What Is an Activity Cost Driver? An activity cost driver is an action that triggers higher or lower variable costs for a business. Sometimes referred to as a causal factor, it is associated with the managerial accounting concept of activity-based costing (ABC). Keeping tabs on activity cost drivers is important as it can help boost efficiency and company profits. Key
What Is an Activity Ratio? An activity ratio is a type of financial metric that indicates how efficiently a company is leveraging the assets on its balance sheet, to generate revenues and cash. Commonly referred to as efficiency ratios, activity ratios help analysts gauge how a company handles inventory management, which is key to its
What Is an Act of God Bond? An act of God bond is an insurance-linked security issued by an insurance company to establish a reserve against unforeseen catastrophic events. Act of God bonds can help insurers raise funds since it can be challenging building enough reserves or money to cover the costs of large-scale disasters.
What Are Actuals? The term “actuals” refers to the homogeneous commodities that are the underlying basis for futures trading. Actuals can be any commodity, but some commonly traded commodities include crude oil, heating oil, natural gas, gold, copper, silver, platinum, wheat, corn, and soy. The actuals making up the most liquid contracts see seasonal shifts
What Are the Actual Deferral Percentage (ADP) & Actual Contribution Percentage (ACP) Tests? The Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests are two tests that companies must conduct to ensure that their 401(k) plans don’t unfairly benefit highly-paid employees at the expense of others. Companies that offer 401(k) plans must conduct the tests
What is an Actual Owner An Actual Owner is a person or entity that receives the benefit of ownership. Being the actual owner, the asset is under the person’s or entity’s name, and they are entitled to any advantage from that. The actual owner can be hard to determine at times if there are multiple
What Is an Actual Return? An actual return refers to the actual gain or loss an investor experiences on an investment or in a portfolio. It is also referred to as the internal rate of return (IRR). It can greatly affect net worth. The Basics of Actual Return As opposed to expected or assumed returns
What Is an Actuarial Adjustment? An actuarial adjustment refers to a revision made to capital reserves, premiums, benefit payments, or other values companies determine, based on one or more changes to actuarial assumptions. Actuarial assumptions are estimates and predictions of unknown variables, such as the age at which a person is likely to die, considering
What Is Actuarial Analysis? Actuarial analysis is a type of asset to liability analysis used by financial companies to ensure they have the funds to pay the required liabilities. Insurance and retirement investment products are two common financial products in which actuarial analysis is needed. Key Takeaways Actuarial analysis is a form of asset-to-liability analysis.This
What Is an Actuarial Consultant? The term actuarial consultant refers to a financial professional who advises clients on investment, insurance, and pension-related decisions using a variety of measurements. The consultant applies an extensive use of statistics, contingency plans, and large amounts of data to formulate a plan best suited to the client. They calculate and
