Accounting

Convertible Debenture – a type of unsecured long-term convertible debt

Convertible Debenture – a type of unsecured long-term convertible debt

A convertible debenture is a type of long-term debt issued by a company that can be converted into shares of equity stock after a specified period. In these debentures, an option is given to the Debentures holders to exchange a part or whole of their Debentures for shares in the Company under cer.....

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Bearer Debentures – an unregistered unsecured bond

Bearer Debentures – an unregistered unsecured bond

A bearer debenture is an unregistered unsecured bond. Bearer debentures are similar to share warrants in that they too are negotiable instruments, transferable by delivery. These are the Debentures that can be transferred by mere delivery and are payable to the bearer of the instrument, i.e. the .....

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Redeemable Debenture

Redeemable Debenture

A redeemable debenture is a written agreement about a loan that must be repaid by a set time. They are issued on the terms that a company is bound to repay the number of Debentures, either at a fixed date, or upon demand, or after notice, or under a system of periodical drawings. These written [&.....

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Modes of Issue of Debentures

Modes of Issue of Debentures

Debentures are a debt instrument used by companies and government to issue the loan. The procedure and accounting entries for the issue of debentures are very much similar to that of share. The procedure of issuing debentures by a company is similar to the one followed while issuing equity stocks.....

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Measurement of Operating Risk

Measurement of Operating Risk

Operating risk refers to the risk of the firm not being able to cover its fixed operating costs. Operating Risk measurement is not the only target of the overall operational risk management process, but it is a fundamental phase as it defines its efficiency; furthermore, the need to measure opera.....

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Significance of Leverage

Significance of Leverage

The term leverage refers to an increased means of accomplishing some purpose. It refers to the use of fixed costs in an attempt to increase profitability. It is an essential tool a company’s management can use to make the best financing and investment decisions. It is positive when earnings.....

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Concept of Leverage

Concept of Leverage

Leverage is an investment strategy of using borrowed money—specifically, the use of various financial instruments or borrowed capital—to increase the potential return of an investment. The common meaning of leverage is the effect of one variable on another variable. The concept of leverage is.....

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Held To Maturity (HTM) Securities

Held To Maturity (HTM) Securities

The debt securities that companies buy and intend to hold until they mature are held-to-maturity (HTM) securities. This type of security is reported in a company’s financial statements as an amortized expense and is typically recorded in the form of debt security with a fixed maturity date......

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Combined Leverage

Combined Leverage

Combined leverage is the leverage that refers to high profits due to fixed costs. The combination of operating leverage and financial leverage is called total leverage or combined leverage. It includes fixed operating expenses with fixed financial expenses. Operating leverage measures operating r.....

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Financial Leverage

Financial Leverage

Financial leverage which is also known as leverage or trading on equity refers to the use of debt to acquire additional assets. It is related to the financing activities of a firm. The use of financial leverage to control a greater amount of assets will cause the returns on the owner’s cash.....

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Operating Leverage – a cost-accounting formula

Operating Leverage – a cost-accounting formula

Operating leverage is a cost-accounting formula that measures the degree to which a firm or project can increase operating income by increasing revenue. It may be defined as the firm’s ability to use fixed operating costs to magnify the effect of changes in sales on its earnings before inte.....

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Difference between Operating Leverage and Financial Leverage

Difference between Operating Leverage and Financial Leverage

Leverage is a firm’s ability to employ new assets or funds to create better returns or to reduce costs. That’s why leverage for any company is very significant. Operating leverage is an indication of how a company’s costs are structured and is used to determine the break-even point for .....

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