Term Out


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.


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.

  1. Balance Sheet

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

    A balance sheet account that represents the value of all assets ...
  3. Working Capital

    Working capital is a measure of both a company's efficiency and ...
  4. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  5. Current Liabilities

    A company's debts or obligations that are due within one year. ...
  6. Long-Term Liabilities

    In accounting, a section of the balance sheet that lists obligations ...
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  1. Can working capital be negative?

    Working capital can be negative if a company's current assets are less than its current liabilities. Working capital is calculated ... Read Full Answer >>
  2. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  3. Does working capital include prepaid expenses?

    The calculation for working capital includes any prepaid expenses that are due within one year, since such prepaid expenses ... Read Full Answer >>
  4. Does working capital include short-term debt?

    Short-term debt is considered part of a company's current liabilities and is included in the calculation of working capital. ... Read Full Answer >>
  5. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  6. Do prepayments provide working capital?

    Prepayments, or prepaid expenses, are typically included in the current assets on a company's balance sheet, as they represent ... Read Full Answer >>

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