What Is a Private Letter Ruling (PLR)? A private letter ruling (PLR) is a written decision by the Internal Revenue Service (IRS) that is sent in response to a taxpayer’s request for guidance on unusual circumstances or complex questions about their specific tax situation. For certain transactions involving large amounts of money, the tax law…
Enterprise Value vs. Market Capitalization: An Overview Enterprise value and market capitalization are both measures of a company’s market value. The two calculations are not identical, and the terms are certainly not interchangeable. Each offers a sense of a company’s overall value and, more importantly, a number that can be used to compare its value…
Hurdle Rate vs. Internal Rate of Return (IRR): What’s the Difference? When a company decides whether a project is worth the costs that will be incurred in undertaking it, it may evaluate it by comparing the internal rate of return (IRR) on the project to the hurdle rate, or the minimum acceptable rate of return…
Summary Lakshman Achuthan is the co-founder of ECRI, the Economic Cycle Research Institute. He also serves as the managing editor of ECRI-produced forecasting publications. Over nearly 30 years of analyzing business cycles, he has been regularly featured in the business and financial media, and as an invited speaker at a number of conferences. In 2004, he…
A recession’s severity is measured by its depth, diffusion and duration, or what we call the 3Ds. In terms of depth, this recession looks extreme, and will likely be the deepest in living memory. It’s also exceptionally widespread in terms of industries affected, so in terms of diffusion, as well, it’s a severe recession. Regarding…
What Is the Emerging Markets Bond Index (EMBI)? The emerging markets bond index (EMBI) is a benchmark index for measuring the total return performance of international government and corporate bonds issued by emerging market countries that meet specific liquidity and structural requirements. Despite their increased riskiness relative to developed markets, emerging market bonds offer several…
What Is Elastic? Elastic is a term used in economics to describe a change in the behavior of buyers and sellers in response to a change in price for a good or service. In other words, demand elasticity or inelasticity for a product or good is determined by how much demand for the product changes as the price…
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…
What Is a Receivership? A receivership is a court-appointed tool that can assist creditors to recover funds in default and can help troubled companies avoid bankruptcy. Having a receivership in place makes it easier for a lender to recover funds that are owed to them if a borrower defaults on a loan. A receivership may…