What is a Financial Intermediary? A financial intermediary refers to an institution that acts as a middleman between two parties in order to facilitate a financial transaction. The institutions that are commonly referred to as financial intermediaries include commercial banks, investment banks, mutual funds, and pension funds. They reallocate uninvested capital to productive sectors of…
What is the Net Debt-to-EBITDA Ratio? Net debt-to-EBITDA is a leverage ratio that compares a company’s liabilities in the form of net debt to its “cash flow,” in the form of EBITDA (stands for earnings before interest, taxes, depreciation and amortization). Credit rating agencies and creditors rely on cash flows to measure the financial health…
What is Cash Ratio? The cash ratio, sometimes referred to as the cash asset ratio, is a liquidity metric that indicates a company’s capacity to pay off short-term debt obligations with its cash and cash equivalents. Compared to other liquidity ratios such as the current ratio and quick ratio, the cash ratio is a stricter, more conservative…
What is Real Estate Project Finance? Project finance is long-term financing of an independent capital investment, which are projects with cash flows and assets that can be distinctly identified. Real estate project finance is a classic example. Other examples of project finance include mining, oil and gas, and buildings and constructions. Real estate project finance cash…
What Are Financial Ratios? Financial ratios are calculations that compare two or more figures from a company’s financial statements to measure performance and financial health. Analysts, investors, and managers use financial ratios to understand how well a company can meet debt obligations, generate profits, and use resources effectively. Ratios also make it easier to compare…
What are Proceeds? Proceeds refers to the cash received from the sale of goods or assets during a particular period. The total is obtained by multiplying the quantities sold by the selling price per unit. The proceeds received before any deductions are made are known as gross proceeds, and they comprise all the expenses incurred…
What is a Credit Score? A credit score is a number representative of an individual’s financial and credit standing and ability to obtain financial assistance from lenders. Lenders use the credit score to assess a prospective borrower’s qualification for a loan and the specific terms of the loan. Essentially, it is used to determine the…
What is Leverage? In finance, leverage is a strategy that companies use to increase assets, cash flows, and returns, though it can also magnify losses. There are two main types of leverage: financial and operating. To increase financial leverage, a firm may borrow capital through issuing fixed-income securities or by borrowing money directly from a…
