NEGATIVE AMORTIZATION Definition

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NEGATIVE AMORTIZATION is a loan repayment schedule in which the outstanding principal balance of the loan increases, rather than amortizing, because the scheduled monthly payments do not cover the full amount required to amortize the loan. The unpaid Interest is added to the outstanding principal, to be repaid later.

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CREDITOR DAYS is the number of days it takes the company to pay trade creditors. This ratio provides an indication of the amount of credit given to the business by its suppliers. The formula is trade creditors divided by sales multiplied by 365 days.

SALES TURNOVER is the total amount sold within a stipulated time period, usually 12 months. Sales turnover is usually expressed in monetary terms but can also be in total units of stock or products sold.

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