Algorithm is a method expressed in a finite list of steps of well-defined instructions to process a signal.

Starting from an initial state (of signal) and initial input (signal), the instructions describe a method that, when followed, will proceed through a finite number of well-defined successive states, eventually producing output (signal) and terminating at a final ending state. The transition from one state to the next is not necessarily deterministic; some algorithms, known as randomized algorithms, incorporate random input (signals). The algorithms in signal processing are represented by signal flow diagrams, in which each step is represented by a device (usually represented by a box in the diagram).

Source: Wikipedia