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Financial Terms | |
Sale and lease-back |
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Definition of Sale and lease-backSale and lease-backsale of an existing asset to a financial institution that then leases it back to the user.
Related Terms:Limitation on sale-and-leasebackA bond covenant that restricts in some way a firm's ability to enter into Sale and LeasebackAn 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. Accounting and Auditing Enforcement Release (AAER)Administrative proceedings or litigation releases that entail an accounting or auditing-related violation of the securities laws. Asset-Backed SecuritiesBond or note secured by assets of company. Asset-backed securityA security that is collateralized by loans, leases, receivables, or installment contracts Available-for-Sale SecurityA debt or equity security not classified as a held-to-maturity security or a trading security. Can be classified as a current or noncurrent investment depending on the intended holding period. Back feeThe fee paid on the extension date if the buyer wishes to continue the option. ![]() Back flushThe subsequent subtraction from inventory records of those parts used Back officeBrokerage house clerical operations that support, but do not include, the trading of stocks and Back To Back AnnuityThis term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application. Back-to-back financingAn intercompany loan channeled through a bank. Back-to-back loanA loan in which two companies in separate countries borrow each other's currency for a Back-up1) When bond yields and prices fall, the market is said to back-up. BackdatingA procedure for making the effective date of a policy earlier than the application date. backdating is often used to make the age of the consumer at policy issue lower than it actually was in order to get a lower premium. backflush costinga streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires BackwardationA market condition in which futures prices are lower in the distant delivery months than in ![]() Best-efforts saleA method of securities distribution/ underwriting in which the securities firm agrees to sell Break-even lease paymentThe lease payment at which a party to a prospective lease is indifferent between Buy-backAnother term for a repo. Capital leaseA lease obligation that has to be capitalized on the balance sheet. Capital leaseA lease in which the lessee obtains some ownership rights over the asset Capital LeaseOne 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. charge-back systema system using transfer prices; see transfer Closing saleA transaction in which the seller's intention is to reduce or eliminate a long position in a stock, Conditional SaleA type of agreement to sell whereby a seller retains title to goods sold and delivered to a purchaser until full payment has been made. Conditional Sale AgreementAn agreement entered into between a conditional buyer and a conditional seller setting out the terms under which goods change hands. Conditional sales contractsSimilar to equipment trust certificates except that the lender is either the Contingent deferred sales charge (CDSC)The formal name for the load of a back-end load fund. Cost of lease financingA lease's internal rate of return. Cost of salesThe manufacture or purchase price of goods sold in a period or the cost of providing a service. Days' sales in inventory ratioThe average number of days' worth of sales that is held in inventory. Days' sales outstandingAverage collection period. Direct leaselease in which the lessor purchases new equipment from the manufacturer and leases it to the Discounted payback period ruleAn investment decision rule in which the cash flows are discounted at an Dividend clawbackWith respect to a project financing, an arrangement under which the sponsors of a project Domestic International Sales Corporation (DISC)A U.S. corporation that receives a tax incentive for Double-dip leaseA cross-border lease in which the disparate rules of the lessor's and lessee's countries let Equity Buy-BackRefers to the investors percentage ownership of a company that can be re-acquired by the company, usually at a pre-determined amount. FeedbackThe retrospective process of measuring performance, comparing it with plan and taking corrective action. 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. Foreign Sales Corporation (FSC)A special type of corporation created by the Tax Reform Act of 1984 that Forward saleA method for hedging price risk which involves an agreement between a lender and an investor Full-payout leaseSee: financial lease. Full-service leaseAlso called rental lease. lease in which the lessor promises to maintain and insure the Gain-on-Sale AccountingUp-front gain recognized from the securitization and sale of a pool Gross salesThe total sales recorded prior to sales discounts and returns. Installment saleThe sale of an asset in exchange for a specified series of payments (the installments). LeaseA long-term rental agreement, and a form of secured long-term debt. leaseLong-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. Lease PaymentThe 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. Lease RateThe payment per period stated in a lease contract. Lease RateThe payment per period stated in a lease contract. Leasehold improvementThis is any upgrade to leased property by a lessee that will be Leasehold improvementsThe cost of improvements made to property that the company leases. Leveraged leaseA lease arrangement under which the lessor borrows a large proportion of the funds needed Limitation on merger, consolidation, or saleA bond covenant that restricts in some way a firm's ability to Litigation ReleaseOfficial SEC record of a settlement or a hearing scheduled before a civil Lookback optionAn option that allows the buyer to choose as the option strike price any price of the Loss carrybackThe offsetting of a current year loss against the reported taxable Mortgage-backed securitiesSecurities backed by a pool of mortgage loans. Mortgage-Backed Securities Clearing CorporationA wholly owned subsidiary of the Midwest Stock Negotiated saleSituation in which the terms of an offering are determined by negotiation between the issuer Net leaseA lease arrangement under which the lessee is responsible for all property taxes, maintenance Net salesTotal revenue, less the cost of sales returns, allowances, and discounts. NET SALES (revenue)The amount sold after customers’ returns, sales discounts, and other allowances are taken away from Normal backwardation theoryHolds that the futures price will be bid down to a level below the expected NUMBER OF DAYS SALES IN RECEIVABLES(also called average collection period). The number of days of net sales that are tied up in credit sales (accounts receivable) that haven’t been collected yet. Opening saleA transaction in which the seller's intention is to create or increase a short position in a given Operating leaseShort-term, cancelable lease. A type of lease in which the period of contract is less than the Operating leaseThe rental of an asset from a lessor, but not under terms that would Operating LeaseOne where the risks and benefits, as well as ownership, stays with the lessor. PaybackThe length of time it takes to recover the initial cost of a project, without regard to the time value of money. PaybackA method of investment appraisal that calculates the number of years taken for the cash flows from an investment to cover the initial capital outlay. PaybackThe length of time required for the net revenues of an investment for the net revenues of an investment to return the cost of the investment. Payback methodA capital budgeting analysis method that calculates the amount of Payback PeriodThe number of years necessary for the net cash flows of an payback periodthe time it takes an investor to recoup an payback periodTime until cash flows recover the initial investment of the project. percentage of sales modelsPlanning model in which sales forecasts are the driving variables and most other variables are Plowback rateRelated: retention rate. plowback ratioFraction of earnings retained by the firm. point of sale (POS)The terminal at which a customer uses his/her debit card to make a direct payment transaction. See also Interac Direct Payment. Price/sales ratio (PS Ratio)Determined by dividing current stock price by revenue per share (adjusted for stock splits). Purchase and saleA method of securities distribution in which the securities firm purchases the securities RATIO OF NET INCOME TO NET SALESA ratio that shows how much net income (profit) a company made on each dollar of net sales. Here’s the formula: RATIO OF NET SALES TO NET INCOMEA ratio that shows how much a company had to collect in net sales to make a dollar of profit. Figure it this way: Rental leaseSee:full-service lease. return on salesThis ratio equals net income divided by sales revenue. Safe harbor leaseA lease to transfer tax benefits of ownership (depreciation and debt tax shield) from the SalesAmounts earned by the company from the sale of merchandise or services; often used interchangeably with the term revenue. Sales allowanceA reduction in a price that is allowed by the seller, due to a problem Sales chargeThe fee charged by a mutual fund when purchasing shares, usually payable as a commission to Sales discountA reduction in the price of a product or service that is offered by the Sales discountsA contra account that offsets revenue. It represents the amount of the discounts for early payment allowed on sales. Sales forecastA key input to a firm's financial planning process. External sales forecasts are based on Sales journalA journal used to record the transactions that result in a credit to sales. Sales mixThe mix of product/services offered by the business, each of which may be aimed at different customers, with each product/service having different prices and costs. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |