TOP-DOWN BUDGETING Definition

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TOP-DOWN BUDGETING is where budgets are created by starting from the highest level working towards the bottom using parametric relationships. A monetary value is placed on an individual unit (product, service, materials, and labor hour). An estimate of the number of units required is then converted to currency by multiplying the quantity of units by the unit price.

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4 Cs OF CREDIT are the four primary considerations that will affect a lenders decision to approve or decline your loan application. Known as the 4 C's of credit:

  1. Capacity - what is your ability to repay the loan? Do you have a job or another income source? Do you have other debts?
  2. Character - will you repay the loan? Have you used credit before? Do you pay your bills on time?
  3. Collateral - if you fail to repay your loan, is there something of value that you agree to forfeit? For example, if you are buying your first car, it could be used as collateral to insure that you will repay the loan. If you default, you lose your car.
  4. Capital (accumulation) - what are you worth? Do you have other assets, such as a savings account, car, or certificate of deposit that could be used to repay the debt?

EATING STOCK is when an underwriter can't find buyers for a stock and therefore has to buy them for his own account.

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