What is Next-In First-Out (NIFO)? Next-In First-Out (NIFO) is a method of inventory valuation used for internal purposes. NIFO involves charging the cost of goods sold by the replacement cost of the item sold from inventory. The value of NIFO inventory valuation method is derived from its ability to integrate the effect of inflation into…
What is Net Interest Margin? Financial intermediaries in the economy deal extensively with borrowing and lending, and the net interest margin is the net benefit of lending. Net interest margin is the difference between the interest income generated and the amount of interest paid out to lenders. It is an industry-specific profitability ratio for banks…
What is Monetarism? Monetarism (also referred to as “monetarist theory”) is a fundamental macroeconomic theory that focuses on the importance of the money supply as a main driver for economic growth. Subscribers to monetary economics believe that money supply is a primary determinant of price levels and inflation. Increasing money supply, according to the theory,…
What is the National Securities Markets Improvement Act (NSMIA)? The National Securities Markets Improvement Act (NSMIA) was introduced in 1996 to more efficiently allocate capital in financial markets. NSMIA amended the previously passed Investment Company Act of 1940 to promote the more efficient management of mutual funds, protect investors, and provide more effective regulation. What…
What is a Negative Pledge? A negative pledge is a contract provision prohibiting the debtor in a contract from creating security interests over specified property assets. The contractual provision aims to protect unsecured creditors by ensuring that debtors can only use unencumbered assets as collateral. Over time, the negative pledge’s become a boilerplate…
What is Net of Tax? Net of tax is the amount obtained after the applicable tax is deducted from the gross income that resulted from investments or transactions. Net of tax is a term most commonly used for showing the results of businesses in terms of income, profits, or losses. If the tax effect is considered…
What is a Venture-Capital-Backed IPO? A venture-capital-backed IPO is the initial offering of shares of a company that’s been mainly supported by venture capital investors. Such a type of initial public offering (IPO) is part of a judicious plan by investors to recover all or a part of a loss of their investments from the…
What is a Night Depository? A night depository is an overnight drop box service provided by banks that allows account holders to make money deposits after regular banking hours. A night depository service is always available for making deposits 24 hours a day, 7 days a week. The deposits can be made up…
What is Net Premium? Net premium is the amount received or written on insurance policies when premiums are incurred or paid, and return premiums are deducted from gross premiums. Net premium can be referred to as the present value of policy benefits less the present value of premiums payable in the future. Hence,…
