What is Return on Total Capital (ROTC)? Return on Total Capital (ROTC) is a return on investment ratio that quantifies how much return a company has generated through the use of its capital structure. The ROTC ratio is different from return on common equity (ROCE), as the former quantifies the return a company has made…
What is the Times Interest Earned Ratio (Cash Basis)? The Times Interest Earned (Cash Basis) (TIE-CB) ratio is very similar to the Times Interest Earned Ratio. Times Interest Earned (Cash Basis) measures a company’s ability to make periodic interest payments on its debt. The main difference between the two ratios is that Times Interest Earned…
What is a Currency Swap Contract? A currency swap contract (also known as a cross-currency swap contract) is a derivative contract between two parties that involves the exchange of interest payments, as well as the exchange of principal amounts in certain cases, that are denominated in different currencies. Although currency swap contracts generally imply the…
What is an Equity Swap Contract? An equity swap contract is a derivative contract between two parties that involves the exchange of one stream (leg) of equity-based cash flows linked to the performance of a stock or an equity index with another stream (leg) of fixed-income cash flows. In equity swap contracts, the cash flows…
What is Review Engagement? A review engagement is also known as a limited assurance or negative engagement. Auditors conduct a review engagement after an accountant’s completed an audit of a company’s financial statements, and therefore, the auditor provides limited assurance on the accuracy of the financial statements. During the engagement, the auditor performs inquiry and…
What is a Compilation Engagement? A compilation engagement is a service provided by an outside accountant to assist the management in the presentation of financial data in the form of financial statements. The accountant should possess a greater knowledge of the operations of the business in order to compile the financial statements. In some cases,…
What are Retail REITs? Retail REITs are a type of REIT that owns and manages retail properties in central business districts and upmarket areas. It leases the retail space to tenants looking to set up shopping malls, grocery stores, boutiques, etc. Retail REITs make money by leasing space to tenants, who pay monthly, quarterly, or…
What is Credit Report Analysis? Credit report analysis involves evaluating the information contained in a credit report, such as the personal details of a customer, their credit summary, any inquiries made, foreclosures and repossessions, and public records on bankruptcies. A credit report provides a credit record of an individual or corporate entity. It helps the…
What are Credit Analyst Skills? An individual needs to possess key credit analyst skills in order to be effective in the role. A credit analyst is required to assess a loan application to determine the creditworthiness of a client and make recommendations on whether or not to lend. For a credit analyst to perform his/her…
