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how do i calculate the average cost
you calculate the average cost by dividing the total amount in dollars invested in a mutual fund position by the number of shares owned
is average cost basis method the only type of cost basis method
no many brokerage firms default to the average cost basis method for mutual funds but other methods are available these include first in first out fifo last in first out lifo high cost low cost and specific identification the bottom linethe average cost basis method calculates the value of mutual fund positions held in...
what is average cost method
average cost method assigns a cost to inventory items based on the total cost of goods purchased or produced in a period divided by the total number of items purchased or produced average cost method is also known as weighted average method eliana rodgers investopediaunderstanding average cost methodbusinesses that sel...
what is the average cost method formula
the average cost method formula is calculated as total cost of goods purchased or produced in period total number of items purchased or produced in period average cost for periodthe result can then be applied to both the cost of goods sold cogs and the cost of goods still held in inventory at the end of the period
why should i use average cost method
average cost method is a simple inventory valuation method especially for businesses with large volumes of similar inventory items instead of tracking each individual item throughout the period the weighted average can be applied across all similar items at the end of the period
what inventory cost methods are acceptable under generally accepted accounting principles gaap
u s gaap allows for last in first out lifo first in first out fifo or average cost method of inventory valuation on the other hand international financial reporting standards ifrs do not allow lifo because it does not typically represent the actual flow of inventory through a business 2the bottom lineaverage cost metho...
what is the average daily balance method
the average daily balance method is a common way that credit card issuers calculate the interest charges cardholders have to pay it is based on the card s outstanding balances on each day of the billing period understanding the average daily balance methodthe federal truth in lending act tila requires credit card issue...
how the average daily balance method works
the average daily balance method can take several different forms including calculations made with or without compounding in either case the formula is average daily balance x daily periodic rate x number of days in the billing cycle interest charge for that monththe computations with and without compounding differ in ...
what is a grace period
a grace period is a span of time between the end of the billing period and when your credit card payment is due if you pay off your balance before the grace period ends you can avoid paying interest grace periods tend to last for at least 21 days but can be longer and they may not apply to all charges such as cash adva...
how can you find out if your credit card uses the average daily balance method
the credit card agreement you received when you signed up for the card will tell you what method the issuer uses to determine your finance charges along with other information if you no longer have a copy you can request one from the issuer according to the consumer financial protection bureau by law the issuer must ma...
is credit card interest tax deductible
not anymore according to the internal revenue service credit card and installment interest incurred for personal expenses cannot be deducted on your tax return 6 prior to tax reforms in 1986 however it was deductible 7the bottom linethe average daily balance method is the most commonly used way of computing finance cha...
what is the average daily rate adr
the average daily rate adr is a metric widely used in the hospitality industry to indicate the average revenue earned for an occupied room on a given day the average daily rate is one of the key performance indicators kpi of the industry another kpi metric is the occupancy rate which when combined with the adr comprise...
what is average daily trading volume adtv
average daily trading volume adtv is the average number of shares traded within a day in a given stock daily volume equates to how many shares are traded each day but this can be averaged over a number of days to find the average daily volume average daily trading volume is an important metric because high or low tradi...
how average daily trading volume is used in trading
traders and investors alike pay close attention to adtv because it provides valuable information about the liquidity and market interest in a particular security the key uses of adtv are as follows image by sabrina jiang investopedia 2023illustration of adtv usein this hypothetical situation a stock trader has analyzed...
what type of indicator is adtv
adtv is considered a market activity indicator it provides information about the volume of trading activity in a security over a specific period typically on a daily basis adtv is often used alongside technical indicators to gain a more comprehensive understanding of market dynamics
what are the similarities between adtv and open interest
adtv and open interest are similar in some ways both are used to measure trading activity can be used to assess liquidity and can be employed to identify trends also adtv and open interest can be used to identify trends as well as support and resistance levels
what are the benefits of using adtv
using adtv in trading offers several benefits including assessing security liquidity evaluating the overall market s activity analyzing volatility trade execution optimization and managing risk
are there any other indicators that can be used instead of adtv
there are several other indicators and metrics that traders use alongside or instead of adtv some alternatives are on balance volume obv volume weighted average price vwap money flow index mfi relative volume volume price trend vpt advance decline line a d line and tick volume the bottom lineaverage daily trading volum...
what is the average directional index adx
the average directional index adx is a technical analysis indicator used by some traders to determine the strength of a trend the trend can be either up or down and this is shown by two accompanying indicators the negative directional indicator di and the positive directional indicator di therefore the adx commonly inc...
what does the adx tell you
the adx negative directional indicator di and positive directional indicator di are momentum indicators the adx helps investors determine trend strength while di and di help determine trend direction the adx identifies a strong trend when the adx is over 25 and a weak trend when the adx is below 20 crossovers of the di...
what is a good average directional index
an adx above 25 is considered strong when the adx is below 20 the trend is weak or the price is trendless
is adx a good indicator
yes but it provides better strategy signals when combined with price investors should first use adx to determine whether prices are trending or non trending and then choose the appropriate trading strategy for the condition
what is the best indicator to use with adx
the adx works best when combined with other technical indicators like the relative strength index rsi while the adx measures the intensity of the trend the rsi can help with entries and exits by giving a time based component to the trend 2the bottom linethe average directional movement index adx is used by technical tr...
what is average life
the average life is the length of time the principal of a debt issue is expected to be outstanding average life does not take into account interest payments but only principal payments made on the loan or security in loans mortgages and bonds the average life is the average period of time before the debt is repaid thro...
what is average outstanding balance
an average outstanding balance is the unpaid interest bearing balance of a loan or loan portfolio averaged over a period of time usually one month the average outstanding balance can refer to any term installment revolving or credit card debt on which interest is charged it may also be an average measure of a borrower ...
when the total outstanding balance decreases a borrower s credit score improves timeliness however is not as easy to improve since delinquent payments are a factor that can remain on a credit report for seven years
average balances are not always a part of credit scoring methodologies however if a borrower s balances are drastically changing over a short period of time due to debt repayment or debt accumulation there will typically be a lag in total outstanding balance reporting to the credit bureau s which can make tracking and ...
what is average propensity to consume
average propensity to consume apc measures the percentage of income that is spent rather than saved this may be calculated by a single individual who wants to know where the money is going or by an economist who wants to track the spending and saving habits of an entire nation in either case the propensity to consume c...
when annotated as a decimal average propensity to consume ranges from zero to one at zero or 0 all income is being saved at one or 100 all income is being consumed
propensity to consume vs propensity to savethe sum of the average propensity to consume and the average propensity to save is always equivalent to one a household or a nation must either spend or save all of its income the inverse of the average propensity to consume is the average propensity to save aps that figure is...
what is average propensity to consume
average propensity to consume is an economic indicator of how much income is spent a specific entity is selected such as an individual an income class or an entire country average propensity to save measures how much money is saved compared to spent average propensity to consume is used by economists to forecast future...
how is average propensity to consume measured
average propensity to consume may be reported as a percent 60 of income is consumed or as a decimal average consumption is 0 6 average propensity to consume is also generally most useful when compared against itself over time or across entities for example the average propensity to consume for a united states citizen c...
how do i calculate average propensity to consume
average propensity to consume is calculated by dividing an entity s consumption by the entity s total income it is a ratio between what is spent and what is earned
what does average propensity to consume mean
average propensity to consume is an economic measurement of how much income a specific entity spends that entity may be an individual or a country if an entity has a higher average propensity to consume it means a higher proportion of their income is used to buy things as opposed to save for the future
what is average return
the average return is the simple mathematical average of a series of returns generated over a specified period of time an average return is calculated the same way that a simple average is calculated for any set of numbers the numbers are added together into a single sum then the sum is divided by the count of the numb...
when looking at average historical returns the geometric average is a more precise calculation the geometric mean is always lower than the average return one benefit of using the geometric mean is that the actual amounts invested need not be known the calculation focuses entirely on the return figures themselves and pr...
the geometric average return is sometimes called the time weighted rate of return twr because it eliminates the distorting effects on growth rates created by various inflows and outflows of money into an account over time alternatively the money weighted rate of return mwrr incorporates the size and timing of cash flow...
what is average selling price asp
the term average selling price asp refers to the price at which a certain class of good or service is typically sold the average selling price is affected by the type of product and the product life cycle the asp is the average selling price of the product across multiple distribution channels across a product category...
what is the average true range atr
the average true range atr is a technical analysis indicator introduced by market technician j welles wilder jr in his book new concepts in technical trading systems that measures market volatility by decomposing the entire range of an asset price for that period the true range indicator is taken as the greatest of the...
how to calculate the atr
the first step in calculating atr is to find a series of true range values for a security the price range of an asset for a given trading day is its high minus its low to find an asset s true range value you first determine the three terms from the formula suppose that xyz s stock had a trading high today of 21 95 and ...
what does the atr tell you
wilder originally developed the atr for commodities although the indicator can also be used for stocks and indices 2 simply put a stock experiencing a high level of volatility has a higher atr and a lower atr indicates lower volatility for the period evaluated the atr may be used by market technicians to enter and exit...
how do you use atr indicator in trading
average true range is used to evaluate an investment s price volatility it is used in conjunction with other indicators and tools to enter and exit trades or decide whether to purchase an asset
how do you read atr values
an average true range value is the average price range of an investment over a period so if the atr for an asset is 1 18 its price has an average range of movement of 1 18 per trading day
what is a good average true range
a good atr depends on the asset if it generally has an atr of close to 1 18 it is performing in a way that can be interpreted as normal if the same asset suddenly has an atr of more than 1 18 it might indicate that further investigation is required likewise if it has a much lower atr you should determine why it is happ...
what is an axe
an axe or axe to grind is the interest that a trader shows in buying or selling a security that is typically already on the books if a trader holds a long position but has short term concerns that trader s axe toward short term put options may be significant likewise if a trader has risk exposure to an increase in inte...
how an axe is used in practice
the term axe can be used in many different ways which makes the context of the conversation important to consider suppose that a trader has a large position in a given security if that trader shops around for quotes with the intent of selling the stake the trader who provides the quote may be at a disadvantage if they ...
what is a baby bond
a baby bond is a fixed income security that is issued in small dollar denominations with a par value of less than 1 000 the small denominations enhance the attraction of baby bonds to average retail investors understanding baby bondsbaby bonds are issued mainly by municipalities counties and states to fund expensive in...
what is a baby boomer
baby boomer is a term used to describe those who were born from 1946 to 1964 they formed the largest generational group in u s history until the millennial generation slightly surpassed them the baby boomer generation makes up a substantial portion of the world s population especially in developed nations they ve had ...
what baby boomer retirement is looking like
every baby boomer will be 65 or older by 2030 their retirement experience will be very different from that of their parents the greatest generation in many ways 2increasing life expectancy has made it likely that baby boomers will spend more time in retirement than their parents did the average life expectancy was 77 5...
what are echo boomers
echo boomers are the children of baby boomers generally born in the years from 1976 to 2001 a period of rising birth rates 14 the earliest echo boomers can be considered members of gen x later ones are either millennials or part of gen z
what is generation jones
generation jones or genjones refers to baby boomers born in the u s in the years 1954 to 1965 the term was coined by writer jonathan pontell who maintains that these later boomers are different enough from their early boomer counterparts to constitute their own generation 15the bottom linethe generation of baby boomers...
what is the back end ratio
the back end ratio also known as the debt to income ratio is a ratio that indicates what portion of a person s monthly income goes toward paying debts total monthly debt includes expenses such as mortgage payments principal interest taxes and insurance credit card payments child support and other loan payments back end...
what is back office
the back office is the portion of a company made up of administration and support personnel who are not client facing back office functions include settlements clearances record maintenance regulatory compliance accounting and it services 12 for example a financial services firm is segmented into three parts the front ...
how the back office works
the back office can be thought of as the part of a company responsible for providing all business functions related to its operations despite their seemingly invisible presence back office personnel provide essential functions to the business the back office is an essential part of any firm and associated job titles ar...
how is the front office different from the back office
the front office is responsible for attracting new clients and servicing existing clients in short they re the client facing team the back office on the other hand exists to service the transactions conducted by the front office and has no interaction with the firm s clients however it could be said that the back offic...
what are the back office s main responsibilities
in short the back office exists to finalize the transactions conducted by the front office this includes confirming transactions and settlement instructions with the back office of the counterparty the back office is also responsible for trade clearances record maintenance accounting and it services
where are back offices physically located
back offices used to be located literally behind the front office or trading desk these days many financial corporations have moved their back office locations to lower cost sites such as florida or north carolina where rents and salaries are generally lower than big cities like new york or chicago the bottom linethe b...
what is a back stop
in corporate finance and investment banking a back stop or backstop is to provide last resort support or to make a bid in a securities offering for the unsubscribed portion of shares
how a back stop works
a back stop functions as a form of insurance while not an actual insurance plan a company can guarantee that a certain amount of its offering will be purchased by particular organizations usually investment banking firms if the open market does not produce enough investors and a portion of the offering goes unsold if t...
what is a back stop in a bond issue
similar to the back stop in an equity placement a back stop for a bond issue is a type of guarantee whereby the underwriting bank or syndicate will fix a price at which to purchase any unsold or unsubscribed bonds who are backstop purchasers if the underwriting bank or investment banking syndicate cannot or do not want...
what are volcker rule backstop provisions
the volcker rule is a set of financial regulations that separates the commercial and investment banking activities of a firm its purpose is to prevent conflicts of interest and unfair practices to the detriment of a bank s customers one provision of the rule is to prevent the backstopping of a securities issue by an un...
what are back to back letters of credit
back to back letters of credit are two letters of credit locs used together to finance a transaction these are used primarily in international transactions the first letter of credit serves as collateral for the second letter of credit back to back letters of credit are usually used in a transaction involving an interm...
how back to back letters of credit work
back to back letters of credit are made up of two different letters of credit with a first one spurring the creation of the second 1with a back to back letter of credit the buyer s bank issues one letter of credit to the intermediary or broker the intermediary s bank issues the other letter of credit to the seller with...
what is the risk of a back to back letter of credit
the primary risk is for the bank issuing the second letter of credit if the original beneficiary doesn t meet the terms and conditions or if there are issues with the settlement date s expiration as a result banks don t encourage their use generally a letter of credit is a more secure form of payment for an exporter an...
is a back to back letter of credit and transferable letter of credit the same
a back to back letter of credit is not the same as a transferable letter of credit with a transferable letter of credit the beneficiary can transfer the letter of credit s rights and protection to another party the transferable letter of credit must be either issued as transferable or amended to make it transferable a ...
are back to back letters of credit irrevocable
typically both letters of credit are irrevocable letters of credit each letter can t be canceled or modified without all participants explicit agreement amendments can be complicated with a back to back letter of credit situation as the second letter depends on the first 3the bottom linethe term back to back letter of ...
what is a backdoor roth ira
a backdoor roth ira is a strategy rather than an official type of individual retirement account it is a technique used by high income earners who exceed roth ira income limits to convert their traditional ira to a roth ira the backdoor roth ira strategy is not a tax dodge when you transfer the assets of a traditional i...
how to create a backdoor roth ira
you can create a backdoor roth ira in one of three ways the custodial bank or brokerage for your ira should be able to help you with the mechanics if you have an employer managed plan you can contact the financial services firm that manages it to learn if your plan provides this opportunity order your copy of investope...
is a backdoor roth still allowed
under the law a backdoor roth individual retirement account is legally permissible and respected by the irs provided that tax law requirements are met
is a backdoor roth a good idea
the backdoor roth strategy can be beneficial if you earn too much to contribute to a roth ira or if you ve determined that a roth ira is better for your retirement
do you pay taxes twice on a backdoor roth ira
traditional ira contributions are tax deferred until withdrawals are taken when you convert your ira to a roth ira you pay taxes on your contributions and capital gains when you withdraw from your roth there are no taxes because you ve already paid them 3 so you only pay taxes once using the backdoor roth ira strategy ...
what is backflush costing
backflush costing is a product costing system generally used in a just in time jit inventory system in short it is an accounting method that records the costs associated with producing a good or service only after they are produced completed or sold backflush costing is also commonly referred to as backflush accounting...
how backflush costing works
flushing costs to the end of the production run eliminates the detailed tracking of expenses such as raw material and labor costs throughout the manufacturing process which is a feature of traditional costing systems this allows the company to simplify its expense tracking processes thus saving accounting and process ...
what is a backlog
a backlog is a buildup of work that needs to be completed the term backlog has a number of uses in accounting and finance it may for example refer to a company s sales orders waiting to be filled or a stack of financial paperwork such as loan applications that needs to be processed
when a public company has a backlog there can be implications for shareholders because the backlog may have an impact on the company s future earnings as having a backlog could suggest the firm is unable to meet demand
investopedia yurle villegasunderstanding a backlogthe term backlog is used to indicate the existing workload that exceeds the production capacity of a firm or department often used in construction or manufacturing the presence of a backlog can have positive or negative implications for example a rising backlog of produ...
when apple aapl debuted the iphone x a 10th anniversary edition of the iphone in october 2017 overwhelming initial demand for the phone created a weeks long backlog on pre orders apple was forced to delay shipments to late november and then again to december for customers pre ordering the phone upon launch many critici...
the 2008 housing crisis resulted in a backlog of foreclosures in which lenders had large inventories of residential properties they needed to sell and get off the books with homes going into foreclosure at a much faster rate than usual lenders did not have the capacity to process all the foreclosures in a timely manner...
what is a backorder
a backorder is an order for a good or service that cannot be filled at the current time due to a lack of available supply the item may not be held in the company s available inventory but could still be in production or the company may need to still manufacture more of the product backorders are an indication that dema...
how to account for backorders
backorders or a company s backlog may be expressed as a dollar figure as in the value of sales or by the number of units ordered and or sold backorders often require special accounting companies normally inform customers that the product they ve ordered is on backorder when the order is placed and when delivery is expe...
when an item is on backorder a customer may look elsewhere for a substitute product especially if the expected wait time until the product becomes available is long this can provide an opportunity for once loyal customers to try other companies products and potentially switch their loyalties difficulties with proper in...
backorders may require additional resources in managing pre orders or clients that are waiting for their product instead of simply carrying inventory and selling it to customers a company must incorporate receiving orders managing obligations coordinating logistics and communicating to specific customers when their pro...
when apple inc releases new products they re often met with exuberant demand around the world early adopters often want to get their hands on the latest technology and many users plan on upgrading their old technology for the newer product
according to apple s website shipments will be sent when the items of order become available popular items that are not in stock will be noted with longer timeframes indicated on online orders some products may also not be eligible for deliveries with pre selected time windows this is truly a natural part of apple s bu...
how long does a backorder take
a backorder is a specific situation relating to a direct company or product there is no regulation or industry standards that stipulate how long a backorder will take some companies may publicly disclose when they believe their backorder will be resolved while others will simply notify customers when their product is a...
what does backorder mean
an item on backorder is no longer is stock and often in high demand the product availability is currently trying to be resolved the company may be trying to manufacture more goods resolve supply chain issues or deliver final products to their storefronts
what is the difference between backorder and out of stock
a backorder and out of stock are similar whereas out of stock is an indicator that good is not available a backorder often signifies that out of stock order may still be able to be ordered but is not available for immediate shipment a company may keep a product as out of stock if it does not wish to further sell more u...
why do backorders happen
backorders occur for several reasons on the supply side a company may simply run out of a good due to supply chain issues underestimated manufacturing capabilities or lack of delivery to physical storefronts on the demand side so many people may be interested in the product especially if it is a new release of a popula...
are backorders bad for business
backorders may be bad for business as customers may search for alternatives instead of waiting for their product to arrive however there are a few things to consider first some back ordered products like the next generation of video game consoles are not easily replaceable loyal customers are often willing to wait seco...
what is a backorder
a backorder is an order for a good or service that cannot be filled at the current time due to a lack of available supply the item may not be held in the company s available inventory but could still be in production or the company may need to still manufacture more of the product backorders are an indication that dema...
how to account for backorders
backorders or a company s backlog may be expressed as a dollar figure as in the value of sales or by the number of units ordered and or sold backorders often require special accounting companies normally inform customers that the product they ve ordered is on backorder when the order is placed and when delivery is expe...
when an item is on backorder a customer may look elsewhere for a substitute product especially if the expected wait time until the product becomes available is long this can provide an opportunity for once loyal customers to try other companies products and potentially switch their loyalties difficulties with proper in...
backorders may require additional resources in managing pre orders or clients that are waiting for their product instead of simply carrying inventory and selling it to customers a company must incorporate receiving orders managing obligations coordinating logistics and communicating to specific customers when their pro...
when apple inc releases new products they re often met with exuberant demand around the world early adopters often want to get their hands on the latest technology and many users plan on upgrading their old technology for the newer product
according to apple s website shipments will be sent when the items of order become available popular items that are not in stock will be noted with longer timeframes indicated on online orders some products may also not be eligible for deliveries with pre selected time windows this is truly a natural part of apple s bu...
how long does a backorder take
a backorder is a specific situation relating to a direct company or product there is no regulation or industry standards that stipulate how long a backorder will take some companies may publicly disclose when they believe their backorder will be resolved while others will simply notify customers when their product is a...
what does backorder mean
an item on backorder is no longer is stock and often in high demand the product availability is currently trying to be resolved the company may be trying to manufacture more goods resolve supply chain issues or deliver final products to their storefronts
what is the difference between backorder and out of stock
a backorder and out of stock are similar whereas out of stock is an indicator that good is not available a backorder often signifies that out of stock order may still be able to be ordered but is not available for immediate shipment a company may keep a product as out of stock if it does not wish to further sell more u...
why do backorders happen
backorders occur for several reasons on the supply side a company may simply run out of a good due to supply chain issues underestimated manufacturing capabilities or lack of delivery to physical storefronts on the demand side so many people may be interested in the product especially if it is a new release of a popula...
are backorders bad for business
backorders may be bad for business as customers may search for alternatives instead of waiting for their product to arrive however there are a few things to consider first some back ordered products like the next generation of video game consoles are not easily replaceable loyal customers are often willing to wait seco...
what is backup withholding
backup withholding is a tax that is levied on investment income at an established tax rate as the investor withdraws it for payments not subject to withholding payers are required to withhold the tax backup withholding helps to ensure that government tax collecting agencies such as the internal revenue service irs or c...
how backup withholding works
investors commonly earn income for example interest payments dividends and distributions from assets in which they have invested while this income is taxable at the time it is received the taxes owed on a calendar year s investment income only come due once every year during tax season investors could potentially spend...
is backup withholding a bad thing
it could be a bad thing since it ties up money with the irs that could otherwise be used for investment purposes if you are subject to backup withholding however you may receive some of that money back as a tax refund who is exempt from backup withholding most american citizens are exempted from backup withholding so l...
what is backward integration
backward integration is a form of vertical integration in which a company expands its role to fulfill tasks formerly completed by businesses up the supply chain in other words backward integration is when a company buys another company that supplies the products or services needed for production for example a company m...
what is backwardation
backwardation is when the current price or spot price of an underlying asset is higher than prices trading in the futures market understanding backwardationthe slope of the curve for futures prices is important because the curve is used as a sentiment indicator the expected price of the underlying asset is always chang...
should a futures contract strike price be lower than today s spot price it means there is the expectation that the current price is too high and the expected spot price will eventually fall in the future this situation is called backwardation
for example when futures contracts have lower prices than the spot price traders will sell short the asset at its spot price and buy the futures contracts for a profit this drives the expected spot price lower over time until it eventually converges with the futures price for traders and investors lower futures prices ...
when futures prices are higher than current prices there s the expectation that the spot price will rise to converge with the futures price for example traders will sell or short futures contracts that have higher prices in the future and purchase at the lower spot prices the result is more demand for the commodity dri...
a futures market can shift between contango and backwardation and remain in either state for a short or extended period backwardation examplefor example let s say the there was a crisis in the production of west texas intermediate crude oil due to poor weather as a result the current supply of oil falls dramatically tr...
what is bad credit
bad credit refers to a person s history of not paying bills on time and the likelihood that they will fail to make timely payments in the future for individuals it is often reflected in a low credit score businesses can also have bad credit having bad credit makes it difficult to borrow money especially at competitive ...
how to improve bad credit
if you have bad credit or fair credit there are steps you can take to get your credit score above 669 and keep it there here are some tips for accomplishing that straight from fico