variable

(noun)

something whose value may be dictated or discovered.

Related Terms

Examples of variable in the following topics:

  • Regression Analysis for Forecast Improvement

    • The error is a random variable with a mean of zero conditional on the explanatory variables.
    • The independent variables are measured with no error.
    • In statistics, regression analysis includes many techniques for modeling and analyzing several variables, when the focus is on the relationship between a dependent variable and one or more independent variables.
    • Most commonly, regression analysis estimates the conditional expectation of the dependent variable given the independent variables — that is, the average value of the dependent variable when the independent variables are fixed.
    • Regression analysis shows the relationship between a dependent variable and one or more independent variables.

  • Defining Operating Leverage

    • Operating leverage can be defined, simply, as the degree to which a firm incurs a combination of fixed and variable costs.
    • Specifically, it is the use of fixed costs over variable costs in production.
    • For example, replacing production workers (variable cost) with robots (fixed cost) .
    • In other words, because variable costs are reduced, each sale will contribute a higher profit margin to the company.
    • The ratios of fixed cost to total costs and fixed costs to variable costs tell us that if the unit variable cost is constant, then as sales increase, operating leverage decreases.

  • Sensitivity Analysis

    • ., understanding relationships between input and output variables).
    • The sensitivity analysis entails changing each variable and seeing how that changes the output .
    • Generally, only one variable is changed at once, with all of the others fixed at their base value.
    • This makes it easy to see how much a variable affects the output.
    • Sensitivity analysis determines how much an output is expected to change due to changes in a variable or parameter.

  • Historical Returns: Market Variability and Volatility

    • Markets and securities may follow general trends, but exogenous factors (such as macroeconomic changes) cause variability and volatility.
    • These types of interlinkages are a cause of the overall market variability and volatility.
    • Furthermore, market variability and volatility can be the cause of what John Maynard Keynes called animal spirits.

  • Calculating the NPV

    • The other integral input variable for calculating NPV is the discount rate.
    • Since many people believe that it is appropriate to use higher discount rates to adjust for risk or other factors, they may choose to use a variable discount rate.
    • The business will receive regular payments, represented by variable R, for a period of time.
    • This period of time is expressed in variable t.
    • The payments are discounted using a selected interest rate, signified by the i variable.

  • Leverage Models

    • The relationship between fixed and variable costs, when calculated alongside sales volume, enables modeling of operational leverage.
    • When fixed costs are high (and variable costs are low), there is quite a bit of risk if the volume of production is low.
    • As you can see, your variable cost is only 10% of the overall revenue.
    • So, the model for leverage in this case is fixed costs/total costs (or fixed costs/fixed costs + variable costs):
    • After filtering out the fixed costs, increases in volume will increase both the overall variable expense and the overall contribution.

  • Calculating Annuities

    • Understanding the relationship between each variable and the broader concept of the time value of money enables simple valuation calculations of annuities.
    • To understand how to calculate an annuity, it's useful to understand the variables that impact the calculation.
    • This gives us six simple variables to use in our calculations:
    • This table is a useful way to view the calculation of annuities variables from a number of directions.
    • Understanding how to manipulate the formula will underline the relationship between the variables, and provide some conceptual clarity as to what annuities are.

  • Break-Even Analysis

    • The variable cost per unit is $5, and the total fixed costs are $1,000. 67 units must be sold in order to break even.
    • Recall that operating leverage describes the relationship between fixed and variable costs.
    • Having high operating leverage (having a larger proportion of fixed costs compared to variable costs) can lead to much higher profits for a company.
    • It is simply the unit net revenue minus the unit variable cost.
    • Contribution margin (C) is the unit net revenue (P = price) minus unit variable cost (V = variable cost).

  • Benefits and Risks of Operating Leverage

    • When considering the benefits of operating leverage, it is appropriate to consider the contribution margin, or the excess of sales over variable costs.
    • When variable costs are lower, the contribution of sales to profits will be greater.
    • For example, the variable costs for a software company, such as packaging and the cost of various media devices (like CDs), are very low compared to its fixed costs, such as research and development.
    • Therefore, once a certain break-even point is reached, the contribution that sales make to profits is much higher than it would be if a greater portion of the costs were variable.

  • Single-Period Investment

    • The amount of time is also represented by a variable: the number of periods (n).
    • All of these variables are related through an equation that helps you find the PV of a single amount of money.
    • That is, it tells you what a single payment is worth today, but not what a series of payments is worth today (that will come later). relates all of the variables together.