Term Out

AAA

DEFINITION of 'Term Out'

The transfer of debt within a company's balance sheet without acquiring new debt. This is done through the capitalization of short-term to long-term debt.

INVESTOPEDIA EXPLAINS 'Term Out'

By changing the characteristic of debt on the balance sheet, companies can improve their working capital situation as well as take advantage of lower interest rates, based upon the projection that they will rise in the future.

RELATED TERMS
  1. Working Capital

    This ratio indicates whether a company has enough short term ...
  2. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  3. Current Assets

    1. A balance sheet account that represents the value of all assets ...
  4. Current Liabilities

    A company's debts or obligations that are due within one year. ...
  5. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  6. Long-Term Liabilities

    In accounting, a section of the balance sheet that lists obligations ...
Related Articles
  1. Reading The Balance Sheet
    Investing Basics

    Reading The Balance Sheet

  2. Interest Rates And Your Bond Investments
    Investing Basics

    Interest Rates And Your Bond Investments

  3. Advanced Financial Statement Analysis
    Options & Futures

    Advanced Financial Statement Analysis

  4. 12 Things You Need To Know About Financial ...
    Investing Basics

    12 Things You Need To Know About Financial ...

comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
Trading Center