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If a Company Is Having Trouble Paying Its Obligations, a Modification

question 175

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If a company is having trouble paying its obligations, a modification of terms can be granted in the form of interest rate reduction, maturity date extension, and/or a reduction in the amount owed.


Definitions:

Market Value

The current price at which an asset or service can be bought or sold.

Annual Net Cash Flows

The total amount of money that flows into and out of a business over a year, after all revenues are collected and expenses are paid.

Marginal Tax Rate

The rate at which an additional dollar of income is taxed, indicating the tax impact on your next dollar earned.

Depreciation

The accounting method of allocating the cost of a tangible or physical asset over its useful life.

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