An amortized loan is a loan that is repaid through regular payments including both principal and interest over a specified period.
A loan in which the repayment is made in more than one installment, as opposed to a bullet loan where the repayment is made in a single lump sum at the end of the term.
A budget deficit occurs when expenditures exceed income, and it can affect governments, corporations, and individuals. It necessitates funding solutions like issuing treasury bonds or reducing expenses.
A ratio for assessing the solvency of a company, calculated by dividing the cash flow from operations by the total liabilities. It indicates a company's ability to satisfy its debts.
Chapter 13 of the Bankruptcy Reform Act of 1978 refers to debt restructuring, allowing individuals to repay creditors over time, typically through a repayment plan.
A consolidation loan combines and refinances multiple other loans or debt into a single loan, typically aimed at reducing the monthly payments an individual needs to make. It is usually an installment loan.
Credit control is a system used by organizations to ensure their outstanding debts are paid within a reasonable period, involving the establishment of a credit policy, assessment of clients' credit rating, and the management of overdue accounts.
Debt administration refers to the process of managing and overseeing the repayment of debts, ensuring that they are correctly and timely settled in compliance with agreed terms and conditions.
Debtors refer to individuals or entities that owe money to an organization, often due to sales of goods or services. This concept is significant in accounting as it affects the balance sheet and requires careful management to ensure accurate financial reporting.
Interest that has not been paid on time. Implies a more serious state of delay than past-due or delinquent.
Deferred payments refer to payments that are extended over a period of time or put off to a future date. This arrangement allows the payer to delay full payment until an agreed-upon future date.
Deleveraging is the process by which an entity reduces its level of debt by rapidly selling off assets or paying down loans, often in response to financial stress or in pursuit of a stronger balance sheet.
A demand loan is a type of loan that must be repaid upon the lender's request, rather than on a predetermined date.
A financial metric that shows the ratio of a company's equity to its debt, providing insights into how a company finances its operations and growth.
A financial planner is a professional who analyzes personal financial circumstances and prepares a program to meet financial needs and objectives, equipped with knowledge in several domains including estate planning, retirement planning, and investments.
The Fixed-Charge Coverage Ratio measures a firm's ability to meet its fixed financial obligations, including interest payments on long-term debt and other contractual commitments, relative to its earnings before interest and taxes.
Forbearance is a situation where a lender decides not to exercise its legal right to foreclose on a property when a borrower defaults. Instead, the lender opts to renegotiate the terms of the loan to offer temporary relief to the borrower.
Gross estate refers to the total value of a person's assets before liabilities such as debts and taxes are deducted. It includes all types of property and accounts that the deceased owned or had an interest in.
An Individual Voluntary Arrangement (IVA) is a formal, legally-binding agreement between an individual and their creditors to pay off debts over a set period, usually managed by an insolvency practitioner.
An Individual Voluntary Arrangement (IVA) is a legally binding agreement between a person and their creditors to pay off their debts over a specified period, often with reduced payments.
Inability to pay one's debts when they fall due, which may lead to bankruptcy for individuals or liquidation for companies.
An Interest Rate Swap (IRS) is a contractual agreement between two counterparties to exchange periodic payments based on a notional principal amount, typically involving the exchange of a fixed-rate payment stream for a floating-rate payment stream.
Invoice Discounting is a financial practice wherein a business sells its invoices to a third party, typically a factoring house, at a discount to obtain immediate cash. It differs from traditional factoring in that it does not typically include sales accounting and debt collecting services.
Leverage ratios are financial metrics that evaluate the level of debt a business is using compared to its equity and assets. These ratios are crucial for analyzing the financial health and sustainability of companies.
Liquidity refers to the extent to which an organization's assets are liquid, enabling it to pay its debts when they fall due and to move into new investment opportunities.
Mortgage debt refers to the amount of money owed under a mortgage, which is a type of loan used particularly for financing the purchase of real estate.
Off the balance sheet (OBS) refers to financial transactions where the property involved does not appear on the company’s balance sheet. This technique is often used to keep debt-to-equity ratios lower and manage financial reporting more favorably.
The Public Sector Borrowing Requirement (PSBR) refers to the amount of money the government needs to borrow to cover its expenditures if these exceed its income. It serves as an economic indicator tracking the difference between government expenditures and income from taxes and other revenue streams, typically over a fiscal year.
Refinancing involves obtaining new funding to pay off an existing obligation, typically done to secure a more favorable interest rate or reduce monthly payments.
Short-term debt, also known as short-term liabilities, refers to debt obligations that are due for payment within one year from the date of the balance sheet. These are recorded under current liabilities, showcasing the financial obligations a company needs to settle in the near term.
Solvency refers to the ability of an individual or an organization to meet its long-term financial obligations and continue its operations in the future. Specifically, solvency can represent a financial state where a person or company can pay their debts as they come due, or the extent to which a bank's assets exceed its liabilities.
Subordination refers to the process of establishing the priority of one claim or debt over another. It is commonly used in various fields including finance and real estate to manage the hierarchy of obligations and claims.
A crucial financial ratio that measures a company's ability to meet its debt obligations, calculated by dividing earnings before interest and taxes (EBIT) by the interest expenses for the same period.
A detailed examination of Company Voluntary Arrangements (CVA) and Individual Voluntary Arrangements (IVA) as defined under the Insolvency Act 1986, including their objectives, processes, and key differences.
