Principal Payment
What is a Principal Payment? A principal payment is a payment toward the original amount of a loan that is owed. In other words, a principal payment is a payment made on a loan that reduces the remaining loan amount due, rather than applying to the payment of interest charged on the loan. In accounting...
Open Credit
What is Open Credit? Open credit is a pre-approved loan between a lender and a borrower. It allows the borrower to make repeated withdrawals up to a certain limit and then make subsequent repayments before the payments become due. Borrowers prefer open-end credit because it gives them greater control over the amount they can borrow...
Times Interest Earned
What is the Times Interest Earned Ratio? The Times Interest Earned (TIE) ratio measures a company’s ability to meet its debt obligations on a periodic basis. This ratio can be calculated by dividing a company’s EBIT by its periodic interest expense. The ratio shows the number of times that a company could, theoretically, pay its...
Times Interest Earned (Cash Basis)
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...
Credit Report Analysis
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...
