"performance, expenses are very predictive. Funds with high expenses ratios tend to continue to have high expenses ratios. An investor can examine a fund's ""Financial Highlights"" which is contained in both the periodic financial reports and the fund's prospectus, and determine a fund's expense ratio over the last five years (if the fund has five years of history). It is very hard for a fund to significantly lower its expense ratio once it has had a few years of operational history. This is because funds have both fixed and variable expenses, but most expenses are variable. Variable costs are fixed"
"an organization may be forces to rate the importance of their expenses according to the survival or the organization. The four groups of expenses are: These four groups result in minimum expenses, consisting of fixed expenses, and maximum expenses, consisting of all four groups of expenses. Based on the Cash Flow calculation according to the Cash Flow Statement, changes in cash result mainly from: Planning of cash focuses on investment and disinvestments as all other figures are derived from other planning sections (income, expenses and financing). For simplicity reasons and as for a majority of companies disinvestment many enjoy minor"
"expenses) can be adjusted by management, and the specific allocation of each expense to each category will be decided under cost accounting. Fixed cost In economics, fixed costs, indirect costs or overheads are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as interest or rents being paid per month, and are often referred to as overhead costs. This is in contrast to variable costs, which are volume-related (and are paid per quantity produced) and unknown at the beginning of the accounting year. For a simple"
"expenses as: In double-entry bookkeeping, expenses are recorded as a debit to an expense account (an income statement account) and a credit to either an asset account or a liability account, which are balance sheet accounts. An expense decreases assets or increases liabilities. Typical business expenses include salaries, utilities, depreciation of capital assets, and interest expense for loans. The purchase of a capital asset such as a building or equipment is not an expense. In a cash flow statement, expenditures are divided into operating, investing, and financing expenditures. An important issue in accounting is whether a particular expenditure is classified"
"be paid during an earlier or later period. (Cash basis accounting, used by some small businesses, recognizes revenue when received and expenses when paid.) Governmental funds, which are not concerned about profitability, usually rely on a ""modified accrual"" basis. This involves recognizing revenue when it becomes both available and measurable, rather than when it is earned. ""Expenditures"", a term preferred over ""expenses"" for modified accrual accounting, are recognized when the related liability is incurred. Proprietary funds, used for business-like activities, usually operate on an accrual basis. Governmental accountants sometimes refer to the accrual basis as ""full accrual"" to distinguish it"
"reported. Accretion expense In accounting, accretion expense is a periodic expense recognized when updating the present value of a balance sheet liability, which has arisen from a company's obligation to perform a duty in the future, and is being measured by using a discounted cash flows approach. In particular, accretion expense is a phrase used in topic 410-20 of the United States GAAP Codification of Accounting Standards (SFAS 143), which is the topic of reporting asset retirement obligations. This kind of liability typically has a long and predetermined life on a company's balance sheet, and so it is valued using"
"filed at the same time (or if the employee has waited to do all expense reports at the same time). Reports can ask for information like: Business strategies are tailored to various types of expense management: The management of wireless and wireline service and asset expenses is labeled as Telecom expense management. Historically, Telecom expenses were managed as general services. In recent years, more and more organizations associate telecom expense to IT services. This change in management is due to a shift in global business strategies towards evolving technologies. Travel expense management (often referred to as ""T+E"") is defined as"
"on equity that company could earn by investing in a new product or service or expansion of business. Cash and cash equivalents are listed on balance sheet as ""current assets"" and its value changes when different transactions are occurred.These changes are called ""cash flows"" and they are recorded on accounting ledger. For instance, if a company spends $300 on purchasing goods, this is recorded as $300 increase to its supplies and decrease in the value of CCE. These are few formulas that are used by analysts to calculate transactions related to cash and cash equivalents: ""Change in CCE = End"
"age, most of the costs incurred by a business were what modern accountants call ""variable costs"" because they varied directly with the amount of production. Money was spent on labor, raw materials, power to run a factory, etc. in direct proportion to production. Managers could simply total the variable costs for a product and use this as a rough guide for decision-making processes. Some costs tend to remain the same even during busy periods, unlike variable costs, which rise and fall with volume of work. Over time, these ""fixed costs"" have become more important to managers. Examples of fixed costs"
"Growth accounting Growth accounting is a procedure used in economics to measure the contribution of different factors to economic growth and to indirectly compute the rate of technological progress, measured as a residual, in an economy. Growth accounting decomposes the growth rate of an economy's total output into that which is due to increases in the contributing amount of the factors used—usually the increase in the amount of capital and labor—and that which cannot be accounted for by observable changes in factor utilization. The unexplained part of growth in GDP is then taken to represent increases in productivity (getting more"
"Expenditure cascades Expenditure cascades is an economic term coined by researcher Robert H. Frank. It describes changes in purchasing and consumption behaviour which ripple through the levels of income in response to changes in income inequality. During the late 1900s and early 2000s, income inequality in the United States rose dramatically, and expenditure cascades occurred. During the 1980s, the income-tax structure was altered to favor top earners in regards to after-tax purchasing power. Expenditure cascades employ positional externalities, which may be inter-related differently from other types of externalities. When a new purchase changes the context within which an existing positional"
"Accretion expense In accounting, accretion expense is a periodic expense recognized when updating the present value of a balance sheet liability, which has arisen from a company's obligation to perform a duty in the future, and is being measured by using a discounted cash flows approach. In particular, accretion expense is a phrase used in topic 410-20 of the United States GAAP Codification of Accounting Standards (SFAS 143), which is the topic of reporting asset retirement obligations. This kind of liability typically has a long and predetermined life on a company's balance sheet, and so it is valued using a"
"Expense account An expense account is the right to reimbursement of money spent by employees for work-related purposes. Some common expense accounts are: administrative expense, amortization expense, bad debt expense, cost of goods sold, depreciation expense, freight-out, income tax expense, insurance expense, interest expense, loss on disposal of plant assets, maintenance and repairs expense, rent expense, salaries and wages expense, selling expense, supplies expense and utilities expense. To increase an expense account, it must be debited. To decrease an expense account, it must be credited. The normal expense account balance is a debit. In order to understand why expenses are"
"as expenses, but as assets until one of the qualifying conditions is met resulting in a recognition as expenses. Lastly, if no connection with revenues can be established, costs are recognized immediately as expenses (e.g., general administrative and research and development costs). Prepaid expenses, such as employee wages or subcontractor fees paid out or promised, are not recognized as expenses; they are considered assets because they will provide probable future benefits. As a prepaid expense is used, an adjusting entry is made to update the value of the asset. In the case of prepaid rent, for instance, the cost of"
"expenses, including overheads) to products and services sold or provided by an enterprise. Considering the laws of variation, only costs that vary totally with units of output (see definition of T below for TVC) e.g. raw materials, are allocated to products and services which are deducted from sales to determine Throughput. Throughput Accounting is a management accounting technique used as the performance measure in the Theory of Constraints (TOC). It is the business intelligence used for maximizing profits, however, unlike cost accounting that primarily focuses on 'cutting costs' and reducing expenses to make a profit, Throughput Accounting primarily focuses on"
"credit to increase. Instead of crediting to decrease, it will be credited to increase. An example of a contra expense account is Purchase Returns and Allowances. In the United States, the use of an expense account can be traced back to George Washington, who chose to forego a salary and relied on an expense account to cover his purchases during his military leadership in the American Revolution. Under today's tax laws of the United States, expense accounts are treated as either ""accountable"" or ""unaccountable"". Accountable expense accounts are subject to a variety of Internal Revenue Service regulations. There must be"
"the opposite direction of price change. This doesn’t apply when consumers interpret high prices as an indicator of quality or exclusivity. For instance LOHAS (Lifestyles of Health and Sustainability) are consumers who value sustainable products and esteem quality. Indeed, the price elasticity of demand varies between types of purchase and among consumer segments. This is the process that companies use to adjust demand by setting prices. Three price-setting strategies are generally employed: value-based pricing, cost-based pricing and rent/lease pricing. Value-based pricing strategy is founded on a differentiation strategy, and uses buyer’s perceptions of value, which are based on experience. It"
"with ""loss"" as described by the Taguchi Loss Function (see Taguchi Methods). Sudden changes in business conditions, such as spikes or decreases in production demand, cause increases in variation from forecasted conditions, causing disruption, and causing waste to accumulate. A lean dynamics approach restructures the way operations, organizations, information, and innovation are structured to overcome this. One method for companies to deal internally with externally driven variation (such as sudden spikes in demand), a core tenet of lean dynamics, was explored by the Defense Department under the Supplier Utilization through Responsive Grouped Enterprises (SURGE) Program. The SURGE program was partially"
"Returns to scale In economics, returns to scale and economies of scale are related but different concepts that describe what happens as the scale of production increases in the long run, when all input levels including physical capital usage are variable (chosen by the firm). The concept of returns to scale arises in the context of a firm's production function. It explains the behavior of the rate of increase in output (production) relative to the associated increase in the inputs (the factors of production) in the long run. In the long run all factors of production are variable and subject"
"Wealth elasticity of demand The wealth elasticity of demand, in microeconomics and macroeconomics, is the proportional change in the consumption of a good relative to a change in consumers' wealth (as distinct from changes in personal income). Measuring and accounting for the variability in this elasticity is a continuing problem in behavioral finance and consumer theory. The wealth elasticity of consumption quantity for some good will determine the size of the expenditure shift due to ""unexpected"" changes in net personal wealth, ""ceteris paribus"" (i.e. the size of the so-called ""wealth effect"" for a given good). It is calculated as ""the"
"as an expense, which is reported immediately on the business's income statement; or whether it is classified as a capital expenditure or an expenditure subject to depreciation, which is not an expense. These latter types of expenditures are reported as expenses when they are depreciated by businesses that use accrual-basis accounting, which is most large businesses and all C corporations. The most common interpretation of whether an expense is of capital or income variety depends upon its term. Viewing an expense as a purchase helps alleviate this distinction. If, soon after the ""purchase"", that which was expenses holds no value"
"for the goods and services it delivers is the business's revenue. The cost of developing, producing, and delivering these goods and services is the business's expenses. A business whose revenues are sufficiently greater than its expenses makes profit or income. Such a business is profitable. As such, generating recurring ""revenue"" is not the focus of operations management; what counts is management of the relationship between the cost of goods sold and the revenue derived from their sale. Efficient processes that reduce costs even while prices remain the same expand the gap between revenue and expenses and derive higher profitability. Types"
"Variance (accounting) In budgeting (or management accounting in general), a variance is the difference between a budgeted, planned, or standard cost and the actual amount incurred/sold. Variances can be computed for both costs and revenues. The concept of variance is intrinsically connected with planned and actual results and effects of the difference between those two on the performance of the entity or company. Variances can be divided according to their effect or nature of the underlying amounts. When effect of variance is concerned, there are two types of variances: The second typology (according to the nature of the underlying amount)"
"will tend to set growth (top-line) and cost cutting (bottom-line) targets simultaneously to make sure they optimise their profit margins and maximise the economic benefit of their revenue growth. Growth can bring extra costs so businesses use this incentive to devise effective operational strategies that will capture the benefits of top-line growth. Businesses often report their top-line growth to shareholders when they have recently implemented a growth strategy to determine if it has been successful. The trend of performance management is popular among public and private businesses. Some managers view Key Performance Indicators (KPI’s) as a way to increase the"
"(DRS). If output increases by more than the proportional change in all inputs, there are increasing returns to scale (IRS). A firm's production function could exhibit different types of returns to scale in different ranges of output. Typically, there could be increasing returns at relatively low output levels, decreasing returns at relatively high output levels, and constant returns at one output level between those ranges. In mainstream microeconomics, the returns to scale faced by a firm are purely technologically imposed and are not influenced by economic decisions or by market conditions (i.e., conclusions about returns to scale are derived from"
"labor that goes into each shirt increases in direct proportion to the number of shirts produced. In this sense, the cost ""varies"" as production varies. For example, a firm pays for raw materials. When activity is decreased, less raw material is used, and so the spending for raw materials falls. When activity is increased, more raw material is used, and spending therefore rises. Note that the changes in expenses happen with little or no need for managerial intervention. These costs are variable costs. A company will pay for line rental and maintenance fees each period regardless of how much power"
"Cost escalation ""'Cost escalation""can be defined as changes in the cost or price of specific goods or services in a given economy over a period. This is similar to the concepts of inflation and deflation except that escalation is specific to an item or class of items (not as general in nature), it is often not primarily driven by changes in the money supply, and it tends to be less sustained. While escalation includes general inflation related to the money supply, it is also driven by changes in technology, practices, and particularly supply-demand imbalances that are specific to a good"
"sold or written down in value. Many businesses sell goods that they have bought or produced. When the goods are bought or produced, the costs associated with such goods are capitalized as part of inventory (or stock) of goods. These costs are treated as an expense in the period the business recognizes income from sale of the goods. Determining costs requires keeping records of goods or materials purchased and any discounts on such purchase. In addition, if the goods are modified, the business must determine the costs incurred in modifying the goods. Such modification costs include labor, supplies or additional"
"greatly impacted by broader economic conditions as a small change in customer base can represent a large proportion of future revenue. Sustained top-line growth for a small business can signal business expansion, increased size and profitability. Businesses use the top-line growth rate to inform their decision making regarding cost-cutting and sales techniques. Managers will analyse the top-line growth rate to gain insight into how the everyday business operations are performing. If they do not meet predetermined targets set by the business, new strategies for increased growth, higher sales turnover and pricing may be considered to improve the trend. Traditionally, companies"
"at the beginning of the statement. Expenses are then deducted on the statement to derive the bottom-line growth figure which is a net value. To make top-line growth comparable across periods, a business may use a percentage change formula to see the amount of growth or decline in the top-line figure. This figure can be modelled into trend lines and graphed. The graphs regarding top-line growth are often then reported to shareholders or potential creditors to show the pace of growth or expansion success for new and existing businesses. These revenue models (RM’s) are influenced by the industry the business"
"to focus their operational improvements. For example, a job-based manufacturer may find that a high percentage of its workers are spending their time trying to figure out a hastily written customer order. Via (ABC) Activity based costing, the accountants now have a currency amount pegged to the activity of ""Researching Customer Work Order Specifications"". Senior management can now decide how much focus or money to budget for resolving this process deficiency. Activity-based management includes (but is not restricted to) the use of activity-based costing to manage a business. While (ABC) Activity based costing may be able to pinpoint the cost"
"Economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation (typically measured by amount of output produced), with cost per unit of output decreasing with increasing scale. (In economics, ""scale"" is synonymous with quantity.) Economies of scale apply to a variety of organizational and business situations and at various levels, such as a business or manufacturing unit, plant or an entire enterprise. When average costs start falling as output increases, then economies of scale are occurring. If a firm's marginal cost of producing a good or service is beneath"
"to change due to a given increase in size (scale). While economies of scale show the effect of an increased output level on unit costs, returns to scale focus only on the relation between input and output quantities. There are three possible types of returns to scale: increasing returns to scale, constant returns to scale, and diminishing (or decreasing) returns to scale. If output increases by the same proportional change as all inputs change then there are constant returns to scale (CRS). If output increases by less than that proportional change in all inputs, there are decreasing returns to scale"