Accounting glossary - dictionary_10

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Accounting glossary - dictionary_10http://www.ventureline.com/glossary.aspTAXABLE INCOME is that income that is reported to the government for thepurposes of calculating income taxes. Taxable income normally is not alignedwith the financial income reported within financial statements. See FINANCIALINCOME.TAX EQUIVALENT YIELD is the yield that must be offered before factoring intaxes so that an investment pays off a certain after-tax yield. This measure isoften necessary to compare taxable and tax-free investments, since tax-freeissues tend to have lower pre-tax yields due to the fact that the investmentsproceeds will not be reduced by taxes. Tax equivalent yield is equal to requiredafter-tax yield divided by (1 minus the tax rate).TAX LOSS CARRY FORWARD/BACKWARD is a tax benefit that lets acompany or individual to deduct losses in order to reduce a tax liability.TAX SHELTER are legal methods taxpayers can use to reduce tax liabilities. Anexample is the use of depreciation of assets.TERM BONDS are bonds whose principal is payable at maturity. Sometimesreferred to as bullet-maturity bonds or bullet bonds.TERM DEBT, as in Term Bonds, is debt that mature in one lump sum at aspecified future date. Term debt is usually carried as one type of long-term debt.TERM ENDOWMENT are endowments with time restrictions required by thedonor such as a restriction that the income from the endowment may not beutilized until a future period or a specific date for condition is met.TERMINAL VALUE, when used in a discounted cash flow valuation, the cashflow is projected for each year into the future for a certain number of years, afterwhich unique annual cash flows cannot be forecasted with reasonable accuracy.At that point, rather than attempting to forecast the varying cash flow for eachindividual year, one uses a single value representing the discounted value of allsubsequent cash flows. This single value is referred to as the terminalvalue.When a firms cash flows grow at a constant rate forever, the presentvalue of those cash flows can be written as: Value = Expected Cash Flow NextPeriod / (r - g)where, r = Discount rate (Cost of Equity or Cost of Capital) g =Expected growth rate. This constant growth rate is called a stable growth rateand cannot be higher than the growth rate of the economy in which the firmoperates. While companies can maintain high growth rates for extended periods,they will all approach stable growth at some point in time. When they doapproach stable growth, the valuation formula above can be used to estimate theterminal value of all cash flows beyond. 181http://www.ventureline.com/glossary.aspTERM LOAN is a bank loan, typically with a floating interest rate, for a specifiedamount that matures in between one and ten years and requires a specifiedrepayment schedule.TESTIMONY is evidence given by a competent witness under oath.THIRD PARTY is someone other than the principals directly involved in atransaction or agreement.THIRD PARTY RECOVERY normally refers to delinquent accounts receivablerecovered by a collection agency for a fee.THREE PERCENT (3%) RULE is a rule used in vesting pension plan benefits.The participants accrued benefit must be at least equal to 3% of the participantsnormal projected retirement benefit for each year of participation, with amaximum of 100% after 33 1/3 years of participation.TI is an acronym that could mean, among others, Total Income or TenantImprovements.TILL ROLL is a roll of paper on which the separate amounts of money paid forgoods are recorded in a retail shops cash register.TIME LAG see LAG TIME.TIME PERIOD CONCEPT provides that accounting take place over specific timeperiods known as fiscal periods. These fiscal periods are of equal length, and areused when measuring the financial progress of a business.TIMES FIXED CHARGES EARNED see COVERAGE OF FIXED CHARGES.TIMES INTEREST EARNED (TIE) measures the extent to which operatingincome can decline before the firm is unable to meet its annual interest costs.The TIE ratio is used by bankers to assess a firm’s ability to pay their liabilities.TIE determines how many times during the year the company has earned theannual interest costs associated with servicing its debt. Normally, a banker willbe looking for a TIE ratio to be 2.0 or greater, showing that a business is earningthe interest charges two or more times each year. A value of 1.0 or less suggeststhat the firm is not earning sufficient amounts to cover interest charges.TIME TO MARKET (TTM) is the length of time it takes to develop a new productfrom an early initial idea for a new product to initial market sales. Precisedefinitions of the start and end point vary from one company to another, and mayvary from one project to another within the company. 182http://www.ventureline.com/glossary.aspTIME VALUE OF MONEY is the idea that a dollar today is worth more than adollar in the future, because the dollar received today can earn interest up untilthe time the future dollar is received.TOBIN RATIO see MARKET TO BOOK VALUE.TO DATE is prior to the current date.TOP DOWN is a concept of analyzing a subject, such as costs or revenue,starting from the highest level working towards the bottom.TOP-LINE of a company is its gross sales, or revenue figure.TOTAL ASSETS is the total of all assets; both current and fixed.TOTAL ASSET TURNOVER measures managements efficiency in managing allof a firm’s assets - specifically the generation of revenues from the firms totalinvestments in assets. This ratio is extremely important in high asset firms suchas manufactures and telecommunications companies. Generally, the higher thisratio as compared to like ...