MATERIAL Definition

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MATERIAL is information important enough to change an investor's decision. Insignificant information has no effect on decisions, so there is no need to report it.

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DOOMSDAY RATIO is related to the quick (acid test) ratio in that it is a conservative approach to debt coverage. The doomsday ratio only considers the cash on hand when evaluating if an entity can cover their current liabilities. The approach is that if the business were to go bankrupt today, would the business have enough cash on hand to cover current debts. The ratio is considered a good indicator of the cash cushion of safety. It may spot cash shortages, thereby assisting in avoiding a credit crisis. It is calculated: Cash divided by Current Liabilities.

COLLATERALIZE is to pledge property as security (collateral) for a debt.

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