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Horizontal Analysis

Horizontal Analysis Horizontal analysis is an approach used to analyze financial statements by comparing specific financial information for a certain accounting period with information from other periods. Analysts use such an approach to analyze historical trends. Horizontal analysis can also be compared with a vertical one. Whereas vertical analysis analyzes a particular financial statement using…

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Income Annuity

Income Annuity An income annuity works by converting a large sum of cash into a stream of regular payments. You give them money to an insurance company. And in exchange, the insurer agrees to pay you for a certain length of time — or the rest of your life. You may receive your annuity payouts…

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Cash flow

Cash flow Cash flow from investing activities is the cash that has been generated (or spent) on non-current assets that are intended to produce a profit in the future. Types of activities that this may include are capital expenditures, lending money, and the sale of investment securities. Why Cash Flow is So Important If incoming…

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Fund Flow

Fund Flow Fund flow, also referred to as asset flows or just “flows,” measures the net movement of cash into and out of investment vehicles like mutual funds and exchange-traded funds. They do not reflect the performance of the investment, only how investors move their money. Outflows reflect share redemptions, or when investors take their…

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Index Fund

Index Fund An index mutual fund or ETF (exchange-traded fund) tracks the performance of a specific market benchmark—or “index,” like the popular S&P 500 Index—as closely as possible. That’s why you may hear people refer to indexing as a “passive” investment strategy. Instead of hand-selecting which stocks or bonds the fund will hold, the fund’s manager buys all…

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Fixed cost

Fixed cost Fixed cost is a cost that does not change when sales or production volumes increase or decrease. This is because they do not directly associate with manufacturing a product or delivering a service. As a result, fixed costs are indirect. Fixed costs can include property taxes, rent, salaries and the cost of benefits…

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Variable Cost

Variable Cost A variable cost is a corporate expense that changes in proportion to how much a company produces or sells. Variable costs increase or decrease depending on a company’s production or sales volume—they rise as production increases and fall as production decreases. Examples of variable costs include a manufacturing company’s costs of raw materials…

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High-Yield Bond

High-Yield Bond High-yield bond (also called junk bonds) are bonds that pay higher interest rates because they have lower credit ratings than investment-grade bonds. They are more likely to default, so they must pay a higher yield than investment-grade bonds to compensate investors. Issuers of high-yield debt tend to be startup companies or capital-intensive firms…

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High-Low Method

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…

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