A ratio that provides a measure of the solvency of a company; it consists of its net assets divided by its debt. Those companies with high asset cover are considered more solvent.
A borrower is a person who has received a loan and is obligated to repay the amount borrowed (principal) with interest and other fees, according to the loan terms.
Chattel paper is a legal document that shows both a debt and a security interest in or a lease of specific goods. It is essential in transactions involving personal property.
Debt is an amount of money borrowed by one party from another, which is often incurred by businesses and individuals to finance specific activities or projects.
A financial ratio illustrating the proportional relationship between a company's debt and its equity, reflecting its financial leverage and risk.
The debt/equity ratio is a financial metric that indicates the relative proportion of a company’s debt to its total equity. It demonstrates how leveraged a company is in terms of its debt financing compared to its equity financing.
The term 'delinquent' refers to a financial obligation that is payable but overdue and yet unpaid. It can apply to various forms of payments, such as credit card bills, mortgage payments, and taxes. Delinquent accounts can lead to penalties and interest charges and might affect the credit score of the individual or entity responsible for the payment.
A downpayment is the initial upfront portion of the total amount due for the purchase of property or goods, generally paid in cash, with the remaining balance being financed through debt.
A finance charge is a fee imposed for the privilege of deferring payment of a debt or for borrowing funds. It is commonly used in credit card transactions and loans.
A first lien is a legal right or claim against a property that is recorded before other liens or claims. It takes precedence over any subsequent liens in the event of foreclosure.
Gearing ratios, also known as leverage ratios, measure the relationship between a company's capital structure, particularly its debt and equity. These ratios are crucial for assessing a company's financial stability and risk level.
A person or entity that guarantees, endorses, or provides indemnity agreements with respect to debts owed by another party. The guarantor ensures the debt will be repaid, and any losses incurred are deductible when sustained.
Hybrid Financial Instruments are synthetic financial instruments formed by combining two or more individual financial instruments, such as a bond with a warrant attached. They blend features of both debt and equity, providing the benefits of both categories.
An individual or firm that extends money to a borrower with the expectation of being repaid, usually with interest, creating debt in the form of loans. Lenders are paid off before stockholders in the event of corporate liquidation.
A lien is a legal right or interest that a creditor has in the debtor's property, which lasts until the debt obligation is satisfied. It is a type of encumbrance used to secure the payment of a debt, judgment, mortgage, or taxes.
A lienholder is an individual or entity that has a lien on a particular piece of property or asset, essentially providing them with a right to keep possession of it until a debt owed by the owner is discharged.
A loan is a financial transaction where a lender provides property, typically money, to a borrower, who promises to return the property with interest after a specified period.
A Loan Creditor is an individual or institution that provides financing to a business or individual, thereby becoming entitled to repayment of the principal amount along with interest.
Long-term liabilities are any financial obligations or debt that are not payable on demand or within one year. These can include loans, bonds payable, mortgages, and other financial obligations.
Finance that lies between pure equity and pure debt, often used in management buy-outs. It can take various forms, is usually provided by specialist financial institutions, and offers higher returns than pure debt but lower returns than equity.
A mortgage is a legal agreement by which a sum of money is lent to a borrower for purchasing property, with the property serving as collateral. The borrower is the mortgagor, and the lender is the mortgagee.
A mortgage note is a legal document that states the names of the borrower and lender, the amount borrowed, the interest rate, repayment terms, and other loan provisions. While the mortgage pledges the property as collateral, the mortgage note outlines the debt and the repayment requirements.
A note or note payable is a written document that acknowledges a debt and contains a promise to pay a specified sum to a certain party by a certain date. Maturity terms can be definite or become definite over time.
An obligation is a commitment undertaken by a person or entity to adhere to the conditions defined in a contract or to repay a specified debt.
An obligor is a person or entity that has a legal or contractual obligation to another party. This term is often used in legal and financial contexts, particularly in relation to bonds, loans, and other forms of debt.
An Outstanding Balance is the amount of money currently owed on a debt. This figure represents the total unpaid portion of a loan, credit card, or other financial liability at any given time.
Credit given, evidenced by a written obligation that is backed by property; slang for debt, often used in contexts such as seller financing.
Payment refers to the satisfaction of a claim or debt usually through the delivery of money in fulfillment of an obligation.
A payment on account is an advance payment or part payment towards an outstanding balance or debt, typically not linked to any specific invoice. It is often used in ongoing business relationships where frequent transactions occur.
Permanent financing refers to long-term financing options available in both corporate finance and real estate, ensuring sustained capital over extended periods through debt or equity instruments.
A recourse loan is a type of loan in which the lender has the right to pursue the borrower's other assets beyond the collateral if the borrower fails to meet the repayment terms.
Releveraging refers to the process of increasing the level of debt in the capital structure of a business. This financial strategy is often used to enhance returns on equity by leveraging borrowed funds.
A secured liability is a debt against which the borrower has pledged sufficient assets as collateral to protect the lender in case of default.
A transaction based on a security agreement that concerns a security interest, whereby personal or real property is pledged as collateral for performance or for a debt.
Shareholder debt refers to the financial obligations incurred by a company to its shareholders, where interest paid on this debt is tax-deductible. It is commonly used in highly leveraged funding arrangements typically associated with private equity firms.
Trade creditors refer to suppliers or vendors to whom a business owes money for goods or services delivered but not yet paid for. These obligations are part of trade payables on a company's balance sheet.
An unsecured creditor is an entity to whom money is owed by an organization but does not have any specific collateral or asset to lay claim on in the event of bankruptcy or non-payment.
