What is the Reporting Cycle? The reporting cycle involves the running, managing, updating, and reporting of a company’s accounts. The cycle usually runs concurrently with the planning and budgeting cycles. It ensures that the company is ready to begin the following period. A company’s planning/budgeting cycles and reporting cycles are usually independent of each other…
What is Timberland (Alternative Investment)? Timberland refers to an alternative form of investment that involves putting money into trees, either in managed tree plantations or natural forests. Investors bank on the predictable biological growth of the trees to increase in value so that they can be sold at a future date for their wood. Timberland…
What are Regional Trading Agreements? Regional trading agreements refer to a treaty that is signed by two or more countries to encourage the free movement of goods and services across the borders of its members. The agreement comes with internal rules that member countries follow among themselves. When dealing with non-member countries, there are external…
What is Consumption? Consumption is defined as the use of goods and services by a household. It is a component in the calculation of the Gross Domestic Product (GDP). Macroeconomists typically use consumption as a proxy of the overall economy. When valuing a business, a financial analyst would look at the consumption trends in the business’ industry….
What is a Subsidy? A subsidy is an incentive given by the government to individuals or businesses in the form of cash, grants, or tax breaks that improve the supply of certain goods and services. With subsidies, consumers are able to access cheaper products and commodities. Markets that have positive externalities, which are extra benefits…
What is Bartering? Bartering is the act of trading one good or service for another without using a medium of exchange such as money. A bartering economy differs from a monetary economy in a variety of ways. The primary difference is that goods or services are exchanged immediately, and the exchange is reciprocal, meaning it’s…
What is Underemployment? Underemployment occurs when a person does not work full time or takes a job that does not reflect their actual training and financial needs. That is, their job doesn’t use all their skills and education, or provides less than full time work. This is not the same as unemployment, which refers to…
What is Price Appreciation (Real Estate Investments)? Price appreciation in real estate refers to the increase in the value of a real estate property over a period of time. One of the goals of investing in real estate is to get a positive return on the investment when the investor decides to sell the property…
What is an Amortizing Loan? An amortizing loan is a type of credit that is repaid via periodic installment payments over the lifetime of a loan. Installments are typically monthly payments, but not always. Each periodic payment includes both a principal portion and an interest portion. Amortization refers to the reduction in loan principal outstanding….
What is Economic Efficiency? Economic efficiency is, in mathematical terms, a function of the ratio of the actual value of an economic variable divided by the potential value of that same economic variable. Economic Efficiency Formula Economic efficiency is basically just a measure of how good things are economically, compared to how good they could…
