Glossary 629Securities Act of 1933, and any changes in the financial statements subsequent to in-
formation included in the Registration Statement.
Comprehensive income: An expanded measure of income that includes items of
other comprehensive income in addition to traditional realized net income.
Conglomerate merger:a combination of firms in unrelated industries.
Consolidation:A merger in which an entirely new firm is created.
Constant-dollar method:A method of inf lation accounting whereby accounts,
which are measured according to historical cost accounting principles, are restated
into units of the same purchasing power using the same general price index.
Control:The power to direct the management and policies of a business enterprise.
Control premium:An amount (expressed in either dollar or percentage form) by
which the pro rata value of a controlling interest exceeds the pro-rata value of a non-
controlling interest in a business enterprise, that ref lects the power of control.
Cooling-off period:That period from the filing of a Registration Statement in con-
nection with an IPO (or other public offering) until the effective date of the Regis-
tration Statement, during which time the only written information that may be
provided to prospective investors is the Prospectus itself.
Core earnings: Earnings exclusive of the effects of nonrecurring items (see sus-
tainable earnings base). Also refers to earnings that only derive from the primary, or
core, activities of the firm.
Cost approach:A general way of estimating a value indication of an individual asset
by quantifying the amount of money that would be required to replace the future ser-
vice capability of that asset.
Cost driver:The cause of the cost of an activity.
Cost of capital:The expected rate of return (discount rate) that the market re-
quires in order to attract funds to a particular investment.
CPU:The Central Processing Unit of a computer. The CPU is the computer ’s equiv-
alent to its brain: All logical operations occur in the CPU, and the CPU directs all
other hardware associated with the computer.
Credit risk:The loss potential that would result from the inability of a counterparty
to satisfy the terms of the foreign currency derivative.
CRT:A Cathode Ray Tube is very similar to the picture tube in a television set. Most
computer monitors use CRT technology, which is relatively cheap.
Currency swap:An exchange of currencies between two parties with an agreement
to re-exchange the currencies at a future date at the same rate.
Current-cost method:A method of inf lation accounting that replaces historical
cost accounting principles with current (replacement) cost as the basis for financial
statement measurement.
Data warehouse:A repository for data transactions, in a database format. This
technology is frequently used as a stop gap to replace older legacy systems in order
to allow greater access to data.
Decision support system:An application used by middle-level and senior manage-
ment to make management decisions.
Deferred tax valuation allowance: A portion of a deferred tax asset that is judged
unlikely to be realized.