Equipment Trust Certificate

AAA

DEFINITION of 'Equipment Trust Certificate'

A debt instrument that allows a company to take possession of an asset and pay for it over time. The debt issue is secured by the equipment or physical assets, as the title for the equipment is held in trust for the holders of the issue. When the debt is paid off, the equipment becomes the property of the issuer, as the title is transferred to the company.

INVESTOPEDIA EXPLAINS 'Equipment Trust Certificate'

These certificates were originally used to finance railway box-cars, and the box-cars were used as collateral. Nowadays, equipment trust certificates are used to finance containers used for shipping and offshore businesses.

RELATED TERMS
  1. Trust Certificate

    A bond or debt investment, usually in a public corporation, that ...
  2. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  3. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  4. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  5. Tangible Asset

    Assets that have a physical form. Tangible assets include both ...
  6. Offshore

    1. Located or based outside of one's national boundaries. The ...
Related Articles
  1. Investing Basics

    Will Corporate Debt Drag Your Stock Down?

    Borrowed funds can mean a leg up for companies or the boot for investors. Find out how to tell the difference.
  2. Fundamental Analysis

    What's Net Debt?

    Net debt is one of the many metrics used to measure a company’s ability to pay its debts. There are other metrics such as net liquidity ratio, cash conversion cycle and the debt to equity ratio, ...
  3. Investing Basics

    What is the difference between an IPO and a seasoned issue?

    Learn how companies issue IPO securities when they first go public and seasoned issue shares if they sell more shares in the secondary market.
  4. Fundamental Analysis

    How accurate or important is the debt service coverage ratio (DSCR) in evaluating whether to invest ...

    See how investors can use the debt service coverage ratio to evaluate the solvency of a company before making an investment decision.
  5. Bonds & Fixed Income

    How do I calculate yield to maturity of a zero coupon bond?

    Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than a bond with a coupon.
  6. Options & Futures

    What is the average debt/equity ratio of companies in the forest products sector?

    Calculating a company's debt to equity ratio is beneficial to investors when analyzing a company's liquidity and overall financial stability.
  7. Bonds & Fixed Income

    Why are bond yields calculated in terms of basis points?

    Find out why financial analysts and publications track and quote bond yields in basis points, or bps, rather than simply stating percentages.
  8. Fundamental Analysis

    Why would you take DCF into account rather than simply projecting future revenues?

    Learn what discounted cash flow analysis is and why it is considered a better equity valuation tool than simply projecting future cash flows.
  9. Fundamental Analysis

    What is the difference between the debt ratio of a company and the debt ratio of an individual?

    Discover the different financial evaluation measures that are most commonly applied to individuals and corporations, respectively.
  10. Investing Basics

    What are some high profile cases of companies who failed to be socially responsible?

    Learn about corporate social responsibility. Explore how Enron's lack of corporate responsibility ultimately destroyed the company and ruined many lives.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center