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Finance GlossaryAccrued Interest
Accrued Interest
Definition of Accrued Interest
An accrued interest is the interest incurred in the current accounting period but the actual interest is due to be paid or received in the next accounting period.
Related Terms
Interest Coverage Ratio
Interest Coverage Ratio (ICR) is used to determine the likelihood of a company’s ability to pay interest on existing outstanding debt. A low ICR typically indicates that a company is less likely to pay interest.
In fact, it indicates that the company may be heading towards bankruptcy. A higher ICR means that a company’s financial health is solid and more than likely to pay interest on existing outstanding debt.
In fact, it indicates that the company may be heading towards bankruptcy. A higher ICR means that a company’s financial health is solid and more than likely to pay interest on existing outstanding debt.
Operating Cash Flow (OCF)
Operating Cash Flow (OCF) measures the amount of cash generated by a company from its normal, day-to-day business activities. It is a key element in a company's cash flow statement. OCF indicates the company's ability to generate enough cash internally to sustain and expand its operations without access to external financing. A consistently positive and growing OCF is a sign of strong financial health and operational efficiency.
Stochastic Oscillator
The Stochastic oscillator is a momentum indicator used in technical analysis. Investors use this indicator to identify conditions where a stock may be overbought or oversold. It compares the closing price of a stock to its price range over a certain period. If the value is above 80, it indicates overbought conditions. If it is below 20, the conditions are considered oversold. The Stochastic oscillator helps investors identify potential reversals.
Forex Options
Forex options are exchange-traded derivative contracts that give the right but not the obligation to buy or sell a pair of underlying currencies at a pre-agreed price and date. Forex options are also known as currency options.
Every forex option can be split into a call or put option. A forex call option gives the holder the right to buy underlying forex pairs while a forex put option gives the holder the right to sell underlying currency pairs.
In either case, there is no obligation to exercise the contract but there is a pre-agreed price and expiration date attached. In India, forex options are only available for the USD-INR currency pair.
Every forex option can be split into a call or put option. A forex call option gives the holder the right to buy underlying forex pairs while a forex put option gives the holder the right to sell underlying currency pairs.
In either case, there is no obligation to exercise the contract but there is a pre-agreed price and expiration date attached. In India, forex options are only available for the USD-INR currency pair.
Annual Earnings Change
An Annual Earnings Change is the difference between a company’s earnings from the present and previous fiscal year. The formula for annual earnings change is:
Current Fiscal Year Earnings - Previous Fiscal Year Earnings
Say for example a liquid nitrogen manufacturing company earned Rs. 50 crores in the current fiscal year and Rs. 29 crores in the previous fiscal year. Their annual earnings change will be:
Rs. 50 crores - Rs. 29 crores = Rs. 21 crores.
Current Fiscal Year Earnings - Previous Fiscal Year Earnings
Say for example a liquid nitrogen manufacturing company earned Rs. 50 crores in the current fiscal year and Rs. 29 crores in the previous fiscal year. Their annual earnings change will be:
Rs. 50 crores - Rs. 29 crores = Rs. 21 crores.
Time Value of Money (TVM)
Time Value of Money (TVM) is the concept that money available today is worth more than the same amount in the future due to its earning potential. It forms the foundation of financial decision-making and valuation. TVM is applied in investments, loans, discounting cash flows, and retirement planning.
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