![]() |
|
Financial Terms | |
Financial leverage ratios |
Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
Main Page: inventory, tax advisor, finance, accounting, payroll, financial advisor, financial, business, |
Definition of Financial leverage ratiosFinancial leverage ratiosRelated: capitalization ratios.
Related Terms:Capitalization ratiosAlso called financial leverage ratios, these ratios compare debt to total capitalization Asset activity ratiosratios that measure how effectively the firm is managing its assets. Changes in Financial PositionSources of funds internally provided from operations that alter a company's chief financial officer (CFO)Officer who oversees the treasurer and controller and sets overall financial strategy. Common stock ratiosratios that are designed to measure the relative claims of stockholders to earnings Corporate financial managementThe application of financial principals within a corporation to create and Corporate financial planningfinancial planning conducted by a firm that encompasses preparation of both ![]() costs of financial distressCosts arising from bankruptcy or distorted business decisions before bankruptcy. Country financial riskThe ability of the national economy to generate enough foreign exchange to meet Coverage ratiosratios used to test the adequacy of cash flows generated through earnings for purposes of Customary payout ratiosA range of payout ratios that is typical based on an analysis of comparable firms. Debt leverageThe amplification of the return earned on equity when an investment or firm is financed degree of operating leveragea factor that indicates how a percentage change in sales, from the existing or current degree of operating leverage (DOL)Percentage change in profits given a 1 percent change in sales. Dupont system of financial controlHighlights the fact that return on assets (ROA) can be expressed in terms External Financial StatementsCorporate financial statements that have been reported on by an external independent accountant. Feasible target payout ratiosPayout ratios that are consistent with the availability of excess funds to make Financial accountingThe production of financial statements, primarily for those interested parties who are external to the business. financial accountinga discipline in which historical, monetary Financial analystsAlso called securities analysts and investment analysts, professionals who analyze Financial assetsClaims on real assets. financial assetsClaims to the income generated by real assets. Also called securities. Financial AssistanceEconomic assistance provided by unrelated third parties, typically government agencies. They may take the form of loans, loan guarantees, subsidies, tax allowances, contributions, or cost-sharing arrangements. financial budgeta plan that aggregates monetary details Financial controlThe management of a firm's costs and expenses in order to control them in relation to Financial CovenantA feature of a debt or credit agreement that is designed to protect the lender or creditor. It is common to characterize covenants as either positive or negative covenants. Financial CovenantsA promise made related to financial conditions or events. Often a promise not to allow certain balance sheet items or ratios to fall below an agreed level. Usually found in loan documents, as a protection mechanism. Financial distressEvents preceding and including bankruptcy, such as violation of loan contracts. Financial distress costsLegal and administrative costs of liquidation or reorganization. Also includes Financial engineeringCombining or dividing existing instruments to create new financial products. Financial futureA contract entered into now that provides for the delivery of a specified asset in exchange financial incentivea monetary reward provided for performance Financial IncentiveAn expression of economic benefit that motivates behavior that might otherwise not take place. Financial intermediariesInstitutions that provide the market function of matching borrowers and lenders or financial intermediaryFirm that raises money from many small investors and provides financing to businesses or other Financial IntermediaryAny institution, such as a bank, that takes deposits from savers and loans them to borrowers. Financial IntermediationThe process whereby financial intermediaries channel funds from lender/savers to borrower/spenders. Financial leaseLong-term, non-cancelable lease. Financial LeaseLease in which the service provided by the lessor to the lessee is limited to financing equipment. All other responsibilities related to the possession of equipment, such as maintenance, insurance, and taxes, are borne by the lessee. A financial lease is usually noncancellable and is fully paid out amortized over its term. Financial leverageUse of debt to increase the expected return on equity. financial leverage is measured by financial leverageThe equity (ownership) capital of a business can serve financial leverageDebt financing amplifies the effects of changes in operating income on the returns to stockholders. Financial leverage clienteleA group of investors who have a preference for investing in firms that adhere to Financial marketAn organized institutional structure or mechanism for creating and exchanging financial assets. financial marketsMarkets in which financial assets are traded. Financial Numbers GameThe use of creative accounting practices to alter a financial statement Financial objectivesObjectives of a financial nature that the firm will strive to accomplish during the period Financial planA financial blueprint for the financial future of a firm. Financial planningThe process of evaluating the investing and financing options available to a firm. It Financial PositionStatus of a firm's assets, liabilities, and equity accounts as of a certain time, as shown in its financial statement. Financial pressThat portion of the media devoted to reporting financial news. Financial ratioThe result of dividing one financial statement item by another. ratios help analysts interpret financial reports and statementsfinancial means having to do with Financial reports or statementsThe Profit and Loss account, Balance Sheet and Cash Flow statement of a business. Financial riskThe risk that the cash flow of an issuer will not be adequate to meet its financial obligations. financial riskRisk to shareholders resulting from the use of debt. financial slackReady access to cash or debt financing. Financial Trend AnalysisProcess of analyzing financial statements of a company for any continuing relationship. Financial yearThe accounting period adopted by a business for the production of its financial statements. Fraudulent Financial ReportingIntentional misstatements or omissions of amounts or disclosures Future-Oriented Financial InformationInformation about prospective results of operations, financial position and/or changes in financial position, based on assumptions about future economic conditions and courses of action. Future-oriented financial information is presented as either a forecast or a projection. Highly leveraged transaction (HLT)Bank loan to a highly leveraged firm. Homemade leverageIdea that as long as individuals borrow (or lend) on the same terms as the firm, they can LeverageThe use of debt financing. Leveragehe use of debt financing. LeverageThe relationship between interest bearing debt and equity in a company(financial leverage) or the effect of fixed expense on after tax earnings(operating leverage). Leverage clienteleA group of shareholders who, because of their personal leverage, seek to invest in Leverage ratiosMeasures of the relative contribution of stockholders and creditors, and of the firm's ability Leverage rebalancingMaking transactions to adjust (rebalance) a firm's leverage ratio back to its target. Leveraged betaThe beta of a leveraged required return; that is, the beta as adjusted for the degree of Leveraged buyoutThe purchase of one business entity by another, largely using borrowed Leveraged buyout (LBO)A transaction used for taking a public corporation private financed through the use leveraged buyout (LBO)Acquisition of the firm by a private group using substantial borrowed funds. Leveraged equityStock in a firm that relies on financial leverage. Holders of leveraged equity face the Leveraged leaseA lease arrangement under which the lessor borrows a large proportion of the funds needed Leveraged portfolioA portfolio that includes risky assets purchased with funds borrowed. Leveraged portfolioA portfolio that includes risky assets purchased with funds borrowed. Leveraged required returnThe required return on an investment when the investment is financed partially by debt. Liquidity ratiosratios that measure a firm's ability to meet its short-term financial obligations on time. Liquidity ratiosratios that measure a firm's ability to meet its short-term financial obligations on time. London International Financial Futures Exchange (LIFFE)A London exchange where Eurodollar futures London International Financial Futures Exchange (LIFFE)London exchange where Eurodollar futures as well as futures-style options are traded. Long-term financial planfinancial plan covering two or more years of future operations. Market value ratiosratios that relate the market price of the firm's common stock to selected financial Net benefit to leverage factorA linear approximation of a factor, T*, that enables one to operationalize the Non-financial servicesInclude such things as freight, insurance, passenger services, and travel. Notes to the financial statementsA detailed set of notes immediately following the financial statements in Operating leverageFixed operating costs, so-called because they accentuate variations in profits. operating leverageA relatively small percent increase or decrease in operating leveragethe proportionate relationship between operating leverageDegree to which costs are fixed. Perfectly competitive financial marketsMarkets in which no trader has the power to change the price of Pro forma financial statementsfinancial statements as adjusted to reflect a projected or planned transaction. profit ratiosratios based on sales revenue for a period. A measure of Profitability ratiosratios that focus on the profitability of the firm. Profit margins measure performance Published Financialfinancial statements and financial information made public. Rate of return ratiosratios that are designed to measure the profitability of the firm in relation to various Reserve ratiosSpecified percentages of deposits, established by the Federal Reserve Board, that banks must Restatement of Prior-Year Financial StatementsA recasting of prior-year financial statements to remove the effects of an error or other adjustment and report them on a new basis. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |