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The fund-raising (deposit taking) units raise funds from the market at a particular rate and lend the same to the central office at a higher rate. For a deposit-raising unit, the difference between interest paid to the deposit-holders and interest receivable from the central office is the contribution to the bank's profitability.
The debt service coverage ratio ( DSCR ), also known as "debt coverage ratio" (DCR), is a financial metric used to assess an entity's ability to generate enough cash to cover its debt service obligations, such as interest, principal, and lease payments. The DSCR is calculated by dividing the operating income by the total amount of debt service due.
A cost of funds index or COFI is a regional average of interest expenses incurred by financial institutions, which in turn is used as a base for calculating variable rate loans. The interest rate on an adjustable rate mortgage, for example, is often linked to a regional COFI specified in the particular loan documents. COFIs, in turn, are ...
Using Discounted Cash Flow Analysis in an International Setting: A Survey of Issues in Modeling the Cost of Capital, Journal of Applied Corporate Finance, Fall, pp. 82–99. Eric Kirzner (2006) Selected Moments in the History of Discounted Present Value. Rotman School of Management (Archived) Kubr, Marchesi, Ilar, Kienhuis (1998). Starting Up.
Federal funds rate vs unemployment rate. In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis. Reserve balances are amounts held at the Federal Reserve.
t. e. In financial accounting, a cash flow statement, also known as statement of cash flows, [ 1] is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities. Essentially, the cash flow statement is concerned ...
The weighted average cost of capital ( WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Importantly, it is dictated by the external market and not by management. The WACC represents the minimum return that a company ...
A balance sheet is often described as a "snapshot of a company's financial condition". [ 1] It is the summary of each and every financial statement of an organization . Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business's calendar year. [ 2]