What Is a Leveraged Buyout? A leveraged buyout (LBO) is the acquisition of a company using a significant amount of borrowed money to fund the purchase. Assets are used as collateral for the additional debt. This includes assets of the company being acquired as well as assets of the acquiring […]
Business
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What Is Sandbagging in Business and Finance? Sandbagging is a strategy of lowering the expectations of a company in order to appear to produce greater-than-anticipated results. In a business context, sandbagging is most often seen when a company’s top executives manage the expectations of shareholders. They do this by providing […]
What Is Bank-Owned Life Insurance (BOLI)? Bank-owned life insurance (BOLI) is a form of life insurance purchased by banks for their key employees. However, the bank is the beneficiary and also usually the owner of the policy. This insurance is used as a tax shelter for financial institutions. They leverage […]
What Is Deferred Revenue? Deferred revenue is also known as unearned revenue. The term refers to advance payments a company receives for products or services. These are to be delivered or performed in the future. The company that receives the prepayment records the amount as deferred revenue. It is recorded […]
What Is Gross Profit Margin? Gross profit is the amount remaining after deducting the cost of goods sold (COGS) or direct costs from revenue. Gross profit margin is a measure of a company’s profitability. It is usually calculated as a percentage of revenue. The cost of goods sold is a […]
What Is the Net Income Formula? Net Income Formula: Net income (NI) equals revenues minus expenses, interest, and taxes. It shows how much is left after all expenses are paid. Net income (NI), is also called net earnings. It is calculated by taking total sales and subtracting the expenses necessary […]