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Financial Terms | |
Seniority |
Information about financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit.
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Definition of SenioritySeniorityThe order of repayment. In the event of bankruptcy, senior debt must be repaid before subordinated
Related Terms:Allowance for bad debtsAn offset to the accounts receivable balance, against which Bad debtAn account receivable that cannot be collected. Bad debtsThe amount of accounts receivable that is not expected to be collected. bad debtsRefers to accounts receivable from credit sales to customers BankruptcyState of being unable to pay debts. Thus, the ownership of the firm's assets is transferred from bankruptcyThe reorganization or liquidation of a firm that cannot pay its debts. Bankruptcy cost viewThe argument that expected indirect and direct bankruptcy costs offset the other ![]() Bankruptcy riskThe risk that a firm will be unable to meet its debt obligations. Also referred to as default or insolvency risk. Bankruptcy viewThe argument that expected bankruptcy costs preclude firms from being financed entirely Before-tax profit marginThe ratio of net income before taxes to net sales. Buy limit orderA conditional trading order that indicates a security may be purchased only at the designated Cost of DebtThe cost of debt (bonds, loans, etc.) that a company is charged for Cross-border riskRefers to the volatility of returns on international investments caused by events associated Day orderAn order to buy or sell stock that automatically expires if it can't be executed on the day it is entered. DebtMoney borrowed. DebtBorrowings from financiers. ![]() DebtFunds owed to another entity. Debt capacityAbility to borrow. The amount a firm can borrow up to the point where the firm value no Debt CapacityAn assessment of ability and willingness to repay a loan from anticipated future cash flow or other sources. 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. Debt displacementThe amount of borrowing that leasing displaces. Firms that do a lot of leasing will be Debt/equity ratioIndicator of financial leverage. Compares assets provided by creditors to assets provided Debt/Equity RatioA comparison of debt to equity in a company's capital structure. Debt FinancingRaising loan capital through the creation of debt by issuing a form of paper evidencing amounts owed and payable on specified dates or on demand. Debt instrumentAn asset requiring fixed dollar payments, such as a government or corporate bond. Debt InstrumentAny financial asset corresponding to a debt, such as a bond or a treasury bill. Debt leverageThe amplification of the return earned on equity when an investment or firm is financed ![]() Debt limitationA bond covenant that restricts in some way the firm's ability to incur additional indebtedness. Debt marketThe market for trading debt instruments. Debt ratioTotal debt divided by total assets. Debt RatioThe percentage of debt that is used in the total capitalization of a Debt reliefReducing the principal and/or interest payments on LDC loans. Debt securitiesIOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and Debt SecurityA security representing a debt relationship with an enterprise, including a government Debt serviceInterest payment plus repayments of principal to creditors, that is, retirement of debt. Debt-service coverage ratioEarnings before interest and income taxes plus one-third rental charges, divided Debt service parity approachAn analysis wherein the alternatives under consideration will provide the firm Debt swapA set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank debt-to-equity ratioA widely used financial statement ratio to assess the Debtor in possessionA firm that is continuing to operate under Chapter 11 bankruptcy process. Debtor-in-possession financingNew debt obtained by a firm during the Chapter 11 bankruptcy process. DebtorsSales to customers who have bought goods or services on credit but who have not yet paid their debt. Discrete order pickingA picking method requiring the sequential completion of earnings before interest and income tax (EBIT)A measure of profit that Earnings before interest and taxes (EBIT)A financial measure defined as revenues less cost of goods sold Earnings before interest and taxes (EBIT)The operating profit before deducting interest and tax. Earnings before interest, taxes, depreciation and amortization (EBITDA)The operating profit before deducting interest, tax, depreciation and amortization. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)An earningsbased measure that, for many, serves as a surrogate for cash flow. Actually consists of working EBBS - Earnings before the bad stuffAn acronym attributed to a member of the Securities and EBDDT - Earnings before depreciation and deferred taxesThis measure is used principally by economic order quantityorder size that minimizes total inventory costs. Economic order quantity (EOQ)The order quantity that minimizes total inventory costs. economic order quantity (EOQ)an estimate of the number engineering change order (ECO)a business mandate that changes the way in which a product is manufactured or a Event riskThe risk that the ability of an issuer to make interest and principal payments will change because Event studyA statistical study that examines how the release of information affects prices at a particular time. Events of defaultContractually specified events that allow lenders to demand immediate repayment of a debt. FHA prepayment experienceThe percentage of loans in a pool of mortgages outstanding at the origination Fill or kill orderA trading order that is canceled unless executed within a designated time period. Firm's net value of debtTotal firm value minus total firm debt. Funded debtdebt maturing after more than one year. funded debtdebt with more than 1 year remaining to maturity. Interest rate on debtThe firm's cost of debt capital. job order cost sheeta source document that provides virtually job order costing systema system of product costing used Junior debt (subordinate debt)debt whose holders have a claim on the firm's assets only after senior Lag response of prepaymentsThere is typically a lag of about three months between the time the weighted Legal bankruptcyA legal proceeding for liquidating or reorganizing a business. Limit orderAn order to buy a stock at or below a specified price or to sell a stock at or above a specified Limit order bookA record of unexecuted limit orders that is maintained by the specialist. These orders are Long-term debtAn obligation having a maturity of more than one year from the date it was issued. Also Long-term debtA debt for which payments will be required for a period of more than Long Term DebtLiability due in a year or more. Long-term debt/capitalizationIndicator of financial leverage. Shows long-term debt as a proportion of the Long-term debt ratioThe ratio of long-term debt to total capitalization. Long-term debt to equity ratioA capitalization ratio comparing long-term debt to shareholders' equity. Make-to-orderA production scheduling system under which products are only Market orderThis is an order to immediately buy or sell a security at the current trading price. Mezzanine DebtRefers to non-conventional debt that has a greater element of risk than secured debt but has less risk than equity. MM's proposition I (debt irrelevance proposition)The value of a firm is unaffected by its capital structure. Monetizing the DebtSee printing money. money orderA guaranteed form of payment in amounts up to and including $5,000. You might request a money order in order to pay for tuition fees at a university or a college, or for a magazine subscription. National DebtThe 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. Negotiable order of withdrawal (NOW)Demand deposits that pay interest. Open (good-til-cancelled) orderAn individual investor can place an order to buy or sell a security. That open purchase orderinga process by which a single purchase Order penetration pointThe point in the production process when a product is Order pickingThe process of moving items from stock for shipment to customers. order pointthe level of inventory that triggers the placement ordering costthe variable cost associated with preparing, Original issue discount debt (OID debt)debt that is initially offered at a price below par. pecking order theoryFirms prefer to issue debt rather than equity if internal finance is insufficient. Pecking-order view (of capital structure)The argument that external financing transaction costs, especially Prepackaged bankruptcyA bankruptcy in which a debtor and its creditors pre-negotiate a plan or Prepaid expenseAn expenditure that is paid for in one accounting period, but which Prepaid expensesExpenses that have been paid for but have not yet been used up; examples are prepaid insurance and prepaid rent. PrepaymentA payment made in advance of when it is treated as an expense for profit purposes. Prepayment speedAlso called speed, the estimated rate at which mortgagors pay off their loans ahead of PrepaymentsPayments made in excess of scheduled mortgage principal repayments. prevention costa cost incurred to improve quality by preventing Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |