Gross Debt Service Usually Must Be Greater Than 30% Before

question 18

True/False

Gross debt service usually must be greater than 30% before a residential mortgage will be approved.

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Definitions:

Minimum Cash Balance

The lowest amount of cash that a business decides to maintain in its accounts to ensure sufficient liquidity for routine operations.

Cash Disbursements

The outflow of cash for various purposes, including operating expenses, asset acquisitions, and debt payments.

Cash Receipts

The sum of all money received by a company during a specified period, from operations, investments, and financing.

Depreciation Expense

The portion of the cost of a fixed asset that is recorded as an expense each year of its useful life.