What is Excess Cash Flow? Excess cash flow refers to the cash held by a company that can trigger a mandatory repayment of debt according to the company’s bond indenture. It is a term typically used in the restrictive covenants in loan agreements or bond indentures. Understanding Excess Cash Flow Debt is a cheap and…
What are Excess Reserves? Excess reserves refer to the cash held by a bank or other financial institution above the reserve requirement that an authority sets. The amount of excess reserves is equal to the total reserves reduced by the required reserves. Holding excess reserves leads to the opportunity cost of investing the cash for…
What is Stochastic RSI (StochRSI)? The stochastic RSI (StochRSI) is a technical indicator used to measure the strength and weakness of the relative strength indicator (RSI) over a set period of time. StochRSI derives its values from the RSI. Basically, a stochastic oscillator is applied to a set of RSI values; Hence, it is based…
What is a Stock Appreciation Right (SAR)? A Stock Appreciation Right (SAR) refers to the right to be paid compensation equivalent to an increase in the company’s common stock price over a base or the value of appreciation of the equity shares currently being traded on the public market. An SAR is a form of…
What is the Sticky Wage Theory? The sticky wage theory is an economic concept describing how wages adjust slowly to changes in labor market conditions. Unlike other markets where prices are dictated by supply and demand, wages tend to remain above equilibrium as employees resist wage cuts. Wages can remain sticky for a variety of…
What is Stochastic Modeling? In finance, stochastic modeling is used to estimate potential outcomes where randomness or uncertainty is present. By allowing for random variation in the inputs, stochastic models are used to estimate the probability of various outcomes. Stochastic modeling allows financial institutions to include uncertainties in their estimates, accounting for situations where outcomes…
What is the Expanded Accounting Equation? The expanded accounting equation breaks down shareholder’s equity (otherwise known as owners’ equity) into more depth than the fundamental accounting equation. It allows analysts and accountants to see the components of shareholder’s equity and how it impacts the company. It breaks down net income and the transactions related to…
What is the Sterling Overnight Interbank Average Rate (SONIA)? Sterling Overnight Interbank Average Rate (SONIA) is an unsecured overnight rate for wholesale funds for all sterling-denominated unsecured overnight funding deals in the British sterling market. SONIA facilitates the direct use of overnight funding deals in financial contracts across the sterling bond, loan, and derivative markets….
What is the Standard Industrial Classification (SIC)? The Standard Industrial Classification (SIC) is a four-digit classification system that classifies industries according to business activities. The SIC classification system was created in 1937 to help the U.S. government and government agencies analyze economic activities across the domestic economy. The SIC code assigned to a company was…
