What is the Gift Tax? Definition: The gift tax is the tax applied to any valuable gift either money or property that an individual can give another person. Technically a gift tax will apply to almost every gift that you may give someone provided they do not pay you back in full. Therefore if you
What are Gross Wages? Definition: Gross wages are you overall earnings from your employer before any type of payroll deductions. What comes to mind when someone says to you, ‘your gross salary is X amount of money?’ Well, a majority of people just walk away in content and perhaps without getting down to the details
What is Forward Integration? Definition: Forward integration is a business strategy that involves expanding a business operation to take control of products distribution. Instead of a business contracting distributors to distribute its products, it can opt to deal with retailers and consumers directly. Understanding Forward Integration Often referred to as vertical integration, forward integration is
What is an Endowment Fund? Definition: An endowment fund is the money donated by philanthropists to non-profit organizations to facilitate the fulfillment of the objectives of the institutions. Typically, such donations target institutions like universities, hospitals, churches and museums. Depending on the size of the fund, it is intended to meet part or the entire
What is a Flexible Budget? Definition: A flexible budget is a financial plan that varies based on volume or activities in production. The budget is prepared based on the current actual amount of output. It also uses immediate revenues and expenses as the baseline, to estimate how revenues and expenses will change in the future
What is EBITDAR? Definition: EBITDAR, Earnings Before Interest Tax Depreciation Amortization and Rent/Restructuring costs, is a metric that enables stakeholders to evaluate the profitability of a business before taking into account operational costs. While the income statement does not show EBITDAR, you can easily derive it. Instead of including EBITDAR in the income statement, most
What is the Dividend Growth Model? Definition: The dividend growth model is an analytic strategy used to ascertain the fair value of a stock based on dividends paid out over time. The model came into being as financial advisers sough to come up with an effective way of navigating the thousands of investment options based
What Is Diversification? Definition: Diversification is defined differently based on the context in which it is used. On the one hand, diversification is a business strategy that companies employ to maximize the profit potential of their operations. On the other hand, diversification is a strategy that investors use to construct a portfolio that lessens their
What Are Discretionary Expenses? Definition: In business, discretionary expenses are costs that cover activities that have insignificant effect on the core business. Such expenses have little effect on the operational procedures of the business if they are reduced or even removed completely. The nature of the expenses is not necessary for proper operation of the
What is the Discount Rate? Definition: Discount rate is a tool for evaluating the present value of future cash flow of a business. Further, this tool plays a critical part in the role of the central bank (Federal Reserve in the US) as a lender of last resort as the lender of last resort in