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Physical Capital Key takeaways * Physical capital consists of tangible, human-made assets used to produce goods and services (machinery, buildings, vehicles, computers, etc.). * It is one of the three core factors of production alongside land/natural resources and human capital. * Physical capital is often fixed and relatively illiquid, depreciates over time, and can create…

Phillips Curve: Inflation and Unemployment Dynamics Key points * The Phillips curve describes an inverse relationship between inflation and unemployment in the short run. * Stagflation in the 1970s (high inflation and high unemployment) exposed limits of a stable trade-off. * Expectations and the economy’s natural rate of unemployment (NAIRU) reshape the curve: in the…

Philanthropy is the intentional act of giving money, time, skills, or resources to improve human welfare and strengthen communities. It ranges from small acts of charity to large, strategic gifts that aim to address root causes and create lasting public benefits. Key takeaways * Philanthropy includes individual and corporate giving, private foundations, donor-advised funds, bequests,…

Phantom Stock Plan Phantom stock plans are employee compensation arrangements that mirror the economic benefits of owning company shares without issuing actual stock. They reward participants with cash (or sometimes paid-in-kind) based on changes in the company’s share value, aligning employee incentives with company performance while avoiding equity dilution. Key Takeaways Provide financial benefits of…

Understanding Petty Cash: Usage, Accounting, and Best Practices What is petty cash? Petty cash is a small on‑site cash reserve a business keeps to pay for minor, immediate expenses where writing a check or using a corporate card is impractical. Typical funds range from about $100 to $500. Petty cash is an asset on the…

Understanding Petroleum: Importance, Uses, and Investment Strategies Key takeaways Petroleum (crude oil) is a non‑renewable fossil fuel used for transportation, heating, electricity, and as a feedstock for chemicals and plastics. The petroleum industry—spanning exploration, production, transportation, and refining—has major economic and geopolitical influence. Environmental impacts (carbon emissions, spills, water contamination) and the finite nature of…

Petrodollars: Definition, History, and Global Impact What are petrodollars? Petrodollars are simply U.S. dollars received by oil-exporting countries in exchange for crude oil. They are not a separate currency or a formal global system—just dollars held as export revenue. The widespread use of dollars for oil settlements reflects the currency’s deep liquidity, global acceptance, and…

What is the Peter Principle? The Peter Principle states that in hierarchical organizations, competent employees are promoted until they reach a role in which they are no longer competent. In other words, people rise to their level of incompetence: promotions reward past performance, but the skills that made an employee successful in one role may…

What Is PEST Analysis? Its Applications and Uses in Business A PEST analysis evaluates external macro-environmental factors—Political, Economic, Social, and Technological—that can affect an organization’s strategy, operations, and profitability. It helps businesses anticipate opportunities and threats, inform strategic planning, and stay competitive. A common extension, PESTLE (or PESTEL), adds Legal and Environmental factors. Why it…

Personally Identifiable Information (PII): Definition, Risks, and Protection Key takeaways PII is any information that can identify an individual, either alone (direct identifiers) or when combined with other data (quasi-identifiers). Sensitive PII (e.g., Social Security numbers, biometric data, medical records) requires stronger protection than nonsensitive PII (e.g., name, ZIP code, gender). Big data and online…

Personal Service Corporation Key takeaways A personal service corporation (PSC) is an IRS-recognized C corporation that provides specified professional services (law, accounting, health, engineering, consulting, performing arts, architecture, actuarial science, veterinary, etc.). PSCs are taxed at a flat 21% corporate rate but face strict ownership and service‑performance tests to qualify. PSCs offer limited liability and…

Personal Property: Definition, Types, and How It Affects Insurance Key takeaways * Personal property refers to movable assets—everything other than real estate—such as furniture, electronics, clothing, and digital assets. * Homeowners insurance typically covers personal property using a percentage of the dwelling limit (commonly 50%–70%). * Coverage options include replacement cost (covers new-item replacement) and…

Personal Lines Insurance What it is Personal lines insurance provides financial protection for individuals and families against everyday risks such as injury, death, property damage, theft, and illness. These policies make it possible to own a home, drive a car, or manage medical expenses without facing potentially catastrophic out-of-pocket costs. How it works Coverage is…

Personal Income: Definition, Components, and Economic Role What is personal income? Personal income is the total income received by individuals or households in a country. It includes compensation from employment and self-employment as well as nonlabor receipts such as: Wages, salaries, bonuses Self-employment and sole‑proprietor earnings Dividends and investment distributions Interest and other investment income…

Personal Identification Number (PIN) Overview A Personal Identification Number (PIN) is a short numerical code used to verify a person’s identity for electronic transactions and device access. PINs are most commonly associated with debit and ATM cards but are also used for mobile devices, security systems, and some tax filings. Typical PIN length is four…

Personal Guarantee: Definition, How It Works, and What to Know What is a personal guarantee? A personal guarantee is a legal promise by an individual to repay a business’s debt if the business cannot. It effectively makes the individual personally responsible for the obligation and gives the creditor a legal claim on the individual’s assets…

Personal Financial Statement What it is A personal financial statement is a snapshot of an individual’s financial position at a specific point in time. It lists assets and liabilities and shows net worth (assets minus liabilities). It’s useful for tracking progress toward financial goals and is often requested by lenders when applying for credit. Key…

Personal Financial Specialist (PFS) Key takeaways * The PFS is an AICPA credential reserved for licensed CPAs who add advanced personal financial planning and wealth-management expertise to their accounting skills. * Requirements include an active CPA license, AICPA membership, specified education and experience in the PFP Body of Knowledge, and passing the PFS exam (with…

Personal Finance Personal finance is the practice of managing your money to meet short- and long-term goals. It covers budgeting, banking, saving, investing, insurance, taxes, retirement and estate planning. Sound personal finance decisions help you cover living expenses, protect against unexpected events and build wealth over time. Key takeaways Personal finance centers on five components:…

Personal Consumption Expenditures (PCE) What is PCE? Personal Consumption Expenditures (PCE) measures the value of goods and services purchased by or for U.S. consumers. Compiled by the Bureau of Economic Analysis (BEA), PCE represents roughly two-thirds of domestic spending and is a major component of gross domestic product (GDP). The BEA reports PCE monthly in…

Perseroan Terbatas (PT): Overview and Types A Perseroan Terbatas (PT) is the legal corporate form used for revenue-generating businesses in Indonesia. Foreign companies, governments, or individuals that want to conduct commercial activities in Indonesia generally must establish a PT (often referred to as a foreign investment limited liability company). The PT structure is broadly comparable…

Perpetuity: Definition, Formulas, and Examples What is a perpetuity? A perpetuity is a financial instrument or cash-flow stream that pays a fixed amount at regular intervals forever — it has no maturity date. In practice, perpetuities are rare as real securities, but the concept is central to valuation models (for example, the dividend discount model)…

Perpetual Inventory System A perpetual inventory system continuously tracks inventory in real time using computerized records. It updates stock levels, cost of goods sold (COGS), and related metrics with every purchase, sale, return, or adjustment, typically by integrating point-of-sale (POS) terminals, barcode/RFID scanning, and inventory software. Key takeaways Provides continuous, real-time visibility into inventory and…

Perpetual Bond Definition A perpetual bond (also called a consol or “perp”) is a fixed‑income security with no maturity date. It pays a fixed coupon indefinitely and does not repay principal. Because payments continue forever, perpetual bonds are often treated similarly to equity instruments rather than traditional debt. Key features No maturity date — principal…

Permanent Life Insurance Key takeaways * Permanent life insurance provides lifetime coverage and typically includes a cash-value component that grows tax-deferred. * Whole life and universal life are the two primary forms; other variations include variable and indexed policies. * Cash value can be borrowed against or withdrawn, but loans/withdrawals reduce the death benefit and…

Permanent Income Hypothesis Definition The permanent income hypothesis (PIH) is an economic theory, formulated by Milton Friedman in 1957, that proposes people base their consumption on their expected long-term average income (their “permanent” income) rather than their current, short-term earnings. Temporary fluctuations in income—bonuses, one-time windfalls, or short-term pay cuts—have limited effect on long-term spending…

Periodic Interest Rate: Definition, How It Works, and Examples What is a periodic interest rate? A periodic interest rate is the interest applied to a loan or investment for a single compounding period. It equals the nominal (annual) interest rate divided by the number of compounding periods per year: Explore More Resources › Read more…

Performance Management: Key Steps and Benefits for Organizational Success What is performance management? Performance management is an ongoing set of practices that helps managers and employees align work with organizational goals, set clear expectations, and use continuous feedback to improve performance and development. Unlike a one-time annual appraisal, performance management emphasizes regular communication, coaching, and…

Performance Budget A performance budget (or performance-based budgeting) links resources to intended outcomes. Instead of allocating funds primarily by historical spending or line items, it allocates resources based on specific, measurable results the organization or program is expected to achieve. This approach is most common in government and nonprofit settings but can be applied in…

Performance Bonds: Guarantees in Contracts What is a performance bond? A performance bond is a financial guarantee—usually issued by a bank or insurance company—that a contractor (the principal) will fulfill its contractual obligations to an employer or project owner (the obligee). If the contractor fails to perform, the surety (bond issuer) compensates the obligee up…

Perfect Competition Perfect competition is an idealized market structure used as a benchmark in economic theory. In this model many small firms sell identical products, buyers and sellers have full information, and there are no barriers to entry or exit. Prices are set by supply and demand, and individual firms are price takers. Key takeaways…

Percentage of Completion Method What it is The percentage of completion method is an accounting approach for long-term contracts that recognizes revenue and expenses as work progresses, rather than waiting until project completion. It provides ongoing reflection of a contract’s profitability and is commonly used in industries with multi-period projects. How it works Revenue and…

Percentage Change What it is Percentage change measures the relative change in a value between two points in time, expressed as a percent. It shows how much something (a price, revenue, population, etc.) has increased or decreased relative to its original value. Why it matters Provides a standard way to compare changes across different scales…

Perceived Value Perceived value is a customer’s evaluation of a product or service based on how well it meets their needs and expectations compared with alternatives. It determines what buyers are willing to pay and influences purchase decisions, often more than production cost. Why it matters in marketing Perceived value shapes pricing strategy: higher perceived…

Per Stirpes: Meaning and Use in Estate Planning Definition Per stirpes is a legal phrase (Latin for “by branch” or “by roots”) used in wills and beneficiary designations to specify who inherits a beneficiary’s share if that beneficiary dies before the person who created the will (the testator). When a gift is made “per stirpes,”…