Finance

Definition: Debenture Redemption Reserve (DRR) is a reserve created to designate a portion of the company's divisible profits, used during the Redemption of Debentures. It acts as a shield against the default in payment to the debenture holder from the company's end at the due date. The goal behind the creation of DRR is to cut the risk of fund shortage on Redemption. As the … [Read more...] about Debenture Redemption Reserve

Definition: Redemption of Debentures is the reimbursement of the amount due to the debenture holder at its maturity. The Redemption includes a refund of the principal amount along with the amount of interest due on it. Companies might redeem the debentures at par and premium. The debentures are the funds that the company borrows. Therefore it is a liability for the company. … [Read more...] about Redemption of Debentures

Definition: Forfeiture of shares is the annulment (cancellation) of the shares owned by a shareholder as a penalty because of the non-payment of allotment and calls due to the company. Along with the shares, the amount already paid to the company also get forfeited. The company can either Dispose of or Reissue the forfeited shares. Post forfeiture, the company removes … [Read more...] about Forfeiture of Shares

Definition: Staggered Board or classified Board is a board which consist of different classes of the directors for different terms or time period, as the election is conducted at a different point so that all the director’s term will not expire at the same time. In general, there are three classes of directors whose tenure and responsibilities are decided by the company. The … [Read more...] about Staggered Board

Definition: Short-Term Financing is a need for money for a short period of time, i.e., less than a year. It is one of the primary function of finance that manages the demand and supply of capital for an interim period, and these funds can be secured or unsecured. To use such funds total financing funds should be driven by the company, and the company gets directed by the … [Read more...] about Short-Term Financing

Definition: Financial Ratios are the ratio amidst two values from the company’s financial records. These ratios are used to evaluate the true and fair position of the company in the market. Various standard ratios are set under this head for measuring the company's status in the market, which is applied by the director, shareholders or the borrowers of the company to analyze … [Read more...] about Financial Ratios

Definition: Merger is a process of combining two companies or entities to form a third separate company by signing an agreement with a vision of going forward to achieve a respectable position in the market. To achieve the targets that they feel they can achieve together more appropriately by combining their strengths rather than working individually. However, the merger can … [Read more...] about Merger

In simple terms, debt is the sum acquired from the outside or external sources along with the liability of some specific amount of interest at the time of repayment of borrowed funds and the equity is the owner’s capital; however, both debt and equity funds are raised to increase the share capital of the company. Debts are the credits for the company and hence return on … [Read more...] about Debt Vs Equity

Definition: Bonus Shares are the supplementary or extra shares distributed to the current stakeholders of the company without taking any extra amount from them, and these shares are issued out of free reserves created from the profits earned by the company. They do not make any impact on the stakeholder’s equity as they are allotted to relocate the retained earnings to the … [Read more...] about Bonus Shares

Definition: Municipal Bond are the bonds which are issued by the local government or agencies to complete their minor projects or to complete the public welfare work for which finance is required, a government issues a certificate consisting of its worth and also provides interest on such certificates to the holders of Municipal Bonds. A general example for which the local … [Read more...] about Municipal Bond