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September 08th 2010.

Financial Glossary

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E  ( 21 DEFINITIONS )

Earned surplus
An earned surplus is a synonym for retained earnings. It is rarely used any more.    top

Earnings before interest and taxes (EBIT)
Earnings before interest and taxes (EBIT) reflects income from operations and is independent of capital structure. Therefore, it is used as a basis for analyzing the effects of alternative financing options.    top

Earnings per share
Earnings per share is the after-tax earnings of a corporation available to common shareholders divided by the number of outstanding common shares. This is calculated by taking the net income, subtracting the preferred share entitlement, and dividing the balance by the weighted-average number of common shares outstanding during the accounting period.    top

Earnings quality
The earnings quality is the relationship between net income and cash flow. High quality earnings are positively correlated with cash flows, while low quality earnings are not.   top

Earnings response coefficient (ERC)
Earnings response coefficients (ERC) measure the extent of a security's abnormal market return in response to the unexpected component of reported earnings of the firm issuing that security.   top

Earnings yield
The earnings yield is a firm's current annual earnings per share divided by the share's market price. This is the reciprocal of the price-earnings ratio. It is often viewed as a rough indicator of investment return.    top

Echo check
An echo check is a magnetic read after each magnetic write, echoing back to the sending location and comparing results.   top

Economic consequences
The concept of economic consequences is a concept that asserts that, despite the implications of efficient securities market theory, accounting policy choice can affect firm value.   top

Economic growth objective
The purpose of the economic growth objective is to promote particular activities, entities, or industries, or to compensate for imperfections in the market mechanism.   top

Economic income
Economic income is an increase in wealth of a corporation. It is a measure of income based on events rather than transactions.   top

Economic order quantity
The economic order quantity is the optimal quantity to be ordered when replenishing inventory. It balances the costs of ordering against the costs of holding inventory.    top

Economic production lot size
The economic production lot size is the number of units produced in a production lot that results in a minimization of set-up costs and the costs of carrying inventory. This is similar to the concept of the economic order quantity.   top

Effective interest rate
The effective interest rate is the real rate of interest paid or earned on a loan. It is the discount rate that equates the payment stream to the net proceeds.    top

Effective tax rate
The effective tax rate is the real tax rate payable on a specific amount of taxable income; the real disbursement expressed as a percentage.   top

Efficient portfolio
An efficient portfolio is a portfolio providing the highest possible expected returns for a particular level of risk.   top

Efficient securities market anomalies
Efficient securities market anomalies are instances in which investor behaviour appears to contradict the theory of efficient securities markets.   top

Efficient securities market in the semi-strong form
An efficient securities market in the semi-strong form is one where the prices of securities traded on that market at all times properly reflect all information that is publicly known about those securities.   top

Eighty/Twenty rule (80/20 rule)
The 80/20 rule is a rule of thumb about population skewness in which 80% of the value tends to be in 20% of the units.    top

Elements
Elements are the building blocks of financial statements. These include assets, liabilities, revenues, expenses, etc.    top

Eligible capital amount
See Cumulative eligible capital amount.   top

Eligible capital expenditure (ECE)
An eligible capital expenditure (ECE) is an expenditure on account of capital for the purpose of gaining and producing income from a business, other than the cost of tangible property, the cost of intangible property that is depreciable property, and property the cost of which is deductible from income. Basically, an ECE is what is spent to acquire an eligible capital property.    top