Banking & Finance

How is leverage measured?

Financial leverage is the amount of debt used by a company relative to the equity in its capital structure.  Financial leverage is measured by means of leverage ratios, these encom...


How is inventory valued?

The inventory valuation method chosen determines the cost of a firm’s inventory reflected in the cost of goods sold in the income statement and the value of inventory on the balanc...


How is expected loss determined?

The quantitative factors and risk components used to determine the expected loss on a credit exposure are probability of default (PD), loss given default (LGD) and exposure at defa...


How is equipment leasing secured?

A lease is not a secured transaction and is not subject to Article 9 of the US Uniform Commercial Code (UCC).  Since the lessor of commercial goods, such as equipment, owns the goo...


How is equipment leasing classified?

There is no standard for the definition and classification of equipment.  While the White Clarke Group reports on nine segments of equipment finance in its annual US auto and asset...


How is debt-service ability measured?

Any ratio that measures a firm’s ability to meet its debt obligations out of earnings is a coverage ratio.  The higher the ratio, the greater the ability of the firm to meet its de...


How is commercial real estate investment financing structured?

The LMA REF Document is commonly used for investing in commercial real estate in the UK and other European markets.  It serves as the standard for bilateral and syndicated transact...


How is commercial real estate investment finance secured?

Credit assessment of real estate investment facilities is based primarily on the loan-to-value of the properties and the net operating income that the properties generate. Special...


How is commercial real estate categorized?

The following is one of the various way in which CRE can be categorized: Office – Central business district (CBD) and suburban office buildings; Industrial – Heavy manufacturing, l...


How is cash flow measured?

A cash flow ratio is any ratio that measures the ability of a firm’s cash flow to support its operations, including: Cash-flow-from-operations ratio – Shows the levels of working c...


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