What are the Uniform Rules for Collections (URC)? The Uniform Rules for Collections is a set of rules that help assist in the process of collecting debts or owed money or assets. The URCs were established – or proposed – by the International Chamber of Commerce (ICC), a worldwide organization that serves to promote and…
What is Infinite Banking? Infinite banking refers to a process by which an individual becomes his or her own banker. The infinite banking concept was created by Nelson Nash. In his book, “Becoming Your Own Banker,” Nash talks about the use of whole life insurance policies that distribute dividends and how owning such policies allows…
What is the Annual Percentage Rate (APR)? The Annual Percentage Rate (APR) is the yearly rate of interest that an individual must pay on a loan, or that they receive on a deposit account. APR is used on everything from mortgages and car loans to credit cards. Ultimately, APR is a simple percentage term used…
What is Gross Merchandise Value? Gross Merchandise Value (GMV), also referred to as gross merchandise volume, is the total amount of sales a company makes over a specified period of time, typically measured quarterly or yearly. GMV is calculated before accrued expenses are deducted. Accrued expenses include costs associated with advertising/marketing, delivery costs, discounts, and…
What is Going Concern? The going concern principle assumes that any organization will continue to operate its business for the foreseeable future. The principle purports that every decision in a company is taken with the objective in mind of running the business rather than that of liquidating it. Breaking Down Going Concern Going concern is one…
What is Look-ahead Bias? Look-ahead bias is a type of bias that occurs when a study or simulation relies on data or information that was not yet available or known during the time period being studied. It generally leads to inaccurate results from a study or simulation. The incorporation of fundamental data that wasn’t available…
What is Retention Ratio? The retention ratio (also known as the net income retention ratio or plowback ratio) is the ratio of a company’s retained income to its net income. The retention ratio measures the percentage of a company’s profits that are reinvested into the company in some way, rather than being paid out to investors…
What is a Share Repurchase? A share repurchase refers to the management of a public company buying back company shares that were previously sold to the public. There are several reasons why a company may decide to repurchase its shares. For instance, a company may choose to repurchase shares to send a market signal that…
What is the Degree of Operating Leverage? The degree of operating leverage (DOL) is a financial ratio that measures the sensitivity of a company’s operating income to its sales. This financial metric shows how a change in the company’s sales will affect its operating income. Breaking Down Degree of Operating Leverage The degree of operating…
What is the Degree of Financial Leverage? The degree of financial leverage is a financial ratio that measures the sensitivity in fluctuations of a company’s overall profitability to the volatility of its operating income caused by changes in its capital structure. The degree of financial leverage is one of the methods used to quantify a…
