What is Debt Service? Debt service refers to the total cash required by a company or individual to pay back all debt obligations. To service debt, the interest and principal on loans and bonds must be paid on time. Businesses may need to repay bonds, term loans, or working capital loans. In some cases, lenders…
What is Economic Growth? Economic growth is a broad term that describes the process of increasing a country’s real gross domestic product (GDP). The growth can be measured as an expansion of real GDP or gross national product (GNP) over a given period. With an increase in GDP or otherwise, the value of goods and…
What is a Depository Transfer Check (DTC)? A depository transfer check (DTC), also known as a depository transfer draft, is used when a third-party service provider collects daily receipts from an organization’s locations and deposits it at a concentration bank. Since an organization may expand its business and operate in several locations, it is convenient…
How Can One Invest in the S&P 500 Index? The S&P 500 Index measures the stock performance of 500 large companies listed on U.S. stock exchanges. It is not a fund that investors can put their money in. However, portfolio management companies offer funds that replicate the index. They are called S&P 500 index funds….
What is the Ticker Symbol for the S&P 500 Index? The S&P 500 index, or Standard & Poor’s 500, is a very important index that tracks the performance of the stocks of 500 large-cap companies in the U.S. The ticker symbol for the S&P 500 index is ^GSPC. The series of letters represents the performance…
What are Deferred Acquisition Costs (DAC)? In the insurance industry, deferred acquisition costs are the accumulated costs of acquiring new insurance contracts and amortizing them over the duration of the contracts. The portion of unrecoverable costs from premium receipts is capitalized as intangible assets on the balance sheet. Amortizing over the contract term aligns with…
What is the S&P 500 Index? The Standard and Poor’s 500 Index, abbreviated as S&P 500 index, is an index comprising the stocks of 500 publicly traded companies in the U.S. with the highest values of market capitalization. Market capitalization, or market cap, is the product of the number of outstanding shares of a company…
What is an Electronic Check? An electronic check is an electronic version of the conventional paper check. It is a form of online payment where money is withdrawn from one account and deposited into another account using the Automated Clearing House (ACH) network. Through an ACH merchant account, a business can collect payments for products…
What is Earmarking? Earmarking is the process of appropriating money aside for a specific purpose. The term is used in several contexts; for example, in congressional appropriations of taxpayer funds to individual practices like mental accounting. In the case of organizations, the term relates to how companies or governments budget spending. For individuals, earmarking can…
What is Deferred Compensation? Deferred compensation refers to that part of one’s contribution that is withheld and paid at a future date. Retirement plans and employee pensions are examples of deferred compensation. Employers usually withhold a fraction of employees’ compensation every month, accumulate it over time, and pay the lump sum amount on a date…
