Involves how much a company owes in obligations. If the ratio is high, the company holds more debt. Adversely, the company does not have that much debt if the ratio is low.
Arrangement in which a firm exchanges its newly-issued common stock for its already-issued bonds. See also debt for export swap.
Measure of a firm's leverage or gearing and its capacity for debt repayment, it indicates proportion of firm's total capital contributed by trade creditors and lenders. Formula: Total debt ÷ owners' equity. Also called leverage ratio or gearing ratio.
Ratio that measures a firm's ability to absorb losses, without reducing its ability to service existing debt. Lower this ratio, greater the size of buffer available to creditors/lenders. Formula: (Accounts payable + Long-term debt + Other loans) ÷ Total net worth.
Reserve established to service interest and principal payments on short- and long-term debt. Also called a debt service fund.
Amount required to service all debts during a period, usually one year.
Reserve established to service interest and principal payments on short- and long-term debt. Also called a debt service reserve fund, or sinking fund.
The cash flow minimum requirement of a corporation that is needed in order to meet debt payment obligations. Can also be a requirement of the government in the amount that is needed to make payments on the debts of the country overall.
