recourse debt

Examples of recourse debt in the following topics:

• Current Obligations Expected to Be Refinanced

  • Refinancing may refer to the replacement of an existing debt obligation with a debt obligation under different terms.
  • If the replacement of debt occurs under financial distress, refinancing might be referred to as debt restructuring.
  • A loan or other type of debt can be refinanced for various reasons:
  • In some jurisdictions, refinanced mortgage loans are considered recourse debt, meaning that the borrower is liable in case of default, while un-refinanced mortgages are non-recourse debt.
  • Refinanced debt must be finalized and the new loan terms approved before reporting it and replacing it for the old debt in the liability section.

• Debt

  • Debt is usually granted with expected repayment.
  • The various types of debt can generally be categorized into:
  • A debt obligation is considered secured if creditors have recourse to the assets of the company on a proprietary basis or otherwise ahead of general claims against the company.
  • Unsecured debt comprises financial obligations, where creditors do not have recourse to the assets of the borrower to satisfy their claims.
  • Treasury bills are one kind of debt issued by the U.S.

• Debt Finance

  • A company uses various kinds of debt to finance its operations .
  • The various types of debt can generally be categorized into:
  • A debt obligation is considered secured, if creditors have recourse to the assets of the company on a proprietary basis or otherwise ahead of general claims against the company.
  • Unsecured debt comprises financial obligations, where creditors do not have recourse to the assets of the borrower to satisfy their claims.
  • A basic loan or "term loan" is the simplest form of debt.

• Factoring Accounts Receivable

  • Debt factoring is also used as a financial instrument to provide better cash flow control, especially if a company currently has a lot of accounts receivables with different credit terms to manage.
  • There are two principal methods of factoring: recourse and non-recourse.
  • Under recourse factoring, the client is not protected against the risk of bad debts.
  • On the other hand, the factor assumes the entire credit risk under non-recourse factoring (i.e., the full amount of invoice is paid to the client in the event of the debt becoming bad).
  • Other variations include partial non-recourse, where the factor's assumption of credit risk is limited by time, and partial recourse, where the factor and its client (the seller of the accounts) share credit risk.

• Secured vs. Unsecured Funding

  • Debt refers to an obligation.
  • A loan is a monetary form of debt.
  • Generally speaking, secured debt may attract lower interest rates than unsecured debt due to the added security for the lender.
  • There are two purposes for a loan secured by debt.
  • Interest rates on unsecured loans are nearly always higher than for secured loans, because an unsecured lender's options for recourse against the borrower in the event of default are severely limited.

• Women and Slavery

  • While free or white women could charge their perpetrators with rape, slave women had no legal recourse.
  • Slave owners might decide to sell families or family members for profit, as punishment, or to pay debts.

• Total Debt to Total Assets

  • The debt ratio is expressed as Total debt / Total assets.
  • Debt ratios measure the firm's ability to repay long-term debt.
  • The debt/asset ratio shows the proportion of a company's assets which are financed through debt.
  • If the ratio is greater than 0.5, most of the company's assets are financed through debt.
  • A company with a high debt ratio (highly leveraged) could be in danger if creditors start to demand repayment of debt.

• The Big Stick

  • In late 1902, Britain, Germany, and Italy implemented a several-month-long naval blockade against Venezuela because of the Venezuelan president's refusal to pay foreign debts and damages suffered by European citizens in a recent Venezuelan civil war.
  • In order to preclude European intervention, the Roosevelt Corollary was created to assert the U.S.' s right to intervene in order to "stabilize" the economic affairs of small states in the Caribbean and Central America if they were unable to pay their international debts.
  • With little diplomatic recourse possible and no match for United States military strength, Colombia was forced to concede to Panama's independence.

• Debt-to-Equity Ratio

  • The Debt-to-Equity Ratio is a financial ratio that compares the debt of a company to its equity and is closely related to leveraging.
  • The Debt-to-Equity Ratio is a financial ratio indicating the relative proportion of shareholder's equity and debt used to finance a company's assets, and is calculated as total debt / total equity.
  • Debt is typically a long-term liability that represents a company's obligation to pay both principal and interest to purchasers of that debt.
  • Calculating a company's debt to equity ratio is straight forward, and the debt and equity components can be found on a company's respective balance sheet.
  • For more advanced analysis, financial analysts can calculate a company's debt to equity ratio using market values if both the debt and equity are publicly traded.

• Corporate Bonds

  • The opposite of secured debt is unsecured debt, which is not linked to any specific piece of property.
  • Senior debt has seniority over subordinated debt in the issuer's capital structure.
  • Subordinated debt is repaid after other debts in the case of liquidation or bankruptcy.
  • Such debt is referred to as subordinate, because the debt providers (the lenders) have subordinate status relative to the normal debt.
  • Because subordinated debt is repaid only after other debts have been paid, they are riskier for lenders.