What Is an Asset-Liability Committee? An asset-liability committee (ALCO), also known as surplus management, is a supervisory group that coordinates the management of assets and liabilities with a goal of earning adequate returns. By managing a company’s assets and liabilities, executives are able to influence net earnings, which may translate into increased stock prices. Key
What Is Asset/Liability Management? Asset/liability management is the process of managing the use of assets and cash flows to reduce the firm’s risk of loss from not paying a liability on time. Well-managed assets and liabilities increase business profits. The asset/liability management process is typically applied to bank loan portfolios and pension plans. It also
What Is Asset-Light Debt? Asset-light debt is a form of corporate debt where the amount of collateral is below typical standards. A company may not have the assets to post as collateral for a loan and may seek out cash flow financing, using their cash flow to qualify for a loan. This leaves the loan
What Is an Asset Liquidation Agreement (ALA)? An asset liquidation agreement (ALA) is a contract between the Federal Deposit Insurance Corporation (FDIC) and a company that agrees to manage the sale of the assets of a failed financial institution. ALAs outline the types of fees that the company can receive compensation for and the value
What Was an Asset Management and Disposition Agreement (AMDA)? An asset management and disposition agreement (AMDA) was a type of contract between the Federal Deposit Insurance Corp. (FDIC) and an independent contractor that oversaw and sold the assets of failed savings and loan (S&L) institutions during the S&L crisis of the 1980s and 1990s. Asset
What Is Asset Mix? The asset mix is the breakdown of all assets within a fund or portfolio. Broadly, assets can be assigned to one of the core asset classes: stocks, bonds, cash, and real estate. Within that, assets can be mixed even further. An asset mix breakdown helps investors understand the composition of a
What Is an Asset Protection Trust (APT)? An asset protection trust (APT) is a trust vehicle that holds an individual’s assets with the purpose of shielding them from creditors. Asset protection trusts offer the strongest protection you can find from creditors, lawsuits, or any judgments against your estate. An APT can even help deter costly
What Is Asset Rationalization? Asset rationalization is the process of reorganizing a company’s resources of economic value to improve operating efficiencies and boost its bottom line. Asset rationalization may involve many activities, including sales or divestitures of certain assets, closures of some facilities and expansion of others, and streamlining of manufacturing or other operations. In the majority
What Is Asset Redeployment? Asset redeployment is the strategic reallocation of assets from a less profitable use to a more profitable use. When companies redeploy assets, they take idle or underutilized capital and change how this capital is used in order to increase profitability. A proper asset redeployment strategy can allow a firm to achieve
In accounting, an asset retirement obligation (ARO) describes a legal obligation associated with the retirement of a tangible, long-lived asset, where a company will be responsible for removing equipment or cleaning up hazardous materials at some future date. AROs should be included in a company’s financial statement to present a more accurate and holistic snapshot
