Financials of companies

Main Page

Financials of companies :

Balance Sheet

Taxes

Important Terms in Financials of companies

Amortisation :Amortization is the distribution of a single lump-sum cash flow into many smaller cash flow installments, as determined by an amortization schedule. Unlike other repayment models, each repayment installment consists of both principal and interest. Amortization is chiefly used in loan repayments (a common example being a mortgage) and in sinking funds. Payments are divided into equal amounts for the duration of the loan, making it the simplest repayment model. A greater amount of the payment is applied to interest at the beginning of the amortization schedule, while more money is applied to principal at the end.
The amortization calculator formula is:
(1-vn)/r, where n = number of years,
v = 1/(1+r), and
r = interest rate / 100.
Divide by (1+r) if a payment is due at the beginning.
Another method of writing this kind of formula is:
A = (p*r(1+i)^m) /((1+i)^m-1)
where: P = principal amount borrowed
i = periodic interest rate
m = number of periods each year (vs."t"= number of periods over the life of the loan, or t=n*m) A = periodic payment.

Negative amortization (also called deferred interest) occurs if the payments made do not cover the interest due. The remaining interest owed is added to the outstanding loan balance, making it larger than the original loan amount.

Networth :The value of all assets less all liabilities. Net worth may be expressed as an amount, or as a percentage of either assets or liabilities, calculated by subtracting liabilities from assets and dividing the remainder by assets or liabilities.Net worth is defined as total assets subtracted by total liabilities.
Example: If company XYZ has $100,000 in investments and $20,000 in debt, the net worth of the company is $80,000

Contract :A contract is a "promise" or an "agreement" made of a set of promises. Breach of this contract is recognized by the law and legal remedies can be provided. In civil law, contracts are considered to be part of the general law of obligations. The law generally sees performance of a contract as a duty.