What Is a Back-Of-The-Envelope Calculation? A back-of-the-envelope calculation is an informal mathematical computation, often performed on a scrap of paper, such as an envelope. A back-of-the-envelope calculation uses estimated or rounded numbers to develop a ballpark figure quickly. The result should be more accurate than a guess, as it involves putting thought to paper, but
What Is a Backorder? A backorder is an order for a good or service that cannot be filled at the current time due to a lack of available supply. The item may not be held in the company’s available inventory but could still be in production, or the company may need to still manufacture more
What Is Backpricing? In finance, the term “backpricing” refers to the practice of entering into a commodities futures contract without initially specifying the price at which the commodity will be purchased. Instead, the parties to a backpriced futures contract will wait until a specified date before deciding on a fair price at which to buy
What Is a Back Stop? In corporate finance and investment banking, a back stop (or backstop) is to provide last-resort support or to make a bid in a securities offering for the unsubscribed portion of shares. When a company is trying to raise capital through an issuance—and wants to guarantee the amount received through the
What Are Back Taxes? Back taxes are taxes that have been partially or fully unpaid in the year that they were due. Taxpayers can have unpaid back taxes at the federal, state and/or local levels. Back taxes accumulate interest and penalties on a regular basis. Key Takeaways Back taxes are taxes that are due to
What Is Backtesting? Backtesting is the general method for seeing how well a strategy or model would have done ex-post. Backtesting assesses the viability of a trading strategy by discovering how it would play out using historical data. If backtesting works, traders and analysts may have the confidence to employ it going forward. Key Takeaways
What Is a Back-to-Back Commitment? A back-to-back commitment is a commitment to make a second take-out loan that piggybacks another loan. With a back-to-back commitment, once the terms of the first loan are satisfied, they will be rolled into the second loan. Key Takeaways A back-to-back commitment is a commitment to make a second take-out
What is Aviation Accident Insurance Aviation Accident Insurance provides coverage for injuries resulting from an aircraft accident. Aviation accident insurance covers injuries sustained by pilots as well as travelers, with the type of coverage typically accidental death and dismemberment (AD&D). Understanding Aviation Accident Insurance The first aviation insurance was underwritten by Lloyds of London in
What Is an Avoidable Cost? An avoidable cost is an expense that will not be incurred if a particular activity is not performed. Avoidable costs refer primarily to variable costs that can be removed from a business operation, unlike most fixed costs, which must be paid regardless of the activity level of a company. There
What Is a FAFSA Award Letter? An award letter is the documentation sent from a college or university to the student that details how much financial support the student is eligible to receive. The award letter is sent following the student’s submission of the Free Application for Federal Student Aid (FAFSA) and application to attend college
