Chapter 9 Flashcards
Long-Term Liabilities
Internal Financing
profits generated by the corporation
External Financing
profits generated OUTSIDE of the corp
Debt Financing
borrowing $ from creditors
Equity Financing
obtaining investment from stockholders
Secured Bonds
backed by collateral
Unsecured Bonds
not backed bu collateral
Term Bondsq
issues return on specific single date
Serial Bonds
issue returns in installments
Callable Bonds
borrower can pay of bonds early
Convertible Bonds
can be converted into common stock
Stated Interest Rate
the rate quoted in the bond contract
Bonds issued at Discount
stated < market
Bonds issued at FV
stated = market
Bonds issued at Premium
stated > market
Interest Expense =
carrying value for bond x market interest rate per period
Cash Paid for Interest =
face amount of bond x stated interest rate per period
Debt to Equity Ratio =
Total Liabilities / Stockholders Equity
Time Interest Earned Ratio =
(NI + interest expense + tax expenses) / interest expense
