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.

BREAKING DOWN '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. Long-Term Debt

    Long-term debt consists of loans and financial obligations lasting ...
  2. Short-Term Debt

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  3. Debt Load

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  4. Current Portion Of Long-Term Debt ...

    A portion of the balance sheet that represents the total amount ...
  5. Net Debt

    A metric that shows a company's overall debt situation by netting ...
  6. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
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RELATED FAQS
  1. Why would you look at a company's net debt rather than its gross debt?

    Learn the difference between net debt and gross debt, how to calculate debt using a company's financial statements and why ... Read Answer >>
  2. Does working capital include short-term debt?

    Learn about a company's working capital and how short-term debt is considered part of current liabilities and is included ... Read Answer >>
  3. Why is debt issued in both temporary and permanent forms?

    Debt is separated into two categories: 1) Temporary or short-term 2) Permanent or long-term. Temporary or short-term debt ... Read Answer >>
  4. What is the short/current long-term debt account on a company's balance sheet?

    A lot of confusion can arise with this balance sheet account. After all, how can something be both long and short? Despite ... Read Answer >>
  5. What's the difference between debt consolidation and debt management or debt settlement?

    Learn about different ways of handling debt when you become overwhelmed, including debt consolidation, debt management and ... Read Answer >>
  6. Does the balance sheet always balance?

    Yes, a balance sheet should always balance. The name "balance sheet" is based on the fact that assets will equal liabilities ... Read Answer >>
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