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Definition of Operating lease
Short-term, cancelable lease. A type of lease in which the period of contract is less than the
The rental of an asset from a lessor, but not under terms that would
One where the risks and benefits, as well as ownership, stays with the lessor.
Contract granting use of real estate, equipment, or other fixed assets for a specified time in exchange for payment, usually in the form of rent. The owner of the leased property is called the lessor, the user the lessee.
Administrative proceedings or litigation releases that entail an accounting or auditing-related violation of the securities laws.
For investment companies, the management fee and "other expenses,"
The lease payment at which a party to a prospective lease is indifferent between
A lease obligation that has to be capitalized on the balance sheet.
A lease in which the lessee obtains some ownership rights over the asset
One where substantially all of the benefits and risks of ownership are transferred to the lessee. It must be reflected on the company's balance sheet as an asset and corresponding liability.
This equals the cash inflow from sales during the period minus the cash
With some exceptions, the cash effects of transactions
A lease's internal rate of return.
a factor that indicates how a percentage change in sales, from the existing or current
Percentage change in profits given a 1 percent change in sales.
lease in which the lessor purchases new equipment from the manufacturer and leases it to the
A cross-border lease in which the disparate rules of the lessor's and lessee's countries let
Long-term, non-cancelable lease.
lease 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.
See: financial lease.
Also called rental lease. lease in which the lessor promises to maintain and insure the
A long-term rental agreement, and a form of secured long-term debt.
Long-term rental agreement.
Lease (Credit Insurance)
Contract granting use of real estate, equipment or other fixed assets for a specified period of time in exchange for payment. The owner or a leased property is the lessor and the user the lessee.
The consideration paid by the lessee to the lessor in exchange for the use of the leased equipment/property. Payments are usually made at fixed intervals.
The payment per period stated in a lease contract.
The payment per period stated in a lease contract.
This is any upgrade to leased property by a lessee that will be
The cost of improvements made to property that the company leases.
A lease arrangement under which the lessor borrows a large proportion of the funds needed
Limitation on sale-and-leaseback
A bond covenant that restricts in some way a firm's ability to enter into
Official SEC record of a settlement or a hearing scheduled before a civil
A lease arrangement under which the lessee is responsible for all property taxes, maintenance
Net operating losses
Losses that a firm can take advantage of to reduce taxes.
Net operating margin
The ratio of net operating income to net sales.
Includes all the sales and expense activities of a business.
a budget expressed in both units and dollars
Operating cash flow
Earnings before depreciation minus taxes. It measures the cash generated from
operating cash flow
See cash flow from operating activities.
Operating Cash Flow
Income available after the payment of taxes, plus the value of the
The average time intervening between the acquisition of materials or services and the final
A term frequently used to describe earnings after the removal of the
Any expense associated with the general, sales, and administrative
The total amount that was spent to run a company this year.
The amount of money the company must spend on overhead, distribution, taxes, underwriting the risk and servicing the policy. It is a factor in calculating premium rates.
Degree to which exchange rate changes, in combination with price changes, will alter a
The net income of a business, less the impact of any financial activity,
A measure of results produced by the core operations of a firm. It is common
Fixed operating costs, so-called because they accentuate variations in profits.
A relatively small percent increase or decrease in
the proportionate relationship between
Degree to which costs are fixed.
Operating Line of Credit
A bank's commitment to make loans to a particular borrower up to a specified maximum for a specified period, usually one year.
A loan advanced under an operating line of credit.
The profit made by the business for an accounting period, equal to gross profit less selling, finance, administration etc. expenses, but before deducting interest or taxation.
See earnings before interest and income tax (EBIT).
Operating profit margin
The ratio of operating margin to net sales.
The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is
operating risk (business risk)
Risk in firm’s operating income.
Safe harbor lease
A lease to transfer tax benefits of ownership (depreciation and debt tax shield) from the
Sale and lease-back
Sale of an existing asset to a financial institution that then leases it back to the user.
Sale and Leaseback
An agreement in which the owner of a property sells that property to a person or institution and then leases it back again for an agreed period and rental.
An arrangement whereby a firm leases its own equipment, such as IBM leasing its own
lease accounting used by a manufacturer who is also a lessor. Up-front gross
Short-run operating activities
Events and decisions concerning the short-term finance of a firm, such as
A contract that qualifies as a valid lease agreement under the Internal Revenue code.
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