Definition of Acid-Test Ratio The acid-test ratio, also known as the quick ratio, is a measure of a company’s liquidity. That means it measures a company’s ability to cover its short-term liabilities. It is calculated by dividing the sum of a company’s cash, marketable securities, and accounts receivable by its […]
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Profitability
Definition of Profitability Profitability is a measure of how much money a company makes relative to its expenses. That means it is a measure of how efficiently a company is using its resources to generate revenue. It is usually expressed as a percentage and calculated by dividing the company’s net […]
Read moreNatural Rate Of Unemployment
Definition of Natural Rate of Unemployment The natural rate of unemployment is the rate of unemployment that exists when the labor market is in equilibrium. It is also sometimes referred to as the non-accelerating inflation rate of unemployment (NAIRU). That means it is the lowest rate of unemployment that an […]
Read moreReverse Repurchase Agreement
Definition of Reverse Repurchase Agreement A reverse repurchase agreement, also known as a reverse repo or a sell/buyback, is a financial transaction in which one party sells a security to another party and agrees to repurchase it at a later date at a higher price. That means the buyer of […]
Read morePrice Level
Definition of Price Level The price level is a measure of the average prices of goods and services in an economy. That means it is a measure of the overall cost of living in a country. It is usually measured by calculating the average price of a basket of goods […]
Read morePrice Floor
Definition of Price Floor A price floor is a government-imposed minimum price for a certain good or service. That means it is the lowest price at which a good or service can be legally sold. Price floors are usually used to protect producers from competition and to ensure that they […]
Read morePrice Discrimination
Definition of Price Discrimination Price discrimination is a pricing strategy in which a company charges different prices for the same product or service to different customers. That means the company charges different prices for the same good or service based on the customer’s willingness to pay. This strategy is often […]
Read morePresent Value
Definition of Present Value Present Value (PV) is a financial concept that describes the current value of a future sum of money or stream of cash flows. That means it is a way to measure the value of money today compared to a future date. To calculate the present value […]
Read morePrisoners Dilemma
Definition of Prisoner’s Dilemma The Prisoner’s Dilemma is a classic game theory problem that illustrates the conflict between individual and collective interests. It is a two-player game in which each player has two options: cooperate or defect. If both players cooperate, they both receive a moderate reward. However, if one […]
Read morePoducer Price Index
Definition of Producer Price Index The Producer Price Index (PPI) is an economic indicator that measures the average change in prices received by domestic producers for their goods and services. It is calculated by the Bureau of Labor Statistics (BLS) and is used to measure the level of inflation in […]
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