What is a Wage Expense? Wage expense refers to the cost incurred by an organization to compensate employees and contractors for work performed over a specific time period. Wage Expense vs. Salary Expense The difference between wages and salaries is often poorly understood. Understanding the difference between wage expense and salary expense allows an analyst…
What is a Wrap Account? A wrap account refers to an investment account that is managed by a broker for a flat annual fee. The flat annual fee, which ranges from 1% to 3% of assets under management (AUM), covers all expenses related to managing the account, such as administration, commission, management expenses. Understanding a…
What is a Go-Shop Period? A go-shop period is a provision within a mergers and acquisitions (M&A) agreement where the target company is permitted to seek out competing offers even after receiving a purchase offer from the acquirer. The period generally lasts up to two months. Understanding the Go-Shop Period A go-shop period allows the…
What are Golden Handcuffs? Golden handcuffs are financial inducements and benefits (typically deferred) given to certain employees to encourage them to remain with the organization for a longer period of time. Understanding Golden Handcuffs Golden handcuffs are a type of employee retention tool and are commonly used for: Senior management Employees with specialized skills High-performing…
What is the Internal Growth Rate (IGR)? The internal growth rate (IGR) refers to the sales growth rate that can be supported with no external financing. As such, the company is funding its operations solely from retained earnings. A company’s maximum internal growth rate is the highest level of business operations that can continue to fund…
What Does Underperforming Mean? In a general sense, underperforming refers to performing poorly or unsatisfactorily in comparison to expectations or when evaluated against a certain standard. For example, one can perform poorly by failing an exam at school (or receiving a score below the class average), indicating an underperformance compared to the rest of the…
What is an Intermediate Good? An intermediate good refers to partially finished goods that are then used as an input ton the production of other goods that become final goods. Intermediate goods are an integral part of the production process, and as such, they are also known as producer goods. When used in the production…
What is Self-Employment? Self-employment refers to working for oneself rather than working for a specific employer who pays them a salary. Self-employed individuals often act as independent contractors by collaborating with other businesses. How Does Self-Employment Work? Self-employment is common in a variety of occupations, but one common theme is that self-employed individuals tend to…
What is Sell in May and Go Away? Sell in May and Go Away refers to a well-known adage in the business and financial world. The phrase refers to an investment strategy for stocks based on the theory that the stock market underperforms in the six-month period between May and October. In contrast, the period…
What is FUTA Tax? FUTA is an abbreviation for Federal Unemployment Tax Act. FUTA Tax is a United States federal tax imposed on employers to help fund unemployment payments. The tax is imposed solely on employers who pay wages to employees. FUTA Tax is used to pay employees who leave employment involuntarily and are eligible…
