FINANCIAL RATIO Definition

Bookmark and Share

FINANCIAL RATIO is the result of dividing one financial statement item by another. Ratios help analysts interpret financial statements by focusing on specific relationships.

Learn new Accounting Terms

GRANDFATHERED INVESTMENTS are Municipal bonds and equities acquired on or before August 7,1986, the effec­tive date of changes in tax rates caused by the Tax Reform Act of 1986. These investments are not subject to the 5.1 % property-casualty insurance company proration tax.

PREPAYMENT RISK, in the area of mortgage-backed securities, which are backed by loans on property, is the possibility that home owners will payoff their mortgages early, returning the investor's principal earlier than expected. This typically occurs during a declining inter­est rate environment, when home owners can refinance at lower rates, leaving investors vulnerable to the risk of reinvestment at lower rates.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.