a country due to economic or political instability, or in search of higher returns elsewhere.
Capital formation refers to the creation or expansion of capital through savings, which are then invested in buildings, machinery, equipment, and other assets that produce goods and services, thereby contributing to economic growth.
A capital fund is a financing source specifically allocated for long-term initiatives, large projects, or investments, often used by non-profit organizations, governments, or businesses to support development and growth initiatives.
A capital gain represents the profit realized from the sale of an asset where the selling price exceeds the original purchasing price. This gain is often subject to capital gains tax, depending on the jurisdiction and applicable legal provisions.
Capital gain distributions refer to payments made by mutual funds or corporations to their investors, representing the gains earned from the sale of securities or liquidated assets. This distribution retains its character as capital gains when passed on to investors.
A capital gain dividend is any distribution that is designated as such by a regulated investment company in a written notice mailed to its shareholders not later than 60 days after the close of its taxable year. It is treated as a capital gain by the shareholders.
Capital gains refer to the profit realized from the sale of assets or investments, which exceeds the purchase price. They can apply to stocks, bonds, real estate, and other types of investments.
Capital Gains Tax (CGT) is a tax on the profit realized from the sale of certain types of assets, occurring at different rates depending on asset type and overall taxable income. This tax plays a significant role in tax planning for investors and businesses.
Capital Gains Tax (CGT) is a tax levied on the profit from the sale of assets or investments. The tax applies to the difference between the sale price and the original purchase price or basis of the asset.
Capital gearing refers to the proportion of debt to equity in the capital structure of a company. It is a crucial indicator of financial stability and risk.
Capital goods are items used in the production of other goods, including industrial buildings, machinery, and equipment, as well as highways, office buildings, and government installations. These goods significantly determine a country's productive capacity.
Capital improvement refers to the significant enhancement or betterment of a building or equipment, which extends its useful life or increases its productivity. The costs associated with capital improvements are added to the asset's basis and depreciated over time.
Understand the various means used by companies to raise finance including shares, debentures, loans, options, and warrants, and the important distinctions and regulations that govern them.
A capital intensive business involves significant investment in fixed assets such as plant and machinery. These companies are regarded as high-risk investments, particularly in times of economic downturns, due to the high proportion of fixed costs.
Capital investment involves the outlay of funds to acquire or upgrade physical assets such as property, buildings, or equipment, which are expected to improve the capacity or efficiency of a business.
Capital investment appraisal is a process used by companies to evaluate and compare potential large-scale investment opportunities to determine their viability and profitability.
A Capital Investment Budget outlines the funds allocated for significant investments in a company's long-term assets, such as property, plants, and equipment. These investments are typically intended to enhance a company's operational capacity, efficiency, and overall profitability.
A Capital Lease, in the USA, is a lease that does not legally constitute a purchase but is recorded as an asset on the lessee's books under certain conditions.
Understanding the financial and physical capital maintenance concepts helps ensure that a company's capital is preserved, facilitating accurate performance measurement over time.
Capital maintenance in units of constant purchasing power (CUPP) is an approach that maintains the financial capital's purchasing power by adjusting for changes in the general price level or inflation.
A market in which long-term capital is raised by industry and commerce, the government, and local authorities. Private investors, insurance companies, pension funds, and banks primarily fund this market.
Capital outflow refers to the exodus of capital from a country, driven by a combination of political and economic factors. Domestic and foreign owners of assets may sell their holdings and relocate their money to countries with more political stability and economic growth potential. Large capital outflows may prompt countries to impose currency controls or other measures to restrict the movement of money.
Capital outlay, also known as capital expenditure (CapEx), refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. It is a crucial aspect of an organization's investment strategy and financial management.
The relationship between the value of capital and the output it produces in a given period, usually a year; the lower the ratio, the more efficiently capital is being used to produce goods and services.
Capital paid in excess of par value refers to the amount of money shareholders have invested in a company that exceeds the par value of the issued shares. This extra amount is often reflected on the equity section of the balance sheet and signifies additional capital that the company can use for growth and operations.
The Capital Purchase Program (CPP) was an initiative under the Troubled Asset Relief Program (TARP) to stabilize the financial system by reinforcing the solvency of major banks through purchasing preferred stock and equity warrants.
Capital rationing occurs when managers have insufficient funds to invest in all projects with a positive net present value (NPV). It requires prioritization of projects to maximize NPV. It is classified into soft and hard capital rationing depending on whether constraints are self-imposed or external, respectively.
A capital redemption reserve is a statutory reserve created when a company repurchases its own shares, leading to a reduction in share capital. This non-distributable reserve ensures the maintenance of the company's capital base and protects creditors' interests.
Capital reduction, also known as the reduction of capital, is a restructuring process whereby a company reduces its shareholder equity through activities such as repurchasing shares or decreasing share capital to distribute assets to shareholders or to eliminate losses.
Capital requirement refers to the amount of capital a business needs to sustain its operations, including both long-term and working capital necessary for maintaining day-to-day functionality and growth.
A capital reserve is an accounting term that refers to a reserve fund that is set aside for long-term projects or other significant ventures. It is part of a company's equity that is not appropriate for distribution as dividends to shareholders.
Capital resources are assets such as factories, buildings, and equipment used in the production of goods. These are crucial for the growth and development of industries.
The risk, in a lending operation, that the capital amount of the investment may be less than its par value even at maturity.
Capital stock represents the equity shares held in a corporation. In the USA, the two fundamental types of capital stock are common stock and preferred stock.
Capital structure refers to the balance between a company's assets and liabilities, the nature of its assets, and the composition of its borrowings. It is also commonly used in the context of a company's debt-equity ratio and the mix of debt classes in structured finance instruments.
In the USA, capital surplus refers to the difference between the par value of a share and its issue price. It is the equivalent of a share premium in the UK.
Capital transactions refer to significant financial activities involving things like share capital and reserves, long-term debt capital, or fixed assets of a company, as opposed to revenue transactions which are common, operational activities.
Capital Turnover, also known as Asset Turnover, measures the efficiency of a company in using its assets to generate sales revenue. A higher ratio indicates better utilization of assets in generating sales.
Capital widening in macroeconomics refers to the process of increasing an economy's capital stock to enhance production levels.
An economic system where private ownership, profit moti ve, and market competition play central roles, facilitating individual and corporate economic gain.
An essential concept in accounting and finance that pertains to providing capital for a company, managing its capital structure, converting reserves into capital, and accounting for capital expenditures.
A capitalization issue, also known as a scrip issue, involves a company issuing new shares to existing shareholders, usually to bolster additional funds or to distribute reserves.
Understand the accounting process of including borrowing costs in the cost of a qualifying asset and how this affects financial statements.
Capitalization rate, often abbreviated as cap rate, is a rate of interest or discount rate used to convert a series of future payments into a single present value. In real estate, the rate includes annual capital recovery in addition to interest.
Understanding the multifaceted term 'capitalize' and the concept of capitalization, especially within various business and financial contexts. This includes asset valuation, financing capital expenditures, accounting procedures, and making economically advantageous decisions.
Capitalized value represents the value at which an asset is recorded in the balance sheet of a company or organization. It is also the capital equivalent of an asset that yields a regular income, calculated at the prevailing rate of interest.
Capitulation is the terminal stage of a market collapse, characterized by investors giving up hope and taking losses, causing prices to bottom out. This typically stirs bullish sentiment as it creates opportunities for value investing and marks a technical sign that downside risk is being replaced by upside potential. Market bottoms are confirmable only in hindsight, which introduces an element of speculation.
A Capped Floating-Rate Note (Capped FRN) is a type of bond that features an interest rate that fluctuates with market levels but has an upper limit or 'cap' to protect issuers against excessive interest rate rises.
Limitations, especially those placed on the extent of interest rate or payment adjustments associated with adjustable-rate mortgages (ARMs).
Understanding Captive Finance Companies, their benefits, structure, and role in providing financial services aligned with the parent company's product sales efforts.
A captive insurance company is a subsidiary company formed to insure the risks of its parent company or a group of companies. This structure allows the parent company to manage and tailor its own risk management strategy, potentially leading to cost savings and more comprehensive coverage.
Capture rate refers to the portion of total sales in a market that are achieved by a specific entity or project. This concept is commonly used in real estate, retail, and other industries to determine market performance and analyze competitive advantage.
Cargo refers to freight or merchandise transported on a transportation vehicle, such as a ship, airplane, truck, or train, excluding passengers. It covers a broad range of goods, from raw materials to finished products, playing a crucial role in global trade and logistics.
Cargo insurance is a specialized insurance policy designed to provide financial protection for goods while they are being transported, typically by sea but also by other modes of transport. It covers a single shipment or all shipments under a continual agreement, protecting against most risks associated with the journey.
Carload Rate refers to a discounted transportation charge applicable when a shipment meets a certain volume or quantity of freight that is sufficient to fill a freight car. This rate is especially relevant for large-volume shipments.
Carousel fraud is a type of criminal scheme commonly involving cross-border transactions within the European Union (EU), where fraudsters exploit the VAT system to steal large amounts of money.
Carpal Tunnel Syndrome (CTS) is a repetitive-use injury of the carpal tunnel, a nerve pathway in the wrist, frequently seen in individuals who spend extended periods keyboarding and using a mouse. It can cause numbness, tingling, and pain in the hand. Preventive measures such as stretching and taking regular breaks can help mitigate the risk of CTS.
Carriage Inwards, also known as Freight Inwards, refers to the delivery costs incurred by a business when purchasing goods. If these costs are associated with fixed assets, they can be capitalized and included in the cost of the asset on the balance sheet.
Carriage outwards refers to the delivery costs incurred when a business sends goods to customers. These costs are accounted for as an expense in the profit and loss account.
In book-keeping, 'carried down' (**c/d**) refers to an amount that is to be transferred as the opening balance in the next accounting period.
Carried Down (C/D) is an accounting term used to indicate that the total balance from the previous page of a ledger is carried down to the top of the new page.
Carried forward (c/f) is an accounting practice of bringing the balance of an account from one accounting period over to the next.
An accounting term used to describe the total of a column of figures that is to be the first item in the corresponding column on the next page.
An entity engaged in the business of providing transportation services for passengers or cargo. Carriers can operate across various modes of transportation including air, sea, road, and rail.
A Carrier's Lien is a legal right bestowed upon providers of transportation services (carriers) to retain possession of the cargo they transport as security for the payment of services rendered.
The Carrot and Stick strategy is often used in negotiations, involving a combination of rewards and threats to induce desired behavior from the other party. It is a metaphor for the use of a carrot (reward) and a stick (punishment) to influence behavior.
Carry trade is a financial strategy that involves borrowing funds in a low-interest-rate market and investing them in a higher return market. This practice capitalizes on the interest rate differential between two markets to generate profit.
Carryback is a tax provision allowing deductions or credits of one taxable year that cannot be used to reduce tax liability in that year to be applied against tax liability in an earlier year or years.
Carryforward refers to a provision in tax law allowing individuals or corporations to apply an unused deduction, credit, or loss from one tax year to future tax years, effectively reducing future taxable income or taxes owed.
The balance-sheet value of an asset or liability, representing the amount at which it is reported on the financial statements.
A carrying charge is a fee associated with holding an investment or conducting business that includes costs such as interest, storage, and insurance across various sectors like commodities, real estate, retailing, and securities.
Carrying costs, also known as holding costs or cost of carry, refer to the expenses associated with maintaining an inventory or financial position. These include opportunity costs, protective measures, wastage, and funding costs.
Carryover refers to the process by which deductions and credits of one taxable year that cannot be used to reduce tax liability in that year are applied against tax liability in subsequent years.
The carryover basis concept is pivotal in a tax-deferred exchange, wherein the adjusted tax basis of the property surrendered is used to determine the tax basis of the property acquired.
Cartage refers to the charge or service for moving goods by truck, wagon, or other vehicle. It plays a crucial role in logistics and supply chain management.
Carte Blanche refers to the full freedom and authority to act at one's own discretion. It is often used in business contexts to describe a situation where an individual is given the broad authority to make decisions and take actions as they see fit, without requiring additional approval.
A cartel is a group of independent suppliers who band together to control prices and limit competition by restricting trade to their mutual benefit. This cooperation typically aims to maximize collective profits by regulating supply and prices.
The term 'carve out' refers to the separation of a specific interest, such as the current income stream of a property, from the property itself. For instance, an owner might sell a portion of future mineral production from a property for a set number of years, creating a carved-out interest in that mineral property.
A form of corporate restructuring in which a parent firm sells shares in a subsidiary through an initial public offering (IPO).
A cascading menu is a secondary menu that appears next to the original menu when an option with its own menu is selected, often leading to further menus.
CASE is an acronym for the Committee on Accounting for Smaller Entities. This organization focuses on the creation and adaptation of accounting standards and practices to better suit the needs of smaller entities, ensuring that they are adequately represented and that their financial reporting is manageable and effective.
Case sensitivity refers to the distinguishing between upper- and lowercase letters in data processing contexts. This concept affects various fields such as programming, file management, and user authentication, determining how differences in letter case impact functionality.
A widely recognized measure of U.S. residential real estate prices, particularly focusing on changes in the price of single-family homes in specific cities.
The Case-Study Method involves studying information from hypothetical or actual business situations to formulate recommended policies based on given facts. This approach is widely used in business education, notably through Harvard case studies, to gather, organize, evaluate, and generalize relevant data. Analyzing how companies handle real-world occurrences helps determine the effectiveness of management policies and offers improvements when necessary.
Legal tender in the form of banknotes and coins that are readily acceptable for the settlement of debts.
Cash accounting is an accounting method where transactions are recorded only when cash is received or paid. This system differs significantly from accrual accounting, which records transactions when they are earned or incurred. Cash accounting provides a simplified approach to managing VAT liabilities for eligible businesses.
