Debt, long-term

Long-term debt = total debt — current debt Long-term debt = 0.26 As — 0.14 As = 0.12 As... 

Debt Financing In practice, debt financing covers a variety of fixed-income securities, both long-term and short-term. The most common forms of long-term debt are bonds, mortgages, and debentures. 

Net inventory 24.6 Current maturities long-term debt 2.1... 

The profit of 10 percent, indicated by ratio 3 in Table 9-26, will be reduced by any dividend due to preferred stockholders, because such payments are not part of fixed-debt expenses the residue is shared among the ordinaiy stockholders. If all the long-term debts were in redeemable 6 percent preferred shares, then (from ratio 3) the net annual profit (aftertax) is Av.vp = 0.10(0.40 A ), or 0.04 A. Interest due on preferred shares is 0.06(0.12 As), or 0.0072 As- Therefore, the earnings for the ordinaiy shares are... 

The accounting definition of woridng capital is total current assets minus total current liabilities. This information can be found from the balance sheet. Current assets consist chiefly of cash, marketable securities, accounts receivable, and inventories current liabilities include accounts payable, short-term debts, and the part of the long-term debt currently due. The accounting definition is in terms of the entire company. 

Bond A long-term debt-type of security generally issued by corporations or governments to generate cash. The coupon rate is the interest rate paid to the bondholder. The maturity date is when the face value of the bond will be paid to the bondholder. 

Liabilities are often categorized as current and long term. Current liabilities include debts that must be paid within a year. These might include the following credit-card balances, balance due on your automobile loan, tax payments, and insurance premiums. Long-term liabilities include such items as mortgage and student loans. 

Modem balance sheets often use the general term liabilities in place of equities. Current liabilities are grouped together and include all liabilities such as accounts payable, debts, and tax accruals due within 12 months of the balance-sheet date. The net working capital of a company can be obtained directly from the balance sheet as the difference between current assets and current liabilities. Other liabilities, such as long-term debts, deferred credits, and reserves are listed under separate headings. Proprietorship, stockholders equity, or capital stock and surplus complete the record on the equity (or liability) side of the balance sheet. 

Accounts receivable Inventory 0.167 As 0.140 As Long-term debt 0.120 As... 

Solvency refers to an enterprise s ability to meet its long-term debt obligations on a continuing basis. All financial statement users are interested in the liquidity of a firm in addition to the obvious liquidity concerns of creditors and management. Will the firm be able to pay its short-term debts as they become due Can the firm cover its current liabilities with its current assets Does the firm have an efficient mix of current assets, e.g., cash and inventory Do owners and management properly use the current assets To effectively answer these and other financial questions, it is necessary to use the following financial tools. 

Long-term financial condition (ability to pay long-term debts)... 

The cash flow from financing activities section summarizes changes in the company s long-term and short-term debt, proceeds from issues of common stock, repurchase of stocks, and dividends paid to stockholders. 

Most debt capital is raised by issuing long-term bonds. A mortgage is a bond that is backed by pledging a specific real asset as security against the loan. An unsecured bond is called a debenture. The ratio of total debt divided by total assets is known as the debt ratio (DR) or leverage of the company. 

The dust of the recent economic implosion has yet to settle. Capital assets and fortunes have been dreamed up, liquidated, and lost more times than any industrial-size paper shredder can handle in a lifetime. Analysts and investors will bear for years the burden of ignoring the high debt loads of many of the now-fallen giants of technology. Former executives and employees of now defunct companies will continue to battle in the courts for years. Fewer CEOs stay with their company for the long term,10 while the media and the public have hotly debated whether corporate returns have kept up with hyperbolic CEO pay.11 The number of business failures has been... 

The International Directory s sketch of Luhrizol in 1988 begins thus When scrutinizing Luhrizol, the world s largest manufacturer of petroleum additives, industry analysts have to pinch themselves to make sure they aren t dreaming. Until recently, the company had no long-term debt. ... 

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