suneetk/investopedia_terms huggingface dataset:
# Liquidating Dividend: Definition, How It Works, Tax Treatment

## What is a Liquidating Dividend

A liquidating dividend is a type of payment that a corporation makes to its shareholders during a partial or full liquidation. For the most part, this form of distribution is made from the company's [capital base](https://www.investopedia.com/terms/c/capitalbase.asp). As a [return of capital](https://www.investopedia.com/terms/r/returnofcapital.asp), this distribution is typically not taxable for shareholders. A liquidating dividend is distinguished from regular dividends that are issued from the company's operating profits or retained earnings.

A liquidating dividend is also called liquidating distribution.

## BREAKING DOWN Liquidating Dividend

A liquidating dividend may be made in one or more installments. In the United States, a corporation paying out liquidating dividends will issue a [Form 1099-DIV](https://www.investopedia.com/terms/f/form1099div.asp) to all of its shareholders that details the amount of the distribution.﻿

Despite certain tax advantages, investors who receive liquidation dividends often find that these still do not cover their initial investment as the company’s fundamental quality has deteriorated.

## Liquidating Dividend and Traditional Dividends

In general, with regular dividends, on and after the ex-dividend date, a seller is still entitled to the payout even if she/he has already sold it to a buyer. Essentially, a person who owns the security on the ex-dividend date will receive the distribution, regardless of who currently holds the stock. The ex-dividend date is typically set for two business days prior to the record date. This is due to the T+3 system of settlement financial markets presently use in North America.

For a regular dividend, the declaration date or [announcement date](https://www.investopedia.com/terms/a/announcement-date.asp) is when a company's board of directors announces a distribution. The [payment date](https://www.investopedia.com/terms/p/paymentdate.asp) is when the company officially mails the dividend checks or credits them to investor accounts.

## Liquidating Dividend and Liquidation Preference

In addition to a liquidating dividend, companies have a set order in which they must re-pay their owners in the event of a liquidation. [Liquidation](https://www.investopedia.com/terms/l/liquidation.asp) can occur when a company is insolvent and cannot pay its obligations when they come due, among other reasons. As company operations end, remaining assets go to existing creditors and shareholders. Each of these parties has a priority in the order of claims to company assets. The most senior claims belong to secured creditors, followed by unsecured creditors, including bondholders, the government (if the company owes taxes) and employees (if the company owes them unpaid wages or other obligations). Preferred and common shareholders receive any remaining assets, respectively.
# Money Flow: Definition, Calculation, Uses in Trading

## What is Money Flow

Money flow is calculated by averaging the high, low and [closing prices](https://www.investopedia.com/terms/c/closingprice.asp), and multiplying by the daily volume. Comparing that result with the number for the previous day tells traders whether money flow was positive or negative for the current day. Positive money flow indicates that prices are likely to move higher, while negative money flow suggests prices are about to fall. The below example shows negative money flow between Day One and Day Two:

﻿ $\begin{aligned} &\textbf{Day One:} \\ &\text{High: } \$65 \\ &\text{Low: } \$60 \\ &\text{Close: } \$63 \\ &\text{Daily Volume: } 500,000 \text{ Shares} \\ &500,000 \times \frac { \$65 + \$60 + \$63 }{ 3 } = \$31,333,333 \\ &\textbf{Day Two:} \\ &\text{High: } \$66 \\ &\text{Low: } \$58 \\ &\text{Close: } \$65 \\ &\text{Daily Volume: } 300,000 \text{ Shares} \\ &300,000 \times \frac{ \$66 + \$58 + \$65 }{ 3} = \$18,900,000 \\ \end{aligned}$﻿

## BREAKING DOWN Money Flow

Positive money flow occurs when a stock is purchased at a higher price (an uptick). Negative money flow occurs when the next trade is purchased at a lower price (a downtick).

If more shares were bought throughout the day on the [uptick](https://www.investopedia.com/terms/u/uptick.asp) than the downtick, net money flow is positive because more investors were willing to pay a premium for the stock. If money flow is negative when a stock's price is rising, this could indicate a pending price reversal. Investors monitor money flow because trading volume is typically considered to lead price, which could help identify early trading opportunities.

## Money Flow and Money Flow Indicators

Many traders use the Chaikin money flow oscillator when they want to incorporate money flow into their trading decisions. The indicator, created by Marc Chaikin, produces values for buying and selling pressure like other money flow indicators but also uses two exponential moving averages to determine momentum in a similar way that the [moving average convergence divergence (MACD)](https://www.investopedia.com/terms/m/macd.asp) indicator does.

Traders also [frequently use the money flow index (MFI)](https://www.investopedia.com/ask/answers/121214/what-are-main-differences-and-similarities-between-money-flow-index-mfi-relative-strength-index-rsi.asp) when they want to analyze price and volume. This indicator divides the net positive money flow by the net negative money flow and plots the value as a line that traders can compare to the price of a security to identify overbought and oversold levels. If the indicator is above 80, prices are considered overbought. A value below 20 indicates oversold conditions.

Other technical indicators should be used in conjunction with money flow indicators to improve their effectiveness and reduce false trading signals.

> **Article Sources**
>
> 1.  Chaikin Analytics. "[Chaikin Money Flow](https://www.chaikinanalytics.com/chaikin-money-flow/)." Accessed May 4, 2021.
# Natural Gas Storage Indicator (EIA Report): Meaning, History

## What Is the Natural Gas Storage Indicator?

The Natural Gas Storage Indicator is the [U.S. Energy Information Administration's](https://www.investopedia.com/terms/e/energy-information-admin.asp) (EIA) estimate of working natural gas volumes held in underground storage facilities at the national and regional levels. The EIA provides weekly estimates of working gas volumes held in underground storage facilities at the Lower 48 states and five regional levels. Changes in these gas inventories on a weekly basis primarily reflect net withdrawals or injections. [The report](http://ir.eia.gov/ngs/ngs.html) is generally updated and available every Thursday at 10:30 am EST. Unexpected changes such as above-average withdrawals or injections can have an immediate impact on [natural gas](https://www.investopedia.com/terms/c/commoditiesexchange.asp) prices.

## Understanding the Natural Gas Storage Indicator (EIA Report)

The Natural Gas Storage Indicator is a measure of working gas, which is the volume of gas in a reservoir that is above a specified base level and is the amount of gas that is available for sale to the marketplace. The EIA report shows gas inventories for the reporting week and previous week, as well as the net change, on a national basis and for East, West and Producing regions. It also provides inventories for a year ago and the five-year average for historical comparison.

The overall approach relies on weekly survey data from a sample of operators of underground storage facilities. These data are used to prepare regional and national estimates for all underground storage.

## History of the Indicator

Weekly estimates of working gas in storage were first provided by the American Gas Association (AGA) in 1994, however, by 2001, the AGA decided that it would discontinue its survey due to resource considerations. The EIA stepped in to fill the information gap to the natural gas market and released its first estimates of underground U.S. natural gas storage for the week ending May 3, 2002.

## The Indicator Goal

According to the EIA, the goal of the weekly storage data program is to provide weekly estimates of the level of working gas in underground storage for the United States and five regions. The total volume of natural gas in underground storage reservoirs is classified as either base gas or working gas. Underground storage facilities may be reservoirs in depleted oil and gas fields, aquifers, or salt caverns.

The Natural Gas Storage Indicator is a very important data source for natural gas traders. According to the EIA, upon release of the report, the natural gas market reacts to the derived net change in inventory levels from the prior week. This information on the nature of the net changes between weekly inventory data reports is helpful in informing trading decisions that often move natural gas prices 3 cents to 5 cents per million British thermal units (MMBtu) each week upon release.
# Negative Income Tax (NIT): What it is, How it Works

## What Is Negative Income Tax?

Negative income tax (NIT) is an alternative to welfare suggested by, among other proponents, economist [Milton Friedman](https://www.investopedia.com/terms/m/milton-friedman.asp) in his 1962 book _Capitalism and Freedom_.﻿﻿ NIT proponents assert that every American without [income](https://www.investopedia.com/terms/i/income.asp) above the [threshold for tax liability](https://www.investopedia.com/terms/t/taxbracket.asp) should have a [basic income](https://www.investopedia.com/terms/b/basic-income.asp) guarantee and that NIT is a means to subsidize the needy at less cost than the welfare system.

## Negative Income Tax Explained

To get a negative income tax subsidy, the needy would, along with other taxpayers, simply file [income tax returns](https://www.investopedia.com/terms/i/individual-tax-return.asp). The IRS’ computerized system could then quickly and objectively identify taxpayers with income below the threshold as eligible for help.

NIT proponents envisioned negative income tax (NIT) as a mirror image of the existing tax system where [tax liabilities](https://www.investopedia.com/terms/t/taxliability.asp) of above-the-threshold taxpayers vary positively with income according to a [tax rate schedule](https://www.investopedia.com/terms/t/taxschedule.asp); and [tax benefits](https://www.investopedia.com/terms/t/tax-benefit.asp) of below-the-threshold taxpayers vary inversely with income according to a negative tax rate (or benefit-reduction) schedule. Taxpayers with income above the threshold would pay taxes in a cash amount equal to the difference (‘positive taxes’) and taxpayers with income below the threshold would receive NIT [refundable credits](https://www.investopedia.com/terms/r/refundablecredit.asp) in a cash amount equal to the difference (‘negative taxes’).

NIT opponents applying [labor-supply economic theories](https://www.investopedia.com/terms/l/labor-productivity.asp) worried that negative income tax (NIT)’s promise of a threshold income guarantee would cause the working poor to work less or quit entirely to substitute in leisure activities since wages reduce but may not exceed the guarantee, particularly after payroll and state and local income taxes are taken out. If too many of the working poor succumbed to this [income effect](https://www.investopedia.com/terms/i/incomeeffect.asp) and this [substitution effect](https://www.investopedia.com/terms/s/substitution-effect.asp), the swelling number of needy with income below the threshold and eligible for NIT refundable credits would make total negative income tax (NIT) costs untenable.

> **Article Sources**
>
> 1.  Milton Friedman. "[The Case for the Negative Income Tax](https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/NR_03_07_1967.pdf)." Accessed Nov. 13, 2020.
# Next In, First Out (NIFO): What It is, How It Works, Example

![Next In, First Out (NIFO)](https://www.investopedia.com/thmb/InXVqG26WxNFcoW3dBEEeAEfZJU=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/next-in-first-out-Final-75f60b2b89de490698c9b014bff103f8.png)

*— Investopedia / Theresa Chiechi*

## What Is Next In, First Out (NIFO)?

Next In, First Out (NIFO) is a method of valuing inventory where the cost of an item is based upon its replacement cost rather than its original cost.

The Next In, First Out form of valuation does not conform to [generally accepted accounting principles](https://www.investopedia.com/terms/g/gaap.asp) (GAAP).﻿﻿ This is because NIFO is said to violate the cost principle, accounting concept which states that goods and services should be recorded at original cost, not present market value.

### Key Takeaways

*   Next In, First Out (NIFO) is a method of valuation where the cost of an item is based upon its replacement cost rather than its original cost.
*   To reflect actual business conditions, companies may use NIFO internally when inflation is a factor and replacement cost is higher than an item's original cost.
*   NIFO does not conform to generally accepted accounting principles.

## Understanding Next In, First Out (NIFO)?

Some companies use Next In, First Out when inflation is a factor. Companies will set a selling price on a [replacement-cost](https://www.investopedia.com/terms/r/replacementcost.asp) basis and use this method as a way to price the items it sells.

Although NIFO doesn't conform to GAAP, many economists and business managers prefer the economic rationale behind the method. As a cost flow assumption technique, by stating that the cost assigned to a product is the cost required to replace it, NIFO can offer a more practical valuation method businesses will actually see during normal operations.

For example, the traditional methods of [Last In, First Out](https://www.investopedia.com/terms/l/lifo.asp) (LIFO) and [First In, First Out](https://www.investopedia.com/terms/f/fifo.asp) (FIFO) can become distorted during inflationary periods. Using accounting methods based on these principles during inflationary environments can mislead business managers. Hence, many businesses will use NIFO for internal purposes during these periods and report results using LIFO or FIFO on their audited financial statements.

## Example of Next In, First Out (NIFO)

Suppose a company sells a toy widget for $100. The original cost of the widget was $47, which would result in a reported profit of $53.

At the time of the sale, the replacement cost of the widget was $63. If the company were to charge $63 for the [cost of goods sold](https://www.investopedia.com/terms/c/cogs.asp) under the NIFO concept, the reported profit would decline to $37.

> **Article Sources**
>
> 1.  David O'Regan. "[Auditor's Dictionary: Terms, Concepts, Processes, and Regulations](https://books.google.com/books?id=Pj5GtEXQBmoC&newbks=1&newbks_redir=0&printsec=frontcover#v=onepage&q&f=false)," Page 189. John Wiley & Sons, 2004.
# Numeraire: What it is, History, How it Works

## What Is Numeraire?

Numeraire is an economic term of French origin, which acts as a benchmark in comparing the value of similar products or financial instruments. The word numeraire translates as "money," "coinage," or "face value."

### Key Takeaways

*   Numeraire is an economic term of French origin, which acts as a benchmark in comparing the value of similar products or financial instruments.
*   A numeraire is usually applied to a single good, which becomes the base value for the entire index or market.
*   The U.S. dollar remains the numeraire for most commodity prices.

## Understanding Numeraire

Numeraire is an economic term that represents a unit in which prices are measured. A numeraire is usually applied to a single good, which becomes the base value for the entire index or market. Having a numeraire, or base value, allows for the comparison of the value of goods against one another. In essence, the numeraire acts as a set standard of value across an exchange.

An example of a numeraire arises when we look at how [currencies](https://www.investopedia.com/terms/c/currency.asp) were valued under the [Bretton Woods](https://www.investopedia.com/terms/b/brettonwoodsagreement.asp) system during the mid-20th century. The U.S. dollar ([USD](https://www.investopedia.com/terms/forex/u/usd-united-states-dollar.asp)) was priced at one-thirty-fifth (1/35) the price of an ounce of gold. All other currencies were then priced as either a multiple or a fraction of the dollar. In this situation, the USD acted as the _de facto_ benchmark, or numeraire, because it was fixed to the price of gold.

Today, the U.S. dollar remains the numeraire for most commodity prices. Denominating commodity prices in U.S. dollars standardizes the price as the USD is the most-traded and liquid currency in the world. For example, companies that engage in oil transactions can easily convert payments or receipts in a timely manner since the price of oil is denominated in USD. 

Also, by setting oil prices in USD, it allows a country to compare the value of oil prices in its own currency. For example, if a country that is a net importer of oil has a currency that is weakening against the U.S. dollar, it will be paying more for its oil (in local currency terms) than it did in the past.
# Obsolescence Risk: What it is, How it Works

## What Is Obsolescence Risk?

Obsolescence risk is the risk that a process, product, or technology used or produced by a company for [profit](https://www.investopedia.com/terms/p/profit.asp) will become obsolete, and thus no longer competitive in the marketplace. This would reduce the profitability of the company.

Obsolescence risk is most significant for technology-based companies or companies with products or services based on technological advantages.

## Understanding Obsolescence Risk

Obsolescence risk is a factor for all companies to some degree and is a necessary side effect of a thriving and innovative economy. This risk comes into play, for example, when a company is deciding how much to invest in new technology. Will this technology remain superior long enough for the investment to pay off? Or will it become obsolete so soon that the company loses money?

Obsolescence risk also means that companies wanting to remain competitive and profitable need to be prepared to make large capital expenditures any time a major product, service, or factor of production becomes obsolete.

> **Important**
>
> Budgeting for obsolescence risk is challenging because it is difficult to predict obsolescence and the exact rate of technological innovation.

## Example of Obsolescence Risk

A publishing company is an example of one that faces obsolescence risk. As computers, tablets, and smartphones have become more popular and affordable, more consumers have started reading magazines, newspapers, and books on these devices instead of in their print forms.

For the publishing company to remain competitive, it must minimize its investments in the old paper publications and maximize its investments in new technologies. Even as it makes this shift, it must remain alert to new and unimagined technologies that could supplant the currently popular ways of reading and require still more investment.

The [stock market](https://www.investopedia.com/terms/s/stockmarket.asp) "graveyards" are littered with dead companies whose products or technology were rendered obsolete. Examples are the technology companies Control Data and Digital Equipment from Morgan Stanley's 1982 “recommended” buy list.

### Key Takeaways

*   Obsolescence risk arises when a product or process is at risk of becoming obsolete, usually due to technological innovations.
*   Reducing obsolescence risk means being ready and able to make capital expenditures and investments in new technology and processes.
*   Technology-based companies or companies that rely on technological advantages are most vulnerable to obsolescence risk.
# Oman Rial (OMR)

## What is the Omani Rial?

The currency of Oman. The Omani rial is broken into smaller units, called baisa, and is found in both coin and banknote form. It is managed by the Central Bank of Oman.

## Understanding the Omani Rial (OMR)

The Omani rial was created during the early 1970s, as a replacement to the [Indian rupee](https://www.investopedia.com/terms/i/inr.asp) and Maria Teresa Thaler. It was part of a modernization effort, undertaken in the wake of a rebellion. The currency is pegged to the [U.S. dollar](https://www.investopedia.com/terms/forex/u/usd-united-states-dollar.asp), though the rate was adjusted in 1986.

> **Article Sources**
>
> 1.  Central Bank of Oman. "[Currency](https://cbo.gov.om/Pages/Currency.aspx)." Accessed March 22, 2021.
>     
> 2.  Central Bank of Oman. "[Currency Museum](https://cbo.gov.om/Pages/CurrencyMuseum.aspx)." Accessed March 22, 2021.
>     
> 3.  Central Bank of Oman. "[The Fixed Peg of the RO to the US Dollar](https://cbo.gov.om/Pages/FixedPeg.aspx)." Accessed March 22, 2021
# On-Us Item: Transactions Paid And Deposited at The Same Bank

## What Is an On-Us Item?

An on-us item is a check or draft that is presented to the bank where the check writer has the funds on deposit, as opposed to the depositor's bank (although in some cases both check writer and depositor may happen to use the same bank). The check can then be cashed or deposited into another account.

Of course, the [drawing account](https://www.investopedia.com/terms/d/drawing-account.asp) must have a sufficient balance to pay the check.

### Key Takeaways

*   An on-us item refers to a check or payment that is deposited or processed by the bank issuing or initiating the payment.
*   Because the transaction remains within a single bank, it is preferred for its lower expenses and added ability to profit from it.
*   For not-on-us items, an inter-bank payments or clearing network must be used, which may carry fees and charges.

## Understanding On-Us Items

On-us items can be very beneficial for banks conducting the transactions as they often obtain revenues from both the acquiring and issuing sides of the payment. In on-us transactions, there is often no need to go to an outside network to obtain authorization or funds for the exchanges, which may carry additional fees or surcharges. On-us checks may also be referred to as "house checks.”

On-us items can also be in the form of electronic [debits](https://www.investopedia.com/terms/d/debit.asp) or transfers. As with [checks](https://www.investopedia.com/terms/c/check.asp), electronic on-us items refer to the drawing and paying accounts at the same bank.

If the [bank of first deposit (BOFD)](https://www.investopedia.com/terms/b/bank-of-first-deposit.asp) is the same as the bank of the issuer, deposits do not need the services of a private clearinghouse or other third-party entity.

## On-Us Versus Other Forms of Transactions

In addition to on-us items, a number of other categories of bank transactions exist. These include, but are not limited to, a not-on-us transaction, an international or cross border transaction, and intra-regional transactions. Not-on-us items occur when the acquirer and issuer bank are separate. In a typical credit card process, for example, an acquirer (a merchant’s bank) both processes and settles a merchant's credit card transaction. After a merchant swipes a credit card, the merchant’s bank requests authorization for the sale. This request is routed to the card-issuing bank prior to the completion of the sale.

International or cross border transactions are defined as when an acquirer and issuer are from different countries. Intra-regional transactions occur when acquirers and issuers are from different regions yet still to an established geographic grouping, such as Europe Single Euro Payments Area ([SEPA](https://www.investopedia.com/terms/s/sepa.asp)) or GIM UEMOA, a banking group of the Economic and Monetary Union of West Africa. GIM UEMOA represents over eighty regional financial institutions and more than 80 million individuals.