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Financial Statement Analysis: A Practitioner's Guide, Fourth Edition by FERNANDO ALVAREZ, MARTIN FRIDSON

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Glossary

accelerate.  To demand immediate repayment of debt in default, exercising thereby a right specified in the loan contract.

Accounting Principles Board (APB).  Formerly, a rule-making body of the American Institute of Certified Public Accountants. Predecessor of the Financial Accounting Standards Board (see).

accrual accounting.  An accounting system in which revenue is recognized during the period in which it is earned and expenses are recognized during the period in which they are incurred, whether or not cash is received or disbursed.

APB.  Accounting Principles Board (see).

bona fide profit.  A reported profit that represents a genuine increase in wealth as opposed to one that exploits a flaw in the accounting system and reflects no economic gain.

book value.  The amount at which an asset is carried on the balance sheet. Book value consists of the asset's construction or acquisition cost, less depreciation (see) and subsequent impairment of value, if applicable. An asset's book value does not rise as a function of an increase in its market value or inflation. (See also historical cost accounting.)

breakeven rate.  The production volume at which contribution (see) is equivalent to fixed costs (see), resulting in a pretax profit of zero.

Example:

Price per unit = $2.50
Variable cost per unit = $1.00
Fixed costs = $600
To calculate breakeven: [($2.50 – $1.00) × B] – $600 = 0
($1.50 × B) = $600
B = 400 units

broadcast cash flow.  A measure of financial performance ...

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