Economic Terms CAD, Fiscal Deficit, Recapitalization, Inflation, Cash Infusion, Cash Surplus, NPA, Budget Surplus YouTube Lecture Handouts

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CAD, Fiscal Deficit, Recapitalization, Cash Infusion & Surplus, NPA, Budget Surplus | Economic Terms

Economic Terms CAD, Fiscal Deficit, Recapitalization, Inflation, Cash Infusion, Cash Surplus, NPA, Budget Surplus

Economic Terms
  • CAD: The current account includes net income, such as interest and dividends, and transfers, such as foreign aid, although these components make up only a small percentage of the total current account
  • CAD – country imports for goods it will export later and create surplus later ⇾ as a place to invest for foreign investors
  • How fiscal deficit is reduced – issue bond, print currency, raise tax and cut spending
  • Fiscal deficit more common in bear market as less economic activity to generate revenue
  • Keynes believed that fiscal deficit Govt spending is good as more money in economy and better job prospects
Economic Terms
  • Recapitalization - process of restructuring a company՚s debt and equity mixture, often to stabilize a company՚s capital structure. The process mainly involves the exchange of one form of financing for another, such as removing preferred shares from the company՚s capital structure and replacing them with bonds.
  • Stabilize company structure, minimize tax, and improve liquidity
  • Shareholders are interested in recapitalization as it affects volatility of earnings per share
  • Reasons for company to consider recapitalization including:
    • A fall in share price
    • To protect itself against a hostile takeover
    • To reduce financial obligations and minimize taxes
    • To provide venture capitalists with an exit strategy
    • Bankruptcy
  • Inflation – rises price and decreases purchasing power
  • When more money is issued the value of money decreases
Economic Terms
  • Cash Infusion: the act of providing more money or resources to make something stronger and work better: infusion of cash/money/funds Central banks acted to calm nervous financial markets by providing an infusion of cash into the system.
  • A cash surplus is the cash that exceeds the cash required for day-to-day operations. How you handle your cash surplus is just as important as the management of money into and out of your cash flow cycle. Two of the most common uses of extra cash are paying down your debt.
Economic Terms
  • Cash Infusion: the act of providing more money or resources to make something stronger and work better: infusion of cash/money/funds Central banks acted to calm nervous financial markets by providing an infusion of cash into the system.
  • A cash surplus is the cash that exceeds the cash required for day-to-day operations. How you handle your cash surplus is just as important as the management of money into and out of your cash flow cycle. Two of the most common uses of extra cash are paying down your debt.
Economic Terms
  • A nonperforming asset (NPA) refers to a classification for loans or advances that are in default or in arrears. A loan is in arrears when principal or interest payments are late or missed. A loan is in default when the lender considers the loan agreement to be broken and the debtor is unable to meet his obligations.
  • A budget surplus is a period when income or receipts exceed outlays or expenditures. A budget surplus often refers to the financial states of governments; individuals prefer to use the term ‘savings’ instead of the term ‘budget surplus’ and excess cash flow for businesses. A surplus is an indication that the government is being effectively managed.
  • It implies less demand for government services, more tax revenue, higher income, and surplus is derived from taxes

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