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The A to Z Glossary of Credit Keywords

There are 166 entries in this glossary.
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Term Definition

The current book value of fixtures and fittings after allowing for depreciation.

Floating charge

A charge created by a company over all company assets for the time being. The lender has no immediate right over the assets but upon crystallisation of the charge he or she can enforce against any or all of the assets covered by the charge.


Accounting ratio of money borrowed compared with unencumbered capital. A company is said to be highly geared if a high proportion of their working capital is borrowed rather than invested.

Generic scorecard

A scorecard which has been designed rather than statistically derived. These usually apply in situations where there is no (or insufficient) data available from which to develop a statistical scorecard. This is typically for new product launches. Also known as Start-up scorecards.


Goodwill only features in a company's balance sheet after it has made an acquisition. It represents the excess of the purchase price over the net worth of the acquisition and is depreciated on the balance sheet over a five-year period. Intangibles include such items as patents, trademarks, formulae etc. and represent the value determined by the Directors for these items.

Gross profit

Net sales less costs.


A promise by one person to carry out the contractual commitments of another in the event of default. Must be in writing.

Holding company

A company formed for the purpose of exercising financial control over a number of operating companies by buying up all or the majority of their shares. A company has a controlling interest in another when it has acquired over 50% of its issued shares which have voting rights. It also has control over the composition of the board of directors of the subsidiary company. The company having the majority interest in another is also referred to as the Parent company.

Income statement

A business financial statement that lists revenues, expenses, and net income throughout a given period. Because of the various methods used to record transactions, the monetary values shown on an income statement can often be misleading. Also known as Earnings report, Earnings statement, Operating statement, or Profit and loss statement.


A promise to compensate another for a wrongdoing, expense or loss incurred. To be distinguished from a guarantee which relates to the obligations of another and may not be a primary obligation.


An inability to pay debts as they fall due, or where a debtor's total assets are exceeded by his or her liabilities. The law in this area is regulated by the Insolvency Act 1986. To be declared insolvent, debts due to a creditor or creditors should be in excess of £750.

Intangible assets

Patents, trademarks, goodwill etc.

Interest expenses

Any interest charges incurred, normally shown as a net figure after deduction of any interest received.

Intermediate assets

Assets more usually found in a balance sheet under fixed assets but could include:

  • Investments in, and amounts due from subsidiaries (Gross).
  • Investments in, and amounts due from related companies (Gross).
  • Trade Investments (Gross).
  • Other listed and unlisted investments e.g. shares in a racehorse, which are not part of the business cycle of the company.
  • Investment properties (where property dealing is not an integral part of the activities of the company).

Money invested in associated companies or any other long-term investment. Usually stated "at cost", with market value also mentioned.

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