What Is an Accreting Principal Swap? An accreting principal swap is a derivative contract in which two counterparties agree to exchange cash flows—usually a fixed rate for a variable rate, as with most other types of interest rate or cross-currency swap contracts. However, in this case, the notional principal amount increases over time on a
What Is Accretion? Accretion is the gradual and incremental growth of assets and earnings due to business expansion, a company’s internal growth, or a merger or acquisition. In finance, accretion is also the accumulation of the additional income an investor expects to receive after purchasing a bond at a discount and holding it until maturity.
What Is an Accretive Acquisition? An accretive acquisition increases the acquiring company’s earnings per share (EPS). Accretive acquisitions tend to be favorable for the company’s market price because the price paid by the acquiring firm is lower than the boost that the new acquisition is expected to provide to the acquiring company’s EPS. As a
What is Accrual Bond? An accrual bond defers periodic interest payments usually until maturity, much like a zero coupon bond, except the coupon rate is fixed to the principal value. Key Takeaways An accrual bond defers periodic interest payments usually until maturity, much like a zero coupon bond, except the coupon rate is fixed to
What Is Accrual Accounting? Accrual accounting is a financial accounting method that allows a company to record revenue before receiving payment for goods or services sold and record expenses as they are incurred. In other words, the revenue earned and expenses incurred are entered into the company’s journal regardless of when money exchanges hands. Accrual
What Are Accruals? Accruals are revenues earned or expenses incurred that impact a company’s net income on the income statement, although cash related to the transaction has not yet changed hands. Accruals also affect the balance sheet, as they involve non-cash assets and liabilities. For example, if a company has performed a service for a
What Is Accrual Swap? An accrual swap is a type of interest rate swap in which the interest on one side accrues only if certain conditions are met. Payment of interest in the accrual swap occurs if the reference rate is above or below a certain level. A reference rate is the benchmark interest rate
What Is Accrue? To accrue means to accumulate over time—most commonly used when referring to the interest, income, or expenses of an individual or business. Interest in a savings account, for example, accrues over time, such that the total amount in that account grows. The term accrue is often related to accrual accounting, which has become
What Are Accrued Benefits? Accrued benefits are benefits that the employee has earned based on their service or other criteria, but that are payable to the employee at some later date. These types of benefits can include sick pay, personal time off, and other related benefits that employees earn or accumulate the longer they work. Key Takeaways
What Is an Accrued Dividend? An accrued dividend is a term referring to balance sheet liability that accounts for dividends on common stock that have been declared but not yet paid to shareholders. Accrued dividends are booked as a current liability from the declaration date and remain as such until the dividend payment date. Accrued
