|Limitation on liens
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Definition of Limitation on liens
Limitation on liens
A bond covenant that restricts in some way a firm's ability to grant liens on its assets.
A bond covenant that restricts in some way the firm's ability to incur additional indebtedness.
A bond covenant that restricts in some way the firm's ability to pay cash dividends.
A bond covenant that restricts in some way a firm's ability to
A bond covenant that restricts in some way a firm's ability to enter into
A bond covenant that restricts in some way a firm's ability to borrow at
A bond covenant that restricts in some way a firm's ability to sell major assets.
A dividend paid in cash to a company's shareholders. The amount is normally based on
A requirement that any missed preferred or preference stock dividends be paid
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
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.
New debt obtained by a firm during the Chapter 11 bankruptcy process.
Discounted dividend model (DDM)
A formula to estimate the intrinsic value of a firm by figuring the
A dividend is a portion of a company's profit paid to common and preferred shareholders. A stock
With respect to a project financing, an arrangement under which the sponsors of a project
A group of shareholders who prefer that the firm follow a particular dividend policy. For
Dividend discount model (DDM)
A model for valuing the common stock of a company, based on the
Dividend growth model
A model wherein dividends are assumed to be at a constant rate in perpetuity.
Dividend payout ratio
Percentage of earnings paid out as dividends.
Dividends per share
Amount of cash paid to shareholders expressed as dollars per share.
An established guide for the firm to determine the amount of money it will pay as dividends.
The fixed or floating rate paid on preferred stock based on par value.
Dividend reinvestment plan (DRP)
Automatic reinvestment of shareholder dividends in more shares of a
A shareholders' rights to receive per-share dividends identical to those other shareholders receive.
Dividend yield (Funds)
Indicated yield represents return on a share of a mutual fund held over the past 12
Dividend yield (Stocks)
Indicated yield represents annual dividends divided by current stock price.
Dividends per share
dividends paid for the past 12 months divided by the number of common shares
Extra or special dividends
A dividend that is paid in addition to a firm's "regular" quarterly dividend.
This literally means "without dividend." The buyer of shares when they are quoted ex-dividend
The first day of trading when the seller, rather than the buyer, of a stock will be entitled to
Firm's net value of debt
Total firm value minus total firm debt.
debt maturing after more than one year.
Sale of some shares of stock to get cash that would be similar to receiving a cash dividend.
Total amount of dividends that would be paid on a share of stock over the next 12 months
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.
Payment by a firm to its owners from capital rather than from earnings.
Original issue discount debt (OID debt)
debt that is initially offered at a price below par.
Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital
Residual dividend approach
An approach that suggests that a firm pay dividends if and only if acceptable
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.
Signaling view (on dividend policy)
The argument that dividend changes are important signals to investors
Also referred to as an extra dividend. dividend that is unlikely to be repeated.
Payment of a corporate dividend in the form of stock rather than cash. The stock dividend
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
Tax differential view ( of dividend policy)
The view that shareholders prefer capital gains over dividends,
Total debt to equity ratio
A capitalization ratio comparing current liabilities plus long-term debt to
Traditional view (of dividend policy)
An argument that "within reason," investors prefer large dividends 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.
Purchase of shares in which the buyer is entitled to the forthcoming dividend. Related: exdividend.
A payment a company makes to stockholders. Earnings before income tax. The profit a company made
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 payment of after-tax profits to shareholders as their share of the profits of the business for an accounting period.
The amount of accounts receivable that is not expected to be collected.
Income that a company receives in the form of dividends on stock in other companies that it holds.
Amounts paid to the owners of a company that represent a share of the income of the company.
Refers to accounts receivable from credit sales to customers
A widely used financial statement ratio to assess the
dividend payout ratio
Computed by dividing cash dividends for the year
dividend yield ratio
Cash dividends paid by a business over the most
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
dividend growth method
a method of computing the cost
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 payment made to shareholders that is proportional to the number of shares
A debt for which payments will be required for a period of more than
Payment of cash by the firm to its shareholders.
constant-growth dividend discount model
Version of the dividend discount model in which dividends grow at a constant rate.
Periodic cash distribution from the firm to its shareholders.
dividend discount model
Computation of todayâ€™s stock price which states that share value equals the present value of all expected future dividends.
dividend payout ratio
Percentage of earnings paid out as dividends.
Date that determines whether a stockholder is entitled to a dividend payment; anyone holding stock before this date is entitled to a dividend.
debt with more than 1 year remaining to maturity.
information content of dividends
dividend increases send good news about cash flow and earnings. dividend cuts send bad news.
MM dividend-irrelevance proposition
Theory that under ideal conditions, the value of the firm is unaffected by dividend policy.
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.
Distribution of additional shares to a firmâ€™s stockholders.
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