A credit order is a transaction where goods or services are provided without immediate payment, rather, billing occurs at a subsequent time. This is a standard practice in many business transactions.
An assessment of the creditworthiness of an individual or a firm, indicating the extent to which they can safely be granted credit. It is a crucial element in financing and investing decisions.
Credit rationing refers to the allocation of loans to creditworthy borrowers by means other than pure market mechanisms. This often occurs when interest rates are maintained below the level that an unregulated market would set, resulting in excess demand for loans.
Standards established by creditors that must be satisfied by potential debtors in order for credit to be given, typically reflecting the applicant's ability to repay the loan or make payments for goods or services acquired.
Credit risk refers to the potential that a borrower or counterparty will fail to meet its obligations in accordance with agreed terms. This concept is crucial for lenders and investors as it impacts the stability and profitability of financial institutions and markets.
A sale made on terms in which cash is to be paid at an agreed future date. As the debtors, who are customers to whom credit sales have been made, pay, the debtors' control account balance will be reduced.
Credit Scoring is an objective methodology used by credit grantors to determine how much credit to grant to an applicant. Various factors like income, assets, employment history, residence stability, and past credit behavior are considered.
Credit standing refers to the reputation an individual or business earns for paying debts. It relates to the perceived reliability in fulfilling financial obligations based on past behavior.
A shopping center or office building tenant that is large enough, old enough, and financially strong enough to be rated at least investment grade by one of the major credit rating services. A property leased to such a tenant may obtain mortgage financing underwritten on the basis of the tenant's likelihood of honoring its lease.
A credit transfer is a system that enables the transfer of money from one bank account to another, based on instructions given by the payer, detailing the receiver’s sort code and account number.
A credit union is a not-for-profit financial institution, typically formed by employees of a company, a labor union, or a religious group, and operated as a cooperative.
Credit Watch is a term used by bond rating agencies to indicate that a company's credit is under review and its rating is subject to change. The implication is that if the rating is changed, it will typically be lowered, usually due to an event that adversely affects the income statement or balance sheet.
A creditor is an entity that is owed money, either for goods or services provided or as a result of a loan. Creditors have a legal right to claim the owed amount from the debtor.
Creditor-days ratio provides an estimate of the average number of days credit an organization takes before paying its creditors. It's an essential measure of financial stability and cash flow management.
Creditors are individuals or entities to whom an organization or an individual owes money, such as unpaid suppliers of raw materials. Effective management of creditor payments is essential for maintaining credit periods and securing prompt-payment discounts.
Fixed capital of a company which gives confidence to creditors for investing in the company by providing assurance of a stable capital base.
A creditors' ledger is a memorandum ledger account used to track individual creditors' accounts, contributing to internal control by recording and comparing transactions with the nominal ledger.
A comprehensive guide covering the definition, examples, FAQs, related terms, online resources, and suggested books for further study on Creditors' Ledger Control Account, also known as Purchases Ledger Control Account.
Creditors' Voluntary Liquidation (CVL) is the process of winding up a company by a special resolution of its members when the company is insolvent. It involves a meeting with creditors and appointing a liquidator to manage the liquidation process.
Creditors' Voluntary Liquidation (CVL) is a process whereby the directors of a company make the decision to voluntarily liquidate the company to pay off its debts, with the creditors actively participating in and overseeing the liquidation process.
An assessment of a person's or a business's ability to pay for goods purchased or services received. Creditworthiness is often represented by a credit rating, which provides lenders insight into the risk of extending credit to the borrower.
A corporate philosophy that guides the way a company does business. It encompasses the company's values, mission, and principles, influencing decision-making, behavior, and company culture.
Creeping inflation refers to slow but continuous inflation that appears manageable over short periods but can lead to substantial long-term price increases if left unchecked.
CREST is an electronic share settlement system established by the Bank of England in 1996, revolutionizing the way securities transactions are settled in the UK by enabling electronic registration and instantaneous settlement, ultimately streamlining dividend payments and eliminating the need for paper certificates.
A crime is an act that the government has determined to be injurious to the public and which can therefore be prosecuted in a criminal proceeding. Crimes encompass felonies and misdemeanors.
Criminal liability pertains to the culpability for an offense that constitutes a criminal act, causing harm to the government or society. Criminal acts are prosecuted by the state, and insurance generally does not cover criminal liability as it could incentivize unlawful behavior.
Crisis management is a systematic approach to mitigating potentially severe outcomes in various critical situations, including disaster response for aircraft, naval incidents, fire emergencies, and flood protection.
Critical mass refers to the size or scale at which a business activity acquires self-sustaining viability.
Critical Path Analysis (CPA), also known as Critical Path Method (CPM), is a decision-making technique used to determine the minimum time necessary to complete a project by identifying the longest sequence of dependent activities from initiation to completion.
The Critical Path Method (CPM) is a planning and control technique that optimizes the order of steps in a process given the costs associated with each step. It is widely used in the manufacturing industry to plan and control the complete process of material deliveries, paperwork, inspections, and production.
In statistical hypothesis testing, the critical region refers to the set of values for the test statistic that leads to the rejection of the null hypothesis.
The Critical-Path Method (CPM) is a step-by-step project management technique for process planning that defines critical and non-critical tasks to minimize schedule delays and time-cost trade-offs.
Crony capitalism refers to an economic system characterized by close, mutually advantageous relationships between business leaders and government officials.
A core terminological aspect of South Asian finance representing a unit in the Indian numbering system, which equals ten million (10,000,000) in the International System.
A securities transaction in which the same broker acts as agent on both sides of the trade. The practice, called 'crossing,' is legal only if the broker first offers the securities publicly at a price higher than the bid.
Cross merchandising is a retail strategy involving the display of complementary products together to increase sales. This technique, often used in supermarkets, aims to encourage customers to purchase related items.
Cross merchandising refers to the practice of displaying items from different product categories together in order to drive additional sales and enhance the overall shopping experience.
A Cross Purchase Plan is a life insurance strategy used among business partners. Each partner buys a life insurance policy on the other partners to ensure business continuity and facilitate buyouts in the event of a partner's death.
A cross rate refers to the exchange rate between two currencies which is derived from their individual exchange rates with a third currency, often the US dollar.
Cross tabulation, also known as contingency table analysis, is a statistical technique used to establish an interdependent relationship between two or more tables of values, without identifying a causal relationship. This method is widely utilized in data analysis to compare and understand the relationship between two categorical variables.
A cross-default clause in a loan agreement that stipulates that a default on one loan can trigger defaults on other loans held by the same borrower.
Cross-footing is a verification process used in spreadsheets where the sums of rows and columns of numbers are compared to ensure accuracy.
Cross-functional teams are employee teams consisting of individuals from two or more functional organizational areas who work together to achieve a common goal.
Cross-price elasticity measures the extent to which the price of a specified good is affected by the price of another complementary or substitute good. It is a crucial concept in microeconomics that helps understand the interdependencies between different products in the market.
Cross-sectional analysis involves comparing the accounting ratios of one company with those of its peers to assess profitability, liquidity, and capital structure. This method helps in determining a company's performance relative to its competitors.
A crossed cheque is a cheque that has two parallel lines drawn across its face with the purpose of instructing the bank that the cheque should only be deposited directly into a bank account and not immediately cashed by the bank over the counter.
A group of exchange members with a defined area of function, tending to congregate around a trading post pending execution of orders, including specialists, floor traders, odd-lot dealers, and other brokers, as well as smaller groups with specialized functions.
Crowdfunding refers to the financing of a new company or other project by selling shares or bonds directly to small private investors via the Internet. Despite its attractions, there have been fears that this growing practice offers scant legal protection to investors or to entrepreneurs, who may find their ideas are stolen and developed by others. In the UK and the USA, crowdfunding platforms have increasingly been brought within the remit of the regulatory authorities.
Crowding out occurs when heavy federal borrowing leads to higher interest rates, which subsequently reduces the borrowing ability of businesses and consumers.
A Crown Jewel Option is a defensive strategy used by companies to prevent hostile takeovers by giving a partner or friendly company the right to buy some of its best assets at a favorable price if a takeover were successful.
In corporate mergers and acquisitions, the term 'crown jewels' refers to the target company's most desirable and valuable properties. The disposal or sale of these assets can significantly reduce the company's overall value and attractiveness as a candidate for takeover.
A Crown loan is a demand loan extended to children or parents of the lenders, named after Chicago industrialist Harry Crown. Originally interest-free, such loans are now regulated to include a market rate of interest or they are subject to gift taxes.
A slang term referring to a work situation where a deadline is near, and employees are working intensely, often with extended hours. This situation usually results from time estimates made by management rather than genuine emergencies.
A dead-end street with a single entrance and a turning circle at the closed end, commonly used in residential subdivision design to increase privacy and reduce traffic.
Culpable means deserving of moral blame or punishment; at fault. One is considered culpable when they have acted with indifference to consequences and to the rights of others.
A comprehensive look at cum dividend, cum rights, and cum warrant stock scenarios, covering the stipulations for buyers to be eligible for declared distributions upon purchasing stock. This article also addresses related terms such as the ex-dividend date.
Cum rights refer to trading shares that include the rights or entitlements attached to securities, typically related to dividends or other special benefits. Investing in cum rights allows shareholders to receive upcoming dividends or participate in other corporate actions.
The Cumulative Bulletin (CB) is a hardbound compilation that consolidates material found in the Internal Revenue Bulletin (IRB) and is typically issued on a semiannual basis.
A cumulative dividend is a feature often associated with preferred stock, entitling holders to receive dividends in arrears before any dividends can be paid to common stockholders.
Cumulative liability is the total of the limits of liability that an insurer or reinsurer has outstanding on a single risk. It includes all contracts from various insurers and covers all lines of coverage for that risk.
A type of preference share that entitles the owner to receive any dividends not paid in previous years, guaranteeing eventual payment before ordinary shares are addressed.
Cumulative Preferred Stock is a type of preferred stock where omitted dividends must be paid out before any dividends can be paid to common stockholders.
Cumulative voting is a system of stockholder voting for a board of directors that allows all votes an individual is eligible to cast to be cast for a single candidate. This system is designed to give minority stockholders representation on the board.
Curable Depreciation in appraisal refers to deterioration or depreciation that can be corrected at a cost less than the value that will be added.
Curb Exchange, also known as the American Stock Exchange, refers to an organized market where securities, commodities, currencies, and bonds are traded directly between brokers or via telecommunication systems.
Currency refers to various forms of money that are in circulation within an economy, serving as a medium of exchange for goods and services.
Currency appreciation refers to an increase in the value of a currency relative to another currency, while currency depreciation refers to a decrease in the value of a currency relative to another currency. These concepts are pivotal in international trade, impacting everything from import/export prices to inflation rates.
Currency futures are contracts in the futures markets for delivery in a major currency such as U.S. dollars, Euros, or Japanese yen. Corporations that sell products globally can hedge against adverse exchange rate movements using these futures.
Currency in circulation refers to the paper money and coins that are circulating within an economy and are counted as part of the total money supply, which also includes demand deposits in banks.
Currency risk, also known as exchange-rate risk or foreign exchange risk, arises from the fluctuation in the exchange rate between two currencies, impacting the value of investments or transactions made in foreign currencies.
A currency swap involves the exchange of principal and interest in one currency for the same in another currency, often to reduce exposure to foreign exchange risk and interest rate risk.
The term 'current' is often used to denote anything that is not overdue or is occurring within the current period or time frame.
A current account serves as an active account in the banking system where you can deposit and withdraw money via various mediums. It's crucial for personal, business, and international financial management.
A current asset refers to cash, accounts receivable, inventory, and other assets that are likely to be converted into cash, sold, exchanged, or expensed in the normal course of business, usually within a year.
Current assets, also known as circulating assets, circulating capital, or floating assets, are the assets of an organization that form part of the working capital and are constantly changing their form as they circulate from cash to goods and back to cash again.
Current Cash Equivalent (CCE) is a financial concept that refers to the amount of cash or cash-equivalent assets that a company holds, which can be quickly converted into cash without significant loss of value.
In continuously contemporary accounting, Current Cash Equivalent (CCE) refers to the measure of assets and liabilities in terms of their current cash value.
Current cost refers to a cost calculated to take into account current circumstances of cost and performance levels. It represents the amount required at current prices to purchase or manufacture an asset, possibly adjusted for inflation.
Current dollars refer to the cost of an asset in terms of today’s price level, adjusted for inflation. For example, if today the Consumer Price Index (CPI) is 180, an automobile that cost $20,000 when the CPI base was 100 would cost $36,000 in current dollars.
In calculating a corporation's Current Earnings and Profits (E&P), nontaxable or tax-exempt income is added to the taxable income for the tax year. Current E&P, if not paid out, transitions into Accumulated E&P. Distributions are first taken from current E&P, and then from accumulated E&P. These distributions are taxable to shareholders to the extent of current and accumulated E&P.
Monthly data on national employment and unemployment, wages, and earnings across all non-agriculture industries, providing key economic indicators.
Current liabilities are amounts owed by a business to other organizations and individuals that should be paid within one year from the balance-sheet date, including trade creditors, bills of exchange payable, and short-term loans.
In accounting, current liabilities are obligations of a company that are expected to be settled within one year or within the operating cycle, whichever is longer. Current liabilities are used to gauge a company’s short-term liquidity and are listed on the balance sheet.
Current liabilities are debts or obligations that a company expects to pay off within one year as part of normal business operations. Examples include accounts payable, short-term loans, and the current portion of long-term loans.
An estimation of the financial worth of a property if it were to be sold in the present-day market, factoring in current economic conditions, comparable property sales, and general real estate trends.
Current Purchasing Power (CPP) Accounting is a method of accounting that adjusts financial statements to reflect the effects of changes in the purchasing power of money. It aims to provide more accurate and relevant information during periods of inflation.
Current Purchasing Power Accounting is an accounting method that adjusts financial statements for changes in the general price level to maintain the purchasing power of shareholders' capital.
The ratio of a business's current assets to its current liabilities, expressed as x:1. This metric helps gauge the liquidity of a company, indicating its ability to meet short-term obligations.
Current Replacement Cost refers to the expense involved in replacing an asset or the services it provides, calculated at the balance-sheet date. Determining this cost can be challenging, especially if the asset is obsolete.
A cost, income, or performance standard based on current operating conditions and established for use over a short period of time in accounting and finance.
Current Value Accounting (CVA) is a method aimed at providing an income statement and balance sheet in terms of current dollars, enhancing the quality of financial information during times of inflation.
Current yield is the annual interest on an investment divided by its market price, providing a snapshot of the bond’s rate of return relative to its current price rather than its face value or yield to maturity.
An investment (e.g., shares) intended to be held for less than one year. See also fixed-asset investment.
Current-Cost Accounting (CCA) adjusts the value of assets and profits to account for changes in prices over time, providing a more accurate reflection of a company’s financial position.
Current-Cost Accounting (CCA) is an accounting approach focusing on the operating capability of a business, ensuring assets are valued to prevent business loss upon their deprivation. This method highlights adjustments for inflation and operational capacity, differentiating holding gains from operating profits.
Current-cost depreciation is a depreciation charge calculated on the current cost of an asset rather than its historical cost. It adjusts for changes in the value of assets over time to ensure financial statements reflect more accurate asset values.
Current-Cost Operating Profit is the amount remaining after adjustments for cost of sales, depreciation, and working capital in current-cost accounting.
Current-value accounting is a method that values assets based on their current market value, taking into account changes in specific prices rather than general price levels. This technique is essential for providing a more precise and timely reflection of an entity's financial situation.
The current-year basis is an accounting principle used for tax assessment in the UK, wherein profits are taxed in a fiscal year based on the profits arising in the accounts for the period ending within that same tax year.
A biographical résumé of an individual's career, including educational credentials and professional experience. Its purpose is to give prospective employers an understanding of the applicant's professional abilities.
