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STEPPED COSTS is a cost that increases by a reasonably constant sum each time volume or activity increases by a predictable, constant, multiple. The smallest step costs are variable costs, which increase by a discrete amount each time output or activity increases by one unit. Larger steps will consist of what are, effectively, fixed costs over a particular range of output. Some costs increase, or decrease, in significant steps when output or activity passes certain limits. For instance, if a bus company regularly has more passengers on a route than can be carried by a single vehicle it may be necessary to use an additional bus. Running an additional bus will double the cost of operating on that route. Similarly, a manufacturing firm may have a policy of employing one supervisor for every ten production workers. In which case the firm will need one supervisor for 1-10 employees, two supervisors for 11-20 employees, and so on. So, if demand rises to the point where 21 production employees are required an extra supervisor must be employed. Costs that behave in this way are called stepped costs.
PRICE TO CASH FLOW is a measure of the markets expectations of a firms future financial health. It is calculated by dividing the price per share by cash flow per share.
SIGNATURE LOAN is a loan secured by the borrower with nothing more than the signature of that borrower.
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