Debtor days is the average number of days required for a company to receive payment from its customers for invoices issued to them. A larger number of debtor days means that a business must invest more cash in its unpaid accounts receivable asset, while a smaller number implies that there is a smaller investment in…
The debt to assets ratio indicates the proportion of a company’s assets that are being financed with debt, rather than equity. The ratio is used to determine the financial risk of a business. A ratio greater than 1 shows that a considerable proportion of assets are being funded with debt, while a low ratio indicates…
The debt-to-equity ratio shows the proportion of equity and debt a company is using to finance its assets and the extent to which shareholder’s equity can fulfill obligations to creditors in the event of a business decline. A low debt-to-equity ratio indicates a lower amount of financing by debt via lenders versus funding through equity…
A drawing account is an accounting record maintained to track money withdrawn from a business by its owners. A drawing account is used primarily for businesses that are taxed as sole proprietorships or partnerships. Owner withdrawals from businesses that are taxed as separate entities must generally be accounted for as either compensation or dividends.
The sale of a business’ invoices to a third party. The third party is charged with processing the invoices, and the business lending the invoices is able to receive loans based on the expected payments on the invoices.
A written report that presents the findings of the Due Diligence Investigation including the entity’s background and financial condition, business operations and contractual obligations and in some cases, recommended strategies.
An investigation of a business or person or the audit of a potential investment. It refers to reasonable steps sometimes taken to satisfy a legal requirement especially before making a sale or a purchase, or prior to signing a contract. This also applies to voluntary investigations such as where a potential acquirer evaluates a target…
A recession that experiences limited positive growth (or short-lived recovery) then dips back into recession.
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