unreferenced date September 2011 Wiktionary amortise Amortization or amortisation is the process of decreasing, or accounting for, an amount over a period. The word comes from Middle English amortisen to kill, alienate in mortmain , from Anglo French amorteser , alteration of amortir , from Vulgar Latin admortire to kill, from Latin ad mort , mors death. When used in the context of a home purchase, amortization is the process by which your loan principal decreases over the life of your loan. With each mortgage payment that you make, a portion of your payment is applied towards reducing your principal and another portion of your payment is applied towards paying the interest on the loan. An amortization table shows this ratio of principal and interest and demonstrates how your loan s principal amount decreases over time. Amortization is generally known as depreciation of intangible asset s of a firm. Applications of amortizationAmortization business , the allocation of a lump sum amount to different time periods, particularly for loans and other forms of finance, including related interest or other finance charges. Amortization schedule , a table detailing each periodic payment on a loan typically a mortgage , as generated by an amortization calculator . Negative amortization , an amortization schedule where the loan amount actually increases through not paying the full interest Amortized analysis , analyzing the execution cost of algorithms over a sequence of operations. Amortization business Accounting Amortization of capital expenditures of certain assets under accounting rules, particularly intangible assets , in a manner analogous to depreciation . Amortizing loan Amortization tax law Amortization is also used in the context of zoning zoning regulation s and describes the time in which a property owner has to conform or relocate when the property s use constitutes a preexisting nonconforming use under amended zoning regulations. References Reflist See also Depreciation ... more details
In business, amortization refers to spreading payments over multiple periods. The term is used for two separate processes amortization of loans and amortization of intangible assets. Amortization of loans In lending, amortization is the distribution of payment into multiple cash flow installments, as determined by an amortization schedule . Unlike other repayment models, each repayment installment consists of both wikt principal principal and interest . Amortization is chiefly used in loan repayments a common example being a mortgage loan and in sinking fund s. Payments are divided into equal amounts for the duration of the loan, making it the simplest repayment model. A greater amount of the payment is applied to interest at the beginning of the amortization schedule , while more money is applied ... 30 12 360 . Negative amortization also called deferred interest occurs if the payments made do not cover ... it larger than the original loan amount. Amortization of intangible assets Accounting In accounting , amortization refers to expensing the acquisition cost minus the residual value of intangible asset ... assets is depreciation . Methodologies for allocating amortization to each accounting period are generally ... to amortization although goodwill is subjected to an impairment test every year . Amortization ... Financial Reporting Standards , guidance on accounting for the amortization of intangible ... Standards No. 142, Goodwill and Other Intangible Assets ref While theoretically amortization ... expense on the cash flow statement and paying off the cost through amortization, thereby improving ... wikinvest Amortization Wikinvest s Coverage of Amortization ref See also Multicol Amortized analysis ... estate topics Multicol end References references External links wikinvest AmortizationAmortization at Wikinvest http mathmajor.org accounting finance and investing amortizationAmortization Formula ... Amortization Calculator by Atul Nene free and open source. Category Accounting terminology Category ... more details
unreferenced date February 2007 An amortization calculator is used to determine the periodic payment amount due on a loan typically a mortgage loan mortgage , based on the amortization business amortization process. The amortization business amortization repayment model factors varying amounts of both interest and principal into every installment, though the total amount of each payment is the same. An amortization schedule calculator is often used to adjust the loan amount until the monthly payments will fit comfortably into budget, and can vary the interest rate to see the difference a better rate might make in the kind of home or car one can afford. An amortization calculator can also reveal the exact dollar amount that goes towards interest and the exact dollar amount that goes towards principal out of each individual payment. The amortization schedule is a table delineating these figures across the duration of the loan in chronological order. The formula The calculation used to arrive at the periodic payment amount assumes that the first payment is not due on the first day of the loan, but rather one full payment period into the loan . While normally used to solve for A, the payment, given the terms it can be used to solve for any single variable in the equation provided that all other variables are known. One can rearrange the formula to solve for any one term, except for i , for which one can use a root finding algorithm . The Annuity finance theory Proof annuity formula is math A P frac i 1 i n 1 i n 1 frac P times i 1 1 i n P left i frac i 1 i n 1 right math Where A periodic ... for the periodic payment amount math A math is derived as follows. For an amortization schedule ... frac p t P 1 frac 1 i t 1 1 i n 1 math Other uses While often used for mortgage related purposes, an amortization ... loans and credit cards. See also Amortizing loan Amortization schedule Amortization business External links dmoz Business Financial Services Mortgages Calculators Amortization calculators Category ... more details
unreferenced date February 2007 An amortization schedule is a table detailing each periodic payment on an amortizing loan typically a mortgage loan mortgage , as generated by an amortization calculator . Amortization refers to the process of paying off a debt often from a loan or mortgage over time through regular payments. A portion of each payment is for interest while the remaining amount is applied towards the principal balance. The percentage of interest versus principal in each payment is determined in an amortization schedule. While a portion of every payment is applied towards both the interest and the principal balance of the loan, the exact amount applied to principal each time varies with the remainder going to interest . An amortization schedule reveals the specific monetary amount put towards interest, as well as the specific amount put towards the principal balance, with each payment. Initially, a large portion of each payment is devoted to interest. As the loan matures, larger portions go towards paying down the principal. Methods of amortization There are different methods in which to arrive at an amortization schedule. These include Straight line linear Declining balance Annuity Bullet all at once Increasing balance negative amortizationAmortization schedules run in chronological order . The first payment is assumed to take place one full payment period after the loan was taken out, not on the first day the amortization date of the loan . The last payment completely pays off the remainder of the loan . Often, the last payment will be a slightly different amount ... portions, an amortization schedule also reveals interest paid to date, principal paid to date, and the remaining principal balance on each payment date. Example amortization schedule This amortization .... Re amortization or restarting the amortization schedule via a refinance causes the entire schedule ... of O S loan balance calculation Loan Amount 100,000 Term 20 years Interest Rate 7 Amortization ... more details
Multiple issues globalize December 2010 refimprove November 2008 In finance , negative amortization , also ... so that the outstanding balance of the loan increases. As an amortization method the shorted amount ... which have negative amortization are called PIK loan s. Amortization refers to the process of paying ... of interest versus principal in each payment is determined in an amortization schedule . Defining characteristics Negative amortization only occurs in loans in which the periodic payment does not cover ... will be lower than any other type of financing instrument. Negative amortization loans can be high ... and riskier in a rising rate market. Start rates on negative amortization or minimum payment option ... times the principal balance, divided by 12 months with no amortization or reduction in the owed balance ... schedule. Negative amortization loans Types In a reverse mortgage borrowers do not need to make ... Mortgages Top Ten Things to Know HUD Bot generated title ref Criticisms Negative amortization loans ... most other adjustable rate loans, many negative amortization loans have been advertised with either ... of the loan amount. For example, a negative amortization loan is often advertised as featuring ... consumers aren t aware of the negative amortization side effect of only paying 1 of the loan amount per year. In addition, most negative amortization loans contain a clause saying that the payment .... Negative amortization loans as a class have the highest potential for what is known as payment shock ... year amortization schedule after ten years of interest only payments could see a payment increase of up to 600 on a balance of 330K. Negative amortization mortgage no payment jump either until 5 years ..., mortgage products require. Difference between negative amortization and a reverse mortgage A negative amortization mortgage should not be confused with a reverse mortgage . A negative amortization .... This early stage is known as the negative amortization or NegAm period. During this time period ... more details
Expert subject Taxation date November 2008 In tax law , amortization refers to the cost recovery system for intangible property . Although the theory behind cost recovery deductions of amortization is to deduct from cost basis basis in a systematic manner over an asset s estimated useful economic life so as to reflect its consumption, expiration, obsolescence or other decline in value as a result of use or the passage of time, many times a perfect match of income and deductions does not occur for policy reasons. Depreciation A corresponding concept for tangible asset s is depreciation . Methodologies for allocating amortization to each tax period are generally the same as for depreciation. However, many intangible asset s such as goodwill or certain brands may be deemed to have an indefinite useful life, or self created and are therefore not subject to amortization. ref House Report No. 103 111, 103rd Congress, 25 May 1993. ref In the United States of America The United States Congress gives taxpayers larger deductions in the early years of an asset s useful life. Intangible property Intangible property which is subject to amortization is described in 26 U.S.C. 197 c 1 and 197 d and must be property held either for use in a trade, business, or for the production of income. Before 1993, the Internal Revenue Code United States Tax Code did not contain provisions for cost recovery of intangible assets rather, the intangible assets were depreciated under the current provisions for depreciation of tangible assets, 26 U.S.C. 167 and 168. However, the problem before 1993 was that many intangible assets did not meet the burdensome requirements of 167 and 168 because intangible assets can not necessarily be subject to wear and tear . This led to taxpayers having the incentive to ignore ..., if an intangible is not eligible for amortization under 197, the taxpayer can depreciate the asset ... up expenditure For amortization as it relates to start up expenses for a new business or activity. ref ... more details
Unreferenced date December 2009 accounting OIBDA is an acronym meaning operating income before depreciation and amortization . It refers to an income calculation made by adding depreciation and amortization to operating income . OIBDA differs from EBITDA because its starting point is operating income, not earnings. It does not, therefore, include non operating income, which tends not to recur year after year. It includes only income gained from regular operations, ignoring items like FX changes or tax treatments. Historically, OIBDA was created to exclude the impact of write down s resulting from one time charges, and to improve the optics for analysts comparing to previous period EBITDA. An example is the case of Time Warner , who shifted to divisional OIBDA reporting subsequent to write downs and charges resulting from the company s merger into AOL . In each case OIBDA, OIBTDA, and EBITDA are proxies for analyzing the cash a firm can generate from operations irrespective of capital structure and taxes, and is therefore very useful as a tool in designing restructurings, mergers and acquisitions, and recapitalizations, and for valuing firms on a TEV total enterprise value basis. DEFAULTSORT Operating Income Before Depreciation And Amortization Category Generally Accepted Accounting Principles Accounting stub ru OIBDA uk OIBDA ... more details
can replace its assets when they wear out, therefore can ignore capital amortization and depreciation ..., Amortization, and Restructuring or Rent Costs EBITDAR Revenue Gross profit Earnings before interest ... DEFAULTSORT Earnings Before Interest, Taxes, Depreciation And Amortization Category Generally Accepted ..., and amortization it Margine operativo lordo he lt EBITDA ... more details
accounting Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs EBITDAR is a non Generally Accepted Accounting Principles GAAP metric that can be used to evaluate a company s financial Performance. EBITDAR revenue expenses excluding tax, interest, depreciation, amortization and restructuring or rent costs Depending on the company and the goal of the user, the indicator can include either restructuring costs or rent costs, but usually not both. The EBITDAR indicator expands on EBITDA by adding an additional excluded item to give a better indication of the company s financial performance. EBITDAR, when evaluating the impact of rent expense is often used by retail businesses and airlines. Typically, in such an analysis the rent expense will be capitalized and added to the net debt of the company in order to better understand the leverage finance leverage levels in the company s capital structure . See also Earnings before interest, taxes, depreciation and amortization EBITDA Revenue Gross profit Earnings before interest and taxes EBIT , or operating profit Net profit or Net income EV EBITDA P E ratio SG&A References http www.investopedia.com terms e ebitdar.asp Investopedia definition of EBITDAR Category Financial accounting uk EBITDAR ... more details
Unreferenced stub auto yes date December 2009 EBITA is an acronym that refers to a company s income earnings before the deduction of interest , tax and Amortization business amortization expenses. See EBITDA . It is a financial indicator used widely as a measure of efficiency and profitability. EBITA margins in developing telecom markets can be as high as 60 , but margins vary greatly across industries and over time. EBITA margin can be calculated by taking the Profit Before Taxation PBT EBT figure as shown on the Consolidated Income Statement, and adding back Net Interest and Amortization. Often, Amortization charges are zero and therefore EBIT EBITA. EBITA has more recently been cited by buyside investors as a useful metric to be used as a replacement for, or in conjunction with, EBITDA multiples, as corporations continue to present increasing levels of intangible based amortization. See also Earnings before interest, taxes, depreciation and amortization DEFAULTSORT Ebita Category Business economics Econ stub de EBITA it EBITA nl EBITA pl EBITA sv EBITA ... more details
Balance Sheet and amortization amortized over the life of the insurance contract. Accrual accounting ... statements of the company. In an accounting sense, it is the amortization of that cost, and not the original ... to new policies are classified as non deferrable acquisition expenses. DAC Amortization Deferred Acquisition ... of recognizing the costs in the income statement is known as amortization and refers to the DAC asset being amortized, or written off. The amortization requires an amortization basis that determines how much DAC should be written off as an expense in each accounting period. The amortization basis .... In addition, DAC amortization uses estimated gross margin s as a basis and an interest rate ... to the k factor. A write off of DAC or amortization of DAC may be caused by dynamical unlocking or true ... words Shadow DAC is applied to reduce increase the amortization of the DAC taking into consideration the unrealized gains and losses. Regular DAC amortization affects the income statement and does not take unrealized gains into account. In other words, regular DAC amortization takes into account ... DAC amortization can be applied to defer the acquisition costs to future periods thereby reducing the expenses and increasing yield for the specific period. The DAC amortization will thus increase in future ... of gross profits required to provide for deferred policy acquisition costs. KDAC is DAC amortization ... more details
Merge to Balloon payment mortgage date December 2010 unreferenced date May 2008 When a debt is repaid in payments of varying amounts there are some colourful jargon terms used to describe the different loan structures. The term balloon payment arises because if you hold back most of a debt and pay it only towards the end of the agreement, both those last payments and the total amount repaid are much larger. The debt is inflated like a balloon due to Compound Interest accumulating on the large sum. This is more technically known as partial amortization . A related piece of jargon is the bullet payment . When a large debt has to be repaid entirely in one big payment it can be financially crippling, making it a metaphorical bullet to the head of a company which doesn t have the cash to hand. With a bullet loan , a bullet payment is paid back when the loan comes to its contractual maturity e.g., reaches the deadline set to repayment at the time the loan was granted representing the full loan amount also called principal . Periodic interest payments are generally made throughout the life of the loan. The more usual arrangement for repaying a loan is called amortizing payment or Amortization business amortization . With amortization , portions of the principal are periodically being repaid along with the loan s interest payments until the loan matures. With full amortization , the amortization schedule has been set so that the last periodical payment comprises the final portion of principal still due. With partial amortization , a balloon payment will still be required at maturity, covering the part of the loan amount still outstanding. This approach is very common in automotive financing where the balloon payment is often calculated with respect to the value of the vehicle at the end of the financing term so the borrower can return the vehicle in lieu of making the balloon payment. Balloon payments or bullet payments are common for certain types of debt. Most Bond financ ... more details
Unreferenced stub auto yes date December 2009 Orphan date August 2008 An installment note is a form of promissory note calling for payment of both Debt principal and interest in specified amounts, or specified minimum amounts, at specific time intervals. This periodic reduction of principal amortization business amortize s the loan . Category Personal finance Category Real estate Category Legal documents Category Negotiable instrument law Finance stub ... more details
amortization of the value of a life estate acquired from a decedent. At issue is whether, and to what extent, taxpayers are entitled to periodic deductions for amortization of the value of a joint ... more details
Orphan date February 2009 unreferenced date February 2009 OOCRE Owner Occupied Commercial Real Estate is typically a commercial property of one of the following types Office Office Buildings and or Office Condos Industrial Including warehouses and manufacturing facilities Retail Shopping Center Agricultural Hotel & Motel Senior Housing Assisted Living Facilities Health Care Special Purpose Unimproved land, Multifamily Homes, and Residential Income Homes are not recognized by most banks or lending institutions as OOCRE. OOCRE is a description utilized to describe the use or utility that the owner will have with the property. Typically an operating entity Corporations, Partnerships, LLC, etc... will own the property with the purpose of running business operations out of it or interacting with customers in there. Financing OOCRE is the most desirable type of lending by banks for commercial real estate. It is probably one of the few visible advertising seen by banks for commercial real estate lending. OOCRE is the sister or Primary Residential Real Estate which has a lower probability of default on lending since must loans require a personal guarantee as well as a guarantee from the borrowing entity which is typically an operating company. Typical Bank loan terms on a OOCRE Amortization Period are typically 15, 20 or 25 years. Term period 5 to 25 years, if it does not match the amortization period, it is considered a Balloon note balloon loan Rates must banks prefer to lend at variable rates typically tied to Prime Rate or LIBOR Some banks offer fixed rates for term period. Prepayment penalties are very common, typically 1 to 5 of the unpaid principal if the loan is paid in full or partially by more than the scheduled payment by the amortization table. most prepayment penalties are for 5 years but some extend through the entire term. References http www.fdic.gov regulations examinations supervisory insights sisum04 cre lending.html Category Commercial real estate ... more details
accounting Non operating income , in accountancy accounting and finance , represents Gain finance gains or losses from sources not related to the typical activities of the business or organization. Non operating income can include gains or losses from investments , property or asset sales, foreign exchange market currency exchange , and other atypical gains or losses. Non operating income is generally not recurring and is therefore usually excluded or considered separately when evaluating performance over a period of time e.g. a quarter or year . References See also Revenue Gross profit Earnings before interest, taxes, depreciation and amortization EBITDA Earnings Before Interest, Taxes, Depreciation, Amortization, and Restructuring or Rent Costs EBITDAR Operating profit Net income per employee Earnings before tax EBT Net profit or Net income Financial Result Profit Before Interest, Depreciation & Taxes PBDIT Earnings Before Depreciation, Interest and Taxes EBDIT External links http www.investopedia.com terms n non operating income.asp Non Operating Income at investopedia.com http www.businessdictionary.com definition non operating income.html BusinessDictionary.com Categories Category Fundamental analysis Category Financial terminology Category Generally Accepted Accounting Principles ... more details
Unreferenced date December 2009 The price cash flow ratio also called price to cash flow ratio or P CF , is a ratio used to compare a company s market value to its cash flow . It is calculated by dividing the company s market cap by the company s operating cash flow in the most recent fiscal year or the most recent four fiscal quarters or, equivalently, divide the per share stock stock price by the per share operating cash flow. In theory, the lower a stock s price cash flow ratio is, the better value that stock is. CFPS NI Depreciation Amortization Common Shares Outstanding Financial ratios Category Financial ratios de Kurs Cash Flow Verh ltnis ... more details
Principal balance , in regards to a Mortgage loan mortgage or other debt instrument, is the amount due and owing to satisfy the payoff of the underlying obligation. Amortization business Amortized mortgage loans automatically pay a portion of each monthly payment to the principal balance with the rest being paid as interest. An interest only loan does not require any monies be paid toward the principal balance each month, but is allowable. ref citeweb url http www.investorwords.com 3842 principal balance.html title Principal Balance Definition ref References Reflist Category mortgage econ theory stub zh ... more details
Graduated Payments are payments repayment terms involving gradual increases in the payments on a closed end obligation. A graduated payment loan typically involves negative amortization , and is intended for young people Citation needed date September 2010 who currently have low income but foresee a greater future income. These terms are only offered when banks have reason to assume that the borrower s income will rise during the 10 year loan period. External links http www.hud.gov offices hsg sfh ins 245 dft.cfm HUD.gov Graduated Payment Program Description DEFAULTSORT Graduated Payments Category Personal finance Finance stub ... more details
Occupancy costs are the whole life cost s of buildings and their associated land from occupancy until disposal . These costs may be incurred on a regular or irregular basis. Occupancy costs ref http www.bcis.co.uk occupancy Building Cost Information Service ref are those costs related to occupying a space including rent, real estate taxes, personal property taxes, insurance on building and contents, depreciation and amortization expenses. This is generally higher in new entrants to a market due to the escalating real estate prices This type of cost cover the whole society since land is inextricably link to human life. Watch out for occupancy cost when you calculate the cost of employee. DEFAULTSORT Occupancy Cost Category Real estate Accounting stub Reflist ... more details
Context date June 2010 A type of zoning variance where a parcel of land may be given an exception from current zoning ordinances due to improvements made by a prior owner or before the current zoning ordinances made the desired use non conforming under local law. Secondary suite s are commonly permitted as a non conforming use in the zoning district they are located in because the suite was developed prior to the zoning ordinance coming into effect. Discontinuance Intent The landowner may explicitly intend to discontinue the use by agreeing to end the use. Implied intent exists if the landowner fails to exercise the nonconforming use. If the landowner discontinues the nonconforming use after a specified period, commonly 21 years in many jurisdictions but shorter in many others, then the nonconforming use will be terminated and parcel will become subject to the zoning requirements of the area in which it is located. Such a discontinuance of the use implies the intent to abandon the use. Partial destruction If the structure exercising the nonconforming use is destroyed beyond a certain percentage usually 50 it cannot be rebuilt or repaired. Instead, the parcel becomes subject to the applicable zoning regulations thereby ending the nonconforming use s reprieve from the zoning regulations. Some states allow amortization of the nonconforming use whereby the nonconforming use s immediate value is amortized over the course of a set period and once the value of the nonconforming reaches zero the nonconforming use ends. Normally such an ordinance is upheld unless it is arbitrary or discriminatory or unreasonable, and it is usually limited to certain uses and outside of those uses it may be an unreasonable exercise of police power. ref Akron ref A reasonable exercise of an amortization end of the nonconforming use allows for a complete return on the investment. ref Gage ref See also Grandfather clause Zoning Zoning in the United States land use Variance land use Spot zoning S ... more details
In 1986, Warren Buffett detailed his Valuation finance valuation method. He stated that the Enterprise value value of a company is simply the total of the net cash flow s owner earnings expected to occur over the life of the business, discounted by an appropriate interest rate Citation needed date August 2010 . He defined owner earnings as follows These represent a reported earnings plus b depreciation , Depletion accounting depletion , Amortization business amortization , and certain other non cash charges...less c the average annual amount of Capital expenditure capitalized expenditures for fixed asset plant and equipment , etc. that the business requires to fully maintain its long term competitive position and its unit volume....Our owner earnings equation does not yield the deceptively precise figures provided by GAAP , since c must be a guess and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes...All of this points up the absurdity of the cash flow numbers that are often set forth in Wall Street reports. These numbers routinely include a plus b but do not subtract c . ref cite web last Buffett first Warren E. title 1986 Letter to Shareholders publisher Berkshire Hathaway, Inc date February 27, 1987 url http www.berkshirehathaway.com letters 1986.html accessdate 2007 05 22 ref See also Warren Buffett Berkshire Hathaway References reflist External links cite web url http www.vioz.org joomla content view 53 44 title What Buffett means by owner earnings cite web url http www.fool.com investing value 2005 05 11 digging into buffetts numbers.aspx title Digging into Buffett s numbers cite web url http stocks.about.com od investingphilisophies a WarrenB121904 2.htm title Buffett s 12 Tenets DEFAULTSORT Owner Earnings Category Berkshire Hathaway Category Management accounting Category Business terms ... more details
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