COST AVOIDANCE Definition

Bookmark and Share

COST AVOIDANCE is an action taken in the present designed to decrease costs in the future.

Learn new Accounting Terms

PAYBACK PERIOD, in capital budgeting, is the length of time needed to recoup the cost of CAPITAL INVESTMENT. The payback period is the ratio of the initial investment (cash outlay, regardless of the source of the cash) to the annual cash inflows for the recovery period. The major shortcoming for the payback period method is that it does not take into account cash flows after the payback period and is therefore not a measure of the profitability of an investment project. For this reason, analysts generally prefer the DISCOUNTED CASH FLOW methods of capital budgeting; primarily, the INTERNAL RATE OF RETURN and the NET PRESENT VALUE methods.

TOP-LINE of a company is its gross sales, or revenue figure.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.