|Debt service parity approach
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Definition of Debt service parity approach
Debt service parity approach
An analysis wherein the alternatives under consideration will provide the firm
Movement of cash from different lockbox locations into a single concentration
Related:Market conversion price
A statistical methodology applied to a set of firms at a particular point in time.
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 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.
New debt obtained by a firm during the Chapter 11 bankruptcy process.
Firm's net value of debt
Total firm value minus total firm debt.
Also called rental lease. Lease in which the lessor promises to maintain and insure the
debt maturing after more than one year.
Organizations that furnish investment and other types of information, such as
Interest rate on debt
The firm's cost of debt capital.
Interest rate parity theorem
Interest rate differential between two countries is equal to the difference
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.
Include such things as freight, insurance, passenger services, and travel.
Optimization approach to indexing
An approach to indexing which seeks to Optimize some objective, such
Original issue discount debt (OID debt)
debt that is initially offered at a price below par.
Purchasing power parity
The notion that the ratio between domestic and foreign price levels should equal
Put-call parity relationship
The relationship between the price of a put and the price of a call on the same
Relative purchasing power parity (RPPP)
Idea that the rate of change in the price level of commodities in
Residual dividend approach
An approach that suggests that a firm pay dividends if and only if acceptable
Risk premium approach
The most common approach for tactical asset allocation to determine the relative
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.
Short-term investment services
services that assist firms in making short-term investments.
approach to the determination of the optimal capital structure asserting that insiders in a
Spot futures parity theorem
Describes the theoretically correct relationship between spot and futures prices.
Stratified sampling approach to indexing
An approach in which the index is divided into cells, each
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
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.
Variance minimization approach to tracking
An approach to bond indexing that uses historical data to
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.
See sales mix.
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
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
grade (of product or service)
the addition or removal of product
net realizable value approach
a method of accounting for by-products or scrap that requires that the net realizable value of these products be treated as a reduction in the cost of the primary products; primary product cost may be reduced by decreasing either
realized value approach
a method of accounting for byproducts or scrap that does not recognize any value for these products until they are sold; the value recognized
an individual or firm engaged in a high or moderate degree of conversion that results in service output
an organizational unit that provides one or more specific functional tasks for other internal units
the actual time consumed performing the functions
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
debt with more than 1 year remaining to maturity.
interest rate parity
Theory that forward premium equals interest rate differential.
MM's proposition I (debt irrelevance proposition)
The value of a firm is unaffected by its capital structure.
purchasing power parity (PPP)
Theory that the cost of living in different countries is equal, and exchange rates adjust to offset inflation differentials across countries.
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.
Interest Rate Parity
Theory that real interest rates are approximately the same across countries except for a risk premium.
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.
Purchasing Power Parity
Theory that says that over the long run exchange rate changes offset any difference between foreign and domestic inflation. This result assumes that the real exchange rate remains constant, something that is not true even in the long run.
Internal Revenue Service
A federal agency empowered by Congress to interpret and enforce tax-related laws.
McNamara-O'Hara Service Contract Act of 1965
A federal Act requiring federal contractors to pay those employees working on a federal contract at
Uniformed Services Employment and Reemployment Rights Act of 1994
A federal act that minimizes the impact on people serving in the Armed Forces
A security representing a debt relationship with an enterprise, including a government
Revenue recognized from the provision of services as opposed to the sale of
An assessment of ability and willingness to repay a loan from anticipated future cash flow or other sources.
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.
A comparison of debt to equity in a company's capital structure.
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.
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.
Index Portfolio Rebalancing Service (IPRS)
Index Portfolio Rebalancing service (IPRS) is a comprehensive investment service that can help increase potential returns while reducing volatility. Several portfolios are available, each with its own strategic balance of Index Funds. IPRS maintains your personal asset allocation by monitoring and rebalancing your portfolio semi-annually.
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.
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