Definition of Residual claim

Residual claim

Related: equity claim

Equity claim

Also called a residual claim, a claim to a share of earnings after debt obligation have been
satisfied.

Stockholder's equity

The residual claims that stockholders have against a firm's assets, calculated by
subtracting total liabilities from total assets.

Claim dilution

A reduction in the likelihood one or more of the firm's claimants will be fully repaid,
including time value of money considerations.

Claimant

A party to an explicit or implicit contract.

Contingent claim

A claim that can be made only if one or more specified outcomes occur.

Disclaimer of opinion

An auditor's statement disclaiming any opinion regarding the company's financial
condition.

Marketed claims

claims that can be bought and sold in financial markets, such as those of stockholders and
bondholders.

Nonmarketed claims

claims that cannot be easily bought and sold in the financial markets, such as those of
the government and litigants in lawsuits.

Residuals

1) Parts of stock returns not explained by the explanatory variable (the market-index return). They
measure the impact of firm-specific events during a particular period.
2) Remainder cash flows generated by pool collateral and those needed to fund bonds supported by the collateral.

Residual assets

Assets that remain after sufficient assets are dedicated to meet all senior debtholder's claims in full.

Residual dividend approach

An approach that suggests that a firm pay dividends if and only if acceptable
investment opportunities for those funds are currently unavailable.

Residual losses

Lost wealth of the shareholders due to divergent behavior of the managers.

Residual method

A method of allocating the purchase price for the acquisition of another firm among the
acquired assets.

Residual risk

Related: unsystematic risk

Residual value

Usually refers to the value of a lessor's property at the time the lease expires.

Residual income (RI)

The profit remaining after deducting from profit a notional cost of capital on the investment in a business or division of a business.

Residual Value

The value attributed to a company to represent all future cash flows
after the end of the forecast period

residual income

the profit earned by a responsibility center that exceeds an amount "charged" for funds committed to that center

residual income

Also called economic value added. Profit minus cost of capital employed.

Unclaimed Pay

Net pay not collected by an employee, which is typically transferred
to the local state government after a mandated interval has passed from
the date of payment.

Preferred Stock Stock that has a claim on assets and dividends of a corporation that are prior

to that of common stock. Preferred stock typically does not carry the right to vote.

Residual Value

Typically estimated based on the present value of the after-tax cash flows expected to be earned after the forecast period.

Claim

Request for payment of benefits under the terms of an insurance policy.

Claimant

Person or party making request for payment of benefits under the terms of an insurance policy.

Shareholders' Equity

The residual interest or owners' claims on the assets of a corporation
that remain after deducting its liabilities.

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