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Definition of Debt Financing
Raising loan capital through the creation of debt by issuing a form of paper evidencing amounts owed and payable on specified dates or on demand.
New debt obtained by a firm during the Chapter 11 bankruptcy process.
The argument that specifies that the various agency costs create a complex environment in
The use of debt financing.
he use of debt financing.
debt financing amplifies the effects of changes in operating income on the returns to stockholders.
Ready access to cash or debt financing.
Methods of financing in which lenders and equity investors look principally to the
An intercompany loan channeled through a bank.
Interim financing of one sort or another used to solidify a position until more permanent
A lease's internal rate of return.
Indicator of financial leverage. Compares assets provided by creditors to assets provided
Ability to borrow. The amount a firm can borrow up to the point where the firm value no
The amount of borrowing that leasing displaces. Firms that do a lot of leasing will be
An asset requiring fixed dollar payments, such as a government or corporate bond.
The amplification of the return earned on equity when an investment or firm is financed
A bond covenant that restricts in some way the firm's ability to incur additional indebtedness.
The market for trading debt instruments.
Total debt divided by total assets.
Reducing the principal and/or interest payments on LDC loans.
IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
Interest payment plus repayments of principal to creditors, that is, retirement of debt.
Debt service parity approach
An analysis wherein the alternatives under consideration will provide the firm
Debt-service coverage ratio
Earnings before interest and income taxes plus one-third rental charges, divided
A set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank
Debtor in possession
A firm that is continuing to operate under Chapter 11 bankruptcy process.
Federal Financing Bank
A federal institution that lends to a wide array of federal credit agencies funds it
Decisions concerning the liabilities and stockholders' equity side of the firm's balance
Firm's net value of debt
Total firm value minus total firm debt.
debt maturing after more than one year.
Interest rate on debt
The firm's cost of debt capital.
Junior debt (subordinate debt)
debt whose holders have a claim on the firm's assets only after senior
An obligation having a maturity of more than one year from the date it was issued. Also
Indicator of financial leverage. Shows long-term debt as a proportion of the
Long-term debt ratio
The ratio of long-term debt to total capitalization.
Long-term debt to equity ratio
A capitalization ratio comparing long-term debt to shareholders' equity.
Multi-option financing facility
A syndicated confirmed credit line with attached options.
Net financing cost
Also called the cost of carry or, simply, carry, the difference between the cost of financing
financing that is not shown as a liability in a company's balance sheet.
Original issue discount debt (OID debt)
debt that is initially offered at a price below par.
Planned financing program
Program of short-term and long-term financing as outlined in the corporate
Production payment financing
A method of nonrecourse asset-based financing in which a specified
debt that, in the event of default, has first claim on specified assets.
debt that, in the event of bankruptcy, must be repaid before subordinated debt receives any payment.
debt that has been customized for the buyer, often by incorporating unusual options.
debt over which senior debt takes priority. In the event of bankruptcy, subordinated
Threshold for refinancing
The point when the WAC of an MBS is at a level to induce homeowners to
Total debt to equity ratio
A capitalization ratio comparing current liabilities plus long-term debt to
debt maturing within one year (short-term debt). See: funded debt.
debt that does not identify specific assets that can be taken over by the debtholder in case of default.
CASH FLOWS FROM FINANCING ACTIVITIES
A section on the cash-flow statement that shows how much cash a company raised by selling stocks or bonds this year and how much was paid out for cash dividends and other finance-related obligations.
RATIO OF DEBT TO STOCKHOLDERSâ€™ EQUITY
A ratio that shows which groupâ€”creditors or stockholdersâ€”has the biggest stake in or the most control of a company:
Borrowings from financiers.
Sales to customers who have bought goods or services on credit but who have not yet paid their debt.
The amount of accounts receivable that is not expected to be collected.
Refers to accounts receivable from credit sales to customers
A widely used financial statement ratio to assess the
One of the three classes of cash flows reported in the
Cost of Debt
The cost of debt (bonds, loans, etc.) that a company is charged for
The percentage of debt that is used in the total capitalization of a
Total Debt to Total Assets Ratio
See debt ratio
a judgment made regarding the method
Allowance for bad debts
An offset to the accounts receivable balance, against which
An account receivable that cannot be collected.
Funds owed to another entity.
A debt for which payments will be required for a period of more than
Decision as to how to raise the money to pay for investments in real assets.
debt with more than 1 year remaining to maturity.
MM's proposition I (debt irrelevance proposition)
The value of a firm is unaffected by its capital structure.
debt that has first claim on specified collateral in the event of default.
debt that may be repaid in bankruptcy only after senior debt is paid.
Any financial asset corresponding to a debt, such as a bond or a treasury bill.
Monetizing the Debt
See printing money.
The debt owed by the government as a result of earlier borrowing to finance budget deficits. That part of the debt not held by the central bank is the publically held national debt.
See national debt.
Publicly Held National Debt
See national debt.
Cash Flow Provided or Used from Financing Activities
Cash receipts and payments involving
A security representing a debt relationship with an enterprise, including a government
Loans granted usually by a financial institution where the asset being financed constitutes the sole security given to the lender.
An assessment of ability and willingness to repay a loan from anticipated future cash flow or other sources.
A comparison of debt to equity in a company's capital structure.
A range of financing products (loans. guarantees, letters of credit, insurance etc.) in support of a variety of activities which help Canadian firms expand into new export markets.
This is a generic term that refers to the many different forms of financing a business may use. For example - loans, shares, and bonds are all considered financing instruments.
Long Term Debt
Liability due in a year or more.
Refers to non-conventional debt that has a greater element of risk than secured debt but has less risk than equity.
debt finance, usually non-recourse, provided by financial institutions for the development and construction of a new project.
Generally, refers to the first contribution of capital toward the financing requirements of a start-up business.
Are debt instruments that provide financing, take primary security against either specific or all assets of the borrower, have fixed terms of repayment and charge fixed or floating interest rates.
debt instruments that provide financing for acquisitions, expansion and restructuring, take secondary security against assets, have fixed or flexible terms of repayment and charge fixed or floating interest rates.
Debt (Credit Insurance)
Money, goods or services that someone is obligated to pay someone else in accordance with an expressed or implied agreement. debt may or may not be secured.
Refinancing (Credit Insurance)
Extending the maturity date or increasing the amount of existing debt or both. Also, revising a payment schedule, usually to reduce the monthly payments and often to modify interest charges.
A plan by U.S. Treasury Secretary James Baker under which 15 principal middle-income debtor
Corporate tax view
The argument that double (corporate and individual) taxation of equity returns makes
In project financing, the risk that the project's output will not be salable at a price that will
Measures of the relative contribution of stockholders and creditors, and of the firm's ability
A security interest in one or more assets that is granted to lenders in connection with secured debt
Pecking-order view (of capital structure)
The argument that external financing transaction costs, especially
Private Export Funding Corporation (PEFCO)
Company that mobilizes private capital for financing the
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