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bad debts |
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Definition of bad debtsbad debtsRefers to accounts receivable from credit sales to customers Bad debtsThe amount of accounts receivable that is not expected to be collected.
Related Terms:Allowance for bad debtsAn offset to the accounts receivable balance, against which accounts receivableShort-term, non-interest-bearing debts owed to a mark to marketRefers to the accounting method that records increases Bad debtAn account receivable that cannot be collected. EBBS - Earnings before the bad stuffAn acronym attributed to a member of the Securities and Allowance for doubtful accountsA contra account related to accounts receivable that represents the amounts that the company expects will not be collected. Allowance for Doubtful AccountsAn estimate of the uncollectible portion of accounts receivable ACCOUNTS RECEIVABLEAmounts owed to a company by customers that it sold to on credit. Total accounts receivable are usually reduced by an allowance for doubtful accounts. Provision for Doubtful AccountsAn operating expense recorded when the allowance for economic components modelAbrams’ model for calculating DLOM based on the interaction of discounts from four economic components. PPF (periodic perpetuity factor)a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity. Accounting exposureThe change in the value of a firm's foreign currency denominated accounts due to a Accounting earningsEarnings of a firm as reported on its income statement. Accounting insolvencyTotal liabilities exceed total assets. A firm with a negative net worth is insolvent on Accounting liquidityThe ease and quickness with which assets can be converted to cash. Accounts payableMoney owed to suppliers. Accounts receivableMoney owed by customers. Accounts receivable turnoverThe ratio of net credit sales to average accounts receivable, a measure of how Acquisition of assetsA merger or consolidation in which an acquirer purchases the selling firm's assets. Adjustable rate preferred stock (ARPS)Publicly traded issues that may be collateralized by mortgages and MBSs. Agency basisA means of compensating the broker of a program trade solely on the basis of commission All or noneRequirement that none of an order be executed unless all of it can be executed at the specified price. All-or-none underwritingAn arrangement whereby a security issue is canceled if the Underwriter is unable Annual fund operating expensesFor investment companies, the management fee and "other expenses," Annual percentage rate (APR)The periodic rate times the number of periods in a year. For example, a 5% Annual percentage yield (APY)The effective, or true, annual rate of return. The APY is the rate actually Annualized holding period returnThe annual rate of return that when compounded t times, would have AssetAny possession that has value in an exchange. Asset/equity ratioThe ratio of total assets to stockholder equity. Asset/liability managementAlso called surplus management, the task of managing funds of a financial Asset activity ratiosRatios that measure how effectively the firm is managing its assets. Asset allocation decisionThe decision regarding how an institution's funds should be distributed among the Asset-backed securityA security that is collateralized by loans, leases, receivables, or installment contracts Asset-based financingmethods of financing in which lenders and equity investors look principally to the Asset classesCategories of assets, such as stocks, bonds, real estate and foreign securities. Asset-coverage testA bond indenture restriction that permits additional borrowing on if the ratio of assets to Asset for asset swapcreditors exchange the debt of one defaulting borrower for the debt of another Asset pricing modelA model for determining the required rate of return on an asset. Asset substitutionA firm's investing in assets that are riskier than those that the debtholders expected. Asset substitution problemArises when the stockholders substitute riskier assets for the firm's existing Asset swapAn interest rate swap used to alter the cash flow characteristics of an institution's assets so as to Asset turnoverThe ratio of net sales to total assets. Asset pricing modelA model, such as the Capital asset Pricing Model (CAPM), that determines the required AssetsA firm's productive resources. Assets requirementsA common element of a financial plan that describes projected capital spending and the At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the Average accounting returnThe average project earnings after taxes and depreciation divided by the average Average age of accounts receivableThe weighted-average age of all of the firm's outstanding invoices. Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Balance of paymentsA statistical compilation formulated by a sovereign nation of all economic transactions Balance of tradeNet flow of goods (exports minus imports) between countries. Balance sheetAlso called the statement of financial condition, it is a summary of the assets, liabilities, and Balance sheet exposureSee:accounting exposure. Balance sheet identityTotal assets = Total Liabilities + Total Stockholders' Equity Balanced fundAn investment company that invests in stocks and bonds. The same as a balanced mutual fund. Balanced mutual fundthis is a fund that buys common stock, preferred stock and bonds. The same as a Bank collection floatThe time that elapses between when a check is deposited into a bank account and when the funds are available to the depositor, during which period the bank is collecting payment from the payer's bank. Bank discount basisA convention used for quoting bids and offers for treasury bills in terms of annualized Basic balanceIn a balance of payments, the basic balance is the net balance of the combination of the current Basic business strategiesKey strategies a firm intends to pursue in carrying out its business plan. BasisRegarding a futures contract, the difference between the cash price and the futures price observed in the Basis pointIn the bond market, the smallest measure used for quoting yields is a basis point. Each percentage Basis pricePrice expressed in terms of yield to maturity or annual rate of return. Basis riskThe uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for Best-interests-of-creditors testThe requirement that a claim holder voting against a plan of reorganization Bond-equivalent basisThe method used for computing the bond-equivalent yield. Bullet contractA guaranteed investment contract purchased with a single (one-shot) premium. Related: Business cycleRepetitive cycles of economic expansion and recession. Business failureA business that has terminated with a loss to creditors. Business riskThe risk that the cash flow of an issuer will be impaired because of adverse economic CableExchange rate between British pounds sterling and the U.S.$. Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance CallableA financial security such as a bond with a call option attached to it, i.e., the issuer has the right to Capital accountNet result of public and private international investment and lending activities. Capital asset pricing model (CAPM)An economic theory that describes the relationship between risk and Capitalization methodA method of constructing a replicating portfolio in which the manager purchases a Capitalization tableA table showing the capitalization of a firm, which typically includes the amount of Cash settlement contractsFutures contracts, such as stock index futures, that settle for cash, not involving Changes in Financial PositionSources of funds internally provided from operations that alter a company's Collection floatThe negative float that is created between the time when you deposit a check in your account Collection fractionsThe percentage of a given month's sales collected during the month of sale and each Collection policyProcedures followed by a firm in attempting to collect accounts receivables. Collective wisdomThe combination of all of the individual opinions about a stock's or security's value. Company-specific riskRelated: Unsystematic risk Comparative credit analysisA method of analysis in which a firm is compared to others that have a desired Compensating balanceAn excess balance that is left in a bank to provide indirect compensation for loans Completion undertakingAn Undertaking either (1) to complete a project such that it meets certain specified Compounding periodThe length of the time period (for example, a quarter in the case of quarterly Concentration accountA single centralized account into which funds collected at regional locations Conditional sales contractsSimilar to equipment trust certificates except that the lender is either the Consumer creditcredit granted by a firm to consumers for the purchase of goods or services. Also called Contingent deferred sales charge (CDSC)The formal name for the load of a back-end load fund. Continuous random variableA random value that can take any fractional value within specified ranges, as ContractA term of reference describing a unit of trading for a financial or commodity future. Also, the actual Contract monthThe month in which futures contracts may be satisfied by making or accepting a delivery. Convertible exchangeable preferred stockConvertible preferred stock that may be exchanged, at the Corporate taxable equivalentRate of return required on a par bond to produce the same after-tax yield to Covered call writing strategyA strategy that involves writing a call option on securities that the investor CreditMoney loaned. Credit analysisThe process of analyzing information on companies and bond issues in order to estimate the Credit enhancementPurchase of the financial guarantee of a large insurance company to raise funds. Credit periodThe length of time for which the customer is granted credit. Credit riskThe risk that an issuer of debt securities or a borrower may default on his obligations, or that the Credit scoringA statistical technique wherein several financial characteristics are combined to form a single Credit spreadRelated:Quality spread Crediting rateThe interest rate offered on an investment type insurance policy. CreditorLender of money. Cumulative Translation Adjustment (CTA) accountAn entry in a translated balance sheet in which gains Current accountNet flow of goods, services, and unilateral transactions (gifts) between countries. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |