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In 1974, the economist Robert S. Merton proposed a model for assessing a company’s credit risk by modeling its equity capital as a call option on its assets. Merton’s model is used today by stock analysts, commercial loan specialists and others. The work of Merton and fellow economist Myron S. Scholes won the Nobel Prize in Economics in 1997. Quasi-Reorganization
September 25, 2022 Quasi-reorganization allows the company to eliminate the deficit of retained earnings by recalculating assets, liabilities and equity in the manner characteristic of bankruptcy. Zombie Debt
September 25, 2022 Zombie debt is debt that has expired for collection.
“Despite that, the collection agencies may try to collect the debt from him, in a sense, bring him back from the dead. Activity-Based Management (ABM)
September 25, 2022 Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses. Advance Payment
September 25, 2022 Advance payments are made before the goods or services are received. Agency Problem
September 25, 2022 An agency problem is a conflict of interest inherent in any relationship where one party is expected to act in the interests of the other. Allowance for Credit Losses
September 25, 2022 A credit loss allowance is an estimate of debt that a company is unlikely to be able to recover. Appropriation
September 25, 2022 Appropriation is the act of allocating money for a particular purpose. Asset Financing
September 25, 2022 Asset financing allows a company to obtain a loan by pledging its balance sheet assets. Asset-Liability Committee (ALCO)
September 25, 2022 Asset and Liability Management Committees (ALMCs) are responsible for overseeing the asset and liability management of a company or bank. Audit Committee
September 25, 2022 The Audit Committee consists of members of the company’s board of directors and oversees its financial reporting and reporting. BCG Growth-Share Matrix
September 25, 2022 The BCG Growth Share Matrix is an internal tool used by management to assess the current state of the value of a firm’s divisions or product lines. Bad Debt
September 25, 2022 Bad debt refers to loans or outstanding debt balances that are no longer considered recoverable and must be written off. Bail-In
September 25, 2022 A guarantee helps a financial institution that is on the verge of bankruptcy by demanding the cancellation of debts to creditors and depositors. Banker's Acceptance
September 25, 2022 Banker’s acceptance is a form of payment that is guaranteed by a bank and not by an individual account holder. Bridge Financing
September 25, 2022 Interim financing can take the form of debt or equity and can be used at the time of the IPO. Buy-In Management Buyout (BIMBO)
September 25, 2022 Management buyout (BIMBO) occurs when an external management team joins the company (buy-in) and also buys out the existing management team. Capital Leases
September 25, 2022 A capital lease is a contract that gives the lessee the right to temporarily use an asset. Capital Markets
September 25, 2022 Capital markets refer to places where funds are exchanged between providers and those seeking capital for their own use. Capital Project
September 25, 2022 A capital project is often a costly, long-term project to expand, maintain, or improve a significant portion of a property. Capital Stock
September 25, 2022 Share capital is the number of ordinary and preferred shares that the company has the right to issue and which are accounted for on the balance sheet as part of share capital. Capital Structure
September 25, 2022 The capital structure is how a company finances its overall operations and growth. Clawback
September 25, 2022 Clawback is a contractual clause that requires the employee to return money already paid by the employer, sometimes with a penalty. Commercial Loan
September 25, 2022 A commercial loan is provided between a bank and a business, used to finance operating expenses and capital expenditures. Corporate Charter
September 25, 2022 A corporation charter is a document filed with a state secretary or registrar to establish a company as a corporation. Corporate Finance
September 25, 2022 Corporate finance is concerned with how businesses finance their activities in order to maximize profits and minimize costs.