|Short-term solvency ratios|
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Definition of Short-term solvency ratios
Short-term solvency ratios
ratios used to judge the adequacy of liquid assets for meeting short-term
Total liabilities exceed total assets. A firm with a negative net worth is insolvent on
ratios that measure how effectively the firm is managing its assets.
Also called financial leverage ratios, these ratios compare debt to total capitalization
A measure of the goodness of fit of the relationship between the dependent and
a measure of dispersion that
ratios that are designed to measure the relative claims of stockholders to earnings
ratios used to test the adequacy of cash flows generated through earnings for purposes of
Conditions under which credit is extended by a lender to a borrower.
A range of payout ratios that is typical based on an analysis of comparable firms.
Liability-matching models that assume that the liability payments and the asset cash
Withdrawal of funds from a financial institution in order to invest them directly.
A non-underwritten Euronote issued directly to the market. Euro-
Payout ratios that are consistent with the availability of excess funds to make
Institutions that provide the market function of matching borrowers and lenders or
Firm that raises money from many small investors and provides financing to businesses or other
Any institution, such as a bank, that takes deposits from savers and loans them to borrowers.
The process whereby financial intermediaries channel funds from lender/savers to borrower/spenders.
Financial leverage ratios
Related: capitalization ratios.
Optional periods of time which the conditions of a contract will be carried out.
The risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk.
spread The spread between the interest rate offered in two sectors of the bond market for
Intermarket spread swaps
An exchange of one bond for another based on the manager's projection of a
An independent third party that may act as a mediator during negotiations.
A good used in producing another good.
Typically 1-10 years.
Investment through a financial institution. Related: disintermediation.
Measures of the relative contribution of stockholders and creditors, and of the firm's ability
ratios that measure a firm's ability to meet its short-term financial obligations on time.
ratios that measure a firm's ability to meet its short-term financial obligations on time.
Liquidity theory of the term structure
A biased expectations theory that asserts that the implied forward
In accounting information, one year or greater.
Value of property, equipment and other capital assets minus the depreciation. This is an
An obligation having a maturity of more than one year from the date it was issued. Also
A debt for which payments will be required for a period of more than
Long Term Debt
Liability due in a year or more.
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.
Long-term financial plan
Financial plan covering two or more years of future operations.
Amount owed for leases, bond repayment and other items due after 1 year.
Bills that are payable in more than one year, such as a mortgage or bonds.
Amounts owing after more than one year.
Longer-Term Fixed Assets
Assets having a useful life greater than one year but the duration of the 'long term' will vary with the context in which the term is applied.
Market value ratios
ratios that relate the market price of the firm's common stock to selected financial
A corporate debt instrument that is continuously offered to investors over a period of
Other long term liabilities
Value of leases, future employee benefits, deferred taxes and other obligations
predetermined overhead rate
an estimated constant charge per unit of activity used to assign overhead cost to production or services of the period; it is calculated by dividing total budgeted annual overhead at a selected level of volume or activity by that selected measure of volume or activity; it is also the standard overhead application rate
ratios based on sales revenue for a period. A measure of
ratios that focus on the profitability of the firm. Profit margins measure performance
Rate of return ratios
ratios that are designed to measure the profitability of the firm in relation to various
The length of time given a borrower by a lender to repay a debt and the frequency of principal payments which the borrower has to meet.
Specified percentages of deposits, established by the Federal Reserve Board, that banks must
If an investor thinks the price of a stock is going down, the investor could borrow the stock from
One who has sold a contract to establish a market position and who has not yet closed out this position
Bonds with short current maturities.
See: unmatched book.
The sale of a futures contract(s) to eliminate or lessen the possible decline in value ownership of
This is the total number of shares of a security that investors have borrowed, then sold in the
Occurs when a person sells stocks he or she does not yet own. Shares must be borrowed,
The sale of an investment, particularly by someone who does not yet own it.
The annualized one-period interest rate.
Short-run operating activities
Events and decisions concerning the short-term finance of a firm, such as
Selling a security that the seller does not own but is committed to repurchasing eventually. It is
Short sale, short position
The sale of a security or financial instrument not
Establishing a market position by selling a security one does not own in anticipation of the price
A situation in which a lack of supply tends to force prices upward.
A straddle in which one put and one call are sold.
Short-term financial plan
A financial plan that covers the coming fiscal year.
Short-term investment services
Services that assist firms in making short-term investments.
Short-term tax exempts
short-term securities issued by states, municipalities, local housing agencies, and
Costs that fall with increases in the level of investment in current assets.
Costs incurred from shortages in current assets.
The risk of falling short of any investment target.
Refers to the ability of a business to pay its liabilities on time
Default on a legal obligation of the firm. For example, technical insolvency occurs
See term to maturity.
This is usually the duration of a loan.
The period of time during which a financial contract – such as a GIC or a loan – is in force.
The time period during which a policy is in force, or the time it takes for a policy to reach maturity.
Often referred to as bullet-maturity bonds or simply bullet bonds, bonds whose principal is
An interest-earning bank deposit that cannot be withdrawn without penalty until a specific time.
Term Fed Funds
Fed Funds sold for a period of time longer than overnight.
Provides a death benefit only, no build-up of cash value.
A product that provides life coverage for a specified duration typically not beyond the age of 75.
Term life insurance
A contract that provides a death benefit but no cash build-up or investment component.
Term Life Insurance
A plan of insurance which covers the insured for only a certain period of time and not necessarily for his or her entire life. The policy pays a death benefit only if the insured dies during the term.
A bank loan, typically with a floating interest rate, for a specified amount that matures in between
A secured loan made to business concerns for a specific period (normally three to ten years). It is repaid with interest, usually with periodical payments.
Excess of the yields to maturity on long-term bonds over those of short-term bonds.
A repurchase agreement with a term of more than one day.
A list of the major points of the proposed financing being offered by an investor.
The relationship between the yields on fixed-interest
Term Structure of Interest Rates
Relationship among interest rates on bonds with different terms to maturity.
Term to maturity
The time remaining on a bond's life, or the date on which the debt will cease to exist and
Term to Maturity
Period of time from the present to the redemption date of a bond.
A closed-end fund that has a fixed termination or maturity date.
Terminal Illness Insurance (Credit Insurance)
Coverage that provides a lump-sum payment should you become terminally ill. The payment is made to your creditors to pay off your debt owing.
The value of a bond at maturity, typically its par value, or the value of an asset (or an entire
Cease all legal obligations under a contract.
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