638 Glossary
Profit plan:A company’s total budget used in achieving a desired profit goal. Some-
times the term refers only to the operating budget, and sometimes it is used synony-
mously with the term master budget.
Prospectus:Part I of a Registration Statement filed by a company offering its secu-
rities to the public, which Registration Statement is filed with and must be approved
by the Securities and Exchange Commission. The Prospectus describes the registering
company, its business and finances, and the risk factors the company faces.
Proxy:The grant by a shareholder to another party of the right to vote the stock-
holder ’s shares of stock.
Proxy contest:An attempt to gain control of a corporation by soliciting shareholder
votes.
Purchase method:After the acquisition, the target firm’s assets are put on the bid-
der ’s balance sheet at their fair market value.
Put option:An asset that gives the owner the right but not the obligation to sell
some other asset for a set price on or up to a specified date.
RAM:Random access memory is the hardware which a computer uses for storing
programs and data that the computer is currently using. In human terms, you can
think of RAM as the memory storing part of your brain. When you are thinking about
a problem, you are using your own RAM to work through various calculations and
thoughts.
Rate of return:An amount of income (loss) and /or change in value realized or
anticipated on an investment, expressed as a percentage of that investment.
Red herring:A preliminary, nonfinal Prospectus distributed by under writers for
the purpose of generating interest in shares of stock to be offered to the public.
Registration statement:A filing made with the SEC by a company issuing its secu-
rities to the public, which describes the company and its financial condition. Part I
consists of the Prospectus.
Regulation FD:A Securities and Exchange Commission Regulation which among
other matters requires a company which purposely or inadvertently releases previ-
ously unknown material information to promptly further distribute that information
to the public.
Regulation S-K:A Regulation of the Securities and Exchange Commission that sets
forth the standards for drafting the body of a Prospectus.
Regulation S-X:A Regulation of the Securities and Exchange Commission that sets
forth the standards for the preparation of financial statements to be included in doc-
uments filed with the Securities and Exchange Commission.
Remeasurement:See temporal translation procedure.
Reporting currency:The currency in which a firm prepares its financial statements.
Residual value:The prospective value as of the end of the discrete projection
period in a discounted benefit streams model.
Restructuring charges:Expenses typically recognized in conjunction with down-
sizings, reengineerings, reorganizations, and comparable activities. The expenses are
usually made up of cash costs, accruals of obligations for future expenditures, as well
as the write-down of assets.
Risk factors:That section of a Prospectus, or of a Form 10-K or other SEC filing,
which lists the operational and financial risks faced by a company.