High-Low Method In cost accounting, the high-low method is a way of attempting to separate fixed and variable costs given a limited amount of data. Thus, the high-low method involves taking the highest level of activity and the lowest level of activity and comparing the total costs at each level. Formula Once the variable cost…
Gross domestic product (GDP) Gross domestic product (GDP), the total market value of the goods and services produced by a country’s economy during a specified period. It includes all final goods and services—that is, those that produce from the economic agents in that country regardless of their ownership. Moreover, it is used throughout the world…
Depth of Market Depth of Market, aka the Order Book, is a window that shows how many open buy and sell orders there are at different prices for a security. Let’s say the current price is $1, the DOM will show how many orders there are at $0.90, $1.10, etc. It’s a great tool to…
Economic Growth Rate Economic growth Rate describes an increase in the quantity and quality of the economic goods and services that a society produces and consumes. From the long-term perspective of social history, we know that economic prosperity and lasting economic growth is very recent achievement for humanity. In this entry, we will also look…
Effective Gross Income What is Effective Gross Income (EGI)? There’s big money-making potential with an investment rental property. However, determining how much you’ll actually make isn’t as simple as multiplying the monthly rent by 12. To understand your true cash flow, you’ll need to keep an eye on your effective gross income (EGI) about your net…
What Is a Breakeven Point (BEP)? Breakeven Point (BEP) is the point at which your trade neither makes nor loses money. It is also known as the price at which you have entered into a trading position. In terms of price action, it is the level at which the risk on the trade is recovered. For example,…
Balance of Trade What is the Balance of Trade? The Balance of Trade (BoT) is the difference between the total value of exports and the total value of imports of a country within a period. It is also referred to as trade balance, commercial balance or net exports (NX). The Balance of Trade shows whether the country had achieved…
Balance of Payments The balance of payments(BOP) is an accounting of a country’s international transactions over a certain time period. It shows the sum of the transactions—purely financial ones, as well as those involving goods or services—between individuals, businesses and government agencies in that country and those in the rest of the world. What is…
Diluted EPS The Diluted EPS formula is equal to Net Income less preferred dividends, divided by the total number of diluted shares outstanding (basic shares outstanding plus the exercise of in-the-money options, warrants, and other dilutive securities). Also, the concept of diluted shares outstanding can be equated to a pie, of sorts. If more slices are…
Basis Risk Basis risk is the inherent risk a trader takes when hedging a position by taking a contrary position in a derivative of the asset, such as a futures contract. It is normal in an attempt to hedge away price risk. As an example, if the current spot price of gold is $1190 and…