What is an Asset Retirement Obligation (ARO)? An asset retirement obligation (ARO) is a legal obligation that is associated with the retirement of a tangible, long-term asset. It is generally applicable when a company is responsible for removing equipment or cleaning up hazardous materials at some agreed-upon future date. A company must realize the ARO…
What are the Different Types of Organizations? This article on the different types of organizations explores the various categories that organizational structures can fall into. Organizational structures can be tall, meaning that there are multiple tiers between the entry-level workers and top managers of the company. They can also be fairly flat, which means that…
What is an Activity Cost Driver? An activity cost driver refers to actions that cause variable costs to increase or decrease for a business. Therefore, identifying what product/service is causing particular costs can help the business to become more profitable by better understanding the specific activities that are driving the costs. Activity cost drivers include…
What are Anti-Dilution Provisions? Anti-dilution provisions are clauses that allow investors the right to maintain their ownership percentages in the event that new shares are issued. They are rights that are usually associated with preferred shares. Understanding Anti-Dilution Provisions Anti-dilution provisions protect an investor’s equity stake from dilution. A company may issue new shares with…
What is Accidental Death and Dismemberment Insurance (AD&D)? Accidental Death and Dismemberment Insurance (AD&D) is an insurance policy that pays out to beneficiaries in the events of accidental death or dismemberment. Dismemberment includes full or partial loss of bodily functions, such as sight, hearing, or use of a limb. How AD&D Insurance…
What is a Non-Covered Security? The term non-covered security refers to a legal definition of securities, the details of which may not necessarily be disclosed to the Internal Revenue Service (IRS). The competent authority that makes such designations for tax reporting purposes in the U.S. is the Securities and Exchange Commission (SEC). The designation entails…
What is Market Value? Market value is usually used to describe how much an asset or company is worth in a financial market. It is mutually determined by market participants and is interchangeably used for market capitalization when dealing with assets and companies. Relationship between Market Value and Market Price On the other hand, market…
What is Market Timing? Market timing refers to an investing strategy through which a market participant makes buying or selling decisions by predicting the price movements of a financial asset in the future. Investors following the strategy aim to outperform the market by taking a long position (buying) at market bottoms and a short position…
What is Market Sentiment? The term market sentiment, also known as investor sentiment, refers to the general outlook or attitude of investors toward a particular security or the overall financial market. The optimism or pessimism of the market players is most evident in the overall price trends. How Does Market Sentiment Affect Prices? Sentiment drives…
What is Market Saturation? Market saturation is a scenario where the market growth trajectory of a given product stagnates. It essentially means that the supply of the product becomes much higher than the demand for the same. Market saturation is also referred to as the point of a product life cycle where the good or…
