Remove Corporate Finance Remove Financial Statements Remove Tax
article thumbnail

Intercompany loan definition

Accounting Tools

Related AccountingTools Courses Business Combinations and Consolidations Corporate Cash Management Corporate Finance When an intercompany loan is created, it should be fully documented, including the amount of the interest rate to be charged and principal repayment terms.

article thumbnail

Financial leverage definition

Accounting Tools

Related Courses Corporate Finance The Interpretation of Financial Statements Treasurer's Guidebook What is Financial Leverage? Financial leverage is the use of debt to buy more assets. Second, interest expense is tax deductible in many tax jurisdictions, which reduces the net cost of debt to the borrower.

professionals

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

Reverse leverage definition

Accounting Tools

To do so, he takes on a loan that has a net after-tax cost of 8%. After one year, he finds that the actual net after-tax return on his purchase of the manufacturing company is just 3%. Since he is generating a negative return of 5% on his investment, David has experienced negative leverage.

article thumbnail

Leverage definition

Accounting Tools

If they had instead invested $200,000 and the business had borrowed $800,000 to still achieve total financing of $1 million, the return on investment would now be 50% (though the after-tax cost of debt must also be considered).

article thumbnail

What is Record-to-Report (R2R Process) in Finance?

Nanonets

Record-to-Report (R2R) is a critical finance management process in corporate finance, which focuses on collecting, processing, and delivering accurate financial data. Consolidation: Data from various sources and subsidiaries is combined to present a unified financial status. It serves several purposes - 1.

article thumbnail

Convertible security definition

Accounting Tools

Related AccountingTools Courses Corporate Cash Management Corporate Finance Investing Guidebook Understanding Convertible Securities Investors want the option to convert into common stock, so they are usually willing to accept a lower rate of return on the interest payments being made to them on the original convertible security.

article thumbnail

Interview: Year-End Best Practices in a Paper-Based Process with Bill Schiffli

AvidXchange

Bill : My name is Bill Schiffli, and I’ve been a Partner at Scale Finance, LLC for about two years now. We provide integrated financial solutions to help companies scale. Spend time reviewing monthly trial balances/financial statements to identify trends that could be an error in the ledgers.

Billing 52