Page 708 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Glossary 693

intrinsic option valuation method The difference between the strike price and the fair market value
of the stock on the date the option is granted.
intrinsic value method Under APB 25, the expense is measured at date of grant as the difference
between current stock price and the price to be paid by the individual.
inventory The cost of goods produced or purchased but not sold.
inventory sales ratio Average inventories for the year divided into net sales.
inventory to working capital ratio Inventory divided by short-term assets minus short-term
liabilities, indicating extent of inventory buildup.
inventory turnover Cost of goods sold divided by average inventories.
investment The transfer of money to make a profit.
investment activities Section of the cash flow statement that shows by category the increases and
decreases in cash from investments in the business.
investment advisor An SEC-registered individual who gives advice regarding the purchase and sale
of securities.
investment analyst Individual who makes recommendations to buy or sell stocks based on assess-
ment of financial data.
investment bank A bank specializing in serving corporations with funds for start-up or expansion by
selling equity and/or debt to the public.
investment banker Individual working for an investment bank.
investment cost method See exercise cost method.
investor An individual or organization that takes a financial position in something or someone with
the belief that the investment will increase in value.
investor capital to sales ratio Shareholder equity divided by sales, indicting the relationship of sales
to shareholder equity.
investor capital to total liabilities Shareholder equity divided by total liabilities, indicating the
percentage of liabilities offset by equity.
involuntary deferral That portion of a person’s compensation that the company requires be deferred
to a later specified date.
IPO See initial public offering.
IRA See individual retirement account.
IRC See Internal Revenue Code.
irrevocable trust A nonfunded, nonqualified, nonforfeitable plan, sometimes called a rabbi trust, that
cannot be changed without the beneficiary’s agreement.
IRS See Internal Revenue Service.
ISO See incentive stock option.
ISS See Institutional Shareholder Services.
issue management After identifying possible issues, preparing appropriate responses for designated
spokespersons to communicate to specific audiences.

janitors insurance Broadbased key-person life insurance.
J&S See joint and survivor benefit.
job The unique duties, responsibilities, and reporting relationship that make a position different from
other jobs.
job analysis Determination of a job’s principle duties, responsibilities, and reporting relationship.