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Definition of Debt Ratio
The percentage of debt that is used in the total capitalization of a
Total debt divided by total assets.
The ratio of long-term debt to total capitalization.
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A comparison of debt to equity in a company's capital structure.
Earnings before interest and income taxes plus one-third rental charges, divided
A widely used financial statement ratio to assess the
A capitalization ratio comparing long-term debt to shareholders' equity.
A ratio that shows which group—creditors or stockholders—has the biggest stake in or the most control of a company:
A capitalization ratio comparing current liabilities plus long-term debt to
See debt ratio
Capital rationing that under certain circumstances can be violated or even viewed
Clause causing repayment of a debt, if specified events occur or are not met.
Belief that an effort to keep unemployment below its natural rate results in an accelerating inflation.
A ratio computed by dividing annual
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid
A ratio that shows how well a company could pay its current debts using only its most liquid or “quick” assets. It’s a more pessimistic—but also realistic—measure of safety than the current ratio, because it ignores sluggish, hard-toliquidate current assets like inventory and notes receivable. Here’s the formula:
See quick ratio
acid test ratio (also called the quick ratio)
The sum of cash, accounts receivable, and short-term marketable
Adjusted Cash Flow Provided by Continuing Operations
Cash flow provided by operating
Allowance for bad debts
An offset to the accounts receivable balance, against which
The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard
Articles of incorporation
Legal document establishing a corporation and its structure and purpose.
Asset activity ratios
ratios that measure how effectively the firm is managing its assets.
The ratio of total assets to stockholder equity.
asset turnover ratio
A broad-gauge ratio computed by dividing annual
An account receivable that cannot be collected.
The amount of accounts receivable that is not expected to be collected.
Refers to accounts receivable from credit sales to customers
Basic Earnings Power Ratio
Percentage of earnings relative to total assets; indication of how
Benefit Ratio Method
The proportion of unemployment benefits paid to a company’s
Benefit Wage Ratio Method
The proportion of total taxable wages for laid off
Canadian Deposit Insurance Corporation
Better known as CDIC, this is an organization which insures qualifying deposits and GICs at savings institutions, mainly banks and trust companys, which belong to the CDIC for amounts up to $60,000 and for terms of up to five years. Many types of deposits are not insured, such as mortgage-backed deposits, annuities of duration of more than five years, and mutual funds.
Placing one or more limits on the amount of new investment undertaken by a firm, either
a condition that exists when there is an
Limit set on the amount of funds available for investment.
Also called financial leverage ratios, these ratios compare debt to total capitalization
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash Flow–to–Income Ratio (CFI)
Adjusted cash flow provided by continuing operations
CASH FLOWS FROM OPERATIONS
A section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business.
The proportion of a firm's assets held as cash.
ratio of cash and cash equivalents to liabilities; in the case of a bank, the ratio of cash to total deposit liabilities.
Common stock ratios
ratios that are designed to measure the relative claims of stockholders to earnings
A single centralized account into which funds collected at regional locations
System whereby customers make payments to a regional collection center which transfers funds to
Movement of cash from different lockbox locations into a single concentration
A review of all engineering documentation used as the basis
Verifying that a delivered product matches authorizing
contribution margin ratio
the proportion of each revenue dollar remaining after variable costs have been covered;
Controlled foreign corporation (CFC)
A foreign corporation whose voting stock is more than 50% owned
The number of shares of common stock that the security holder will receive from
A legal "person" that is separate and distinct from its owners. A corporation is allowed to own
A legal entity, organized under state laws, whose investors purchase
Business owned by stockholders who are not personally
The net present value of an investment divided by the investment's initial cost. Also called
Cost of Debt
The cost of debt (bonds, loans, etc.) that a company is charged for
ratios used to test the adequacy of cash flows generated through earnings for purposes of
Restriction of loans by lenders so that not all borrowers willing to pay the current interest rate are able to obtain loans.
Indicator of short-term debt paying ability. Determined by dividing current assets by current
A ratio that shows how many times a company could pay its current debts if it used its current assets to pay them. The formula:
Calculated to assess the short-term solvency, or debt-paying
A measure of the ability of a company to use its current assets to
Current assets divided by current liabilities. This ratio indicates the extent to which the claims of short-term creditors are covered by assets expected to be converted to cash in the near future.
Customary payout ratios
A range of payout ratios that is typical based on an analysis of comparable firms.
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
Borrowings from financiers.
Funds owed to another entity.
Ability to borrow. The amount a firm can borrow up to the point where the firm value no
An assessment of ability and willingness to repay a loan from anticipated future cash flow or other sources.
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.
The amount of borrowing that leasing displaces. Firms that do a lot of leasing will be
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.
An asset requiring fixed dollar payments, such as a government or corporate bond.
Any financial asset corresponding to a debt, such as a bond or a treasury bill.
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.
Reducing the principal and/or interest payments on LDC loans.
IOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and
A security representing a debt relationship with an enterprise, including a government
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
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.
New debt obtained by a firm during the Chapter 11 bankruptcy process.
Sales to customers who have bought goods or services on credit but who have not yet paid their debt.
The date on which a firm's directors meet and announce the date and amount of the next
The date on which the board of directors has declared a dividend.
A business segment that has been or is planned to be closed or sold off.
Net income and the gain or loss on disposal of a business segment whose assets and operations are clearly distinguishable from the other assets and operations of an entity.
Dividend payout ratio
Percentage of earnings paid out as dividends.
dividend payout ratio
Computed by dividing cash dividends for the year
dividend payout ratio
Percentage of earnings paid out as dividends.
dividend yield ratio
Cash dividends paid by a business over the most
The product of modified duration and the initial price.
Domestic International Sales Corporation (DISC)
A U.S. corporation that receives a tax incentive for
A common gauge of the price sensitivity of an asset or portfolio to a change in interest rates.
The weighted average of the time until maturity of each of the
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