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Solvency
Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. Solvency can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term expansion and growth. This is best measured using the net liquid balance (NLB) formula. In this formula, solvency is calculated by adding cash and cash equivalents to short-term investments, then subtracting notes payable. There exist cryptographic schemes for both proofs of liabilities and assets, especially in the blockchain space. See also *Accounting liquidity * Debt ratio * Going concern * Insolvency *Quick ratio In finance, the quick ratio, also known as the acid-test ratio is a type of liquidity ratio, which measures the ability of a company to use its ''near cash'' or quick assets to extinguish or retire its current liabilities immediately. It is defi ... Notes References * * ...
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Accounting Liquidity
In accounting, liquidity (or accounting liquidity) is a measure of the ability of a debtor to pay their debts as and when they fall due. It is usually expressed as a ratio In mathematics, a ratio shows how many times one number contains another. For example, if there are eight oranges and six lemons in a bowl of fruit, then the ratio of oranges to lemons is eight to six (that is, 8:6, which is equivalent to the ... or a percentage of current liability (accounting), liabilities. Liquidity is the ability to pay short-term obligations. Calculating liquidity For a corporation with a published balance sheet there are various Quick ratio, ratios used to calculate a measure of liquidity. These include the following: * The current ratio is the simplest measure and calculated by dividing the total current assets by the total current liabilities. A value of over 100% is normal in a non-banking corporation. However, some current assets are more difficult to sell at full value in a h ...
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Insolvency
In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet insolvency. Cash-flow insolvency is when a person or company has enough assets to pay what is owed, but does not have the appropriate form of payment. For example, a person may own a large house and a valuable car, but not have enough liquid assets to pay a debt when it falls due. Cash-flow insolvency can usually be resolved by negotiation. For example, the bill collector may wait until the car is sold and the debtor agrees to pay a penalty. Balance-sheet insolvency is when a person or company does not have enough assets to pay all of their debts. The person or company might enter bankruptcy, but not necessarily. Once a loss is accepted by all parties, negotiation is often able to resolve the situation without bankruptcy. A comp ...
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Finance
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of financial economics bridges the two). Finance activities take place in financial systems at various scopes, thus the field can be roughly divided into personal, corporate, and public finance. In a financial system, assets are bought, sold, or traded as financial instruments, such as currencies, loans, bonds, shares, stocks, options, futures, etc. Assets can also be banked, invested, and insured to maximize value and minimize loss. In practice, risks are always present in any financial action and entities. A broad range of subfields within finance exist due to its wide scope. Asset, money, risk and investment management aim to maximize value and minimize volatility. Financial analysis is viability, stability, and profitabil ...
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Current Asset
In accounting, a current asset is any asset which can reasonably be expected to be sold, consumed, or exhausted through the normal operations of a business within the current fiscal year or operating cycle or financial year (whichever period is longer). Typical current assets include cash, cash equivalents, short-term investments which in the ordinary activity are mainly related to non-strategic companies in the process of being sold (usually as a result of private negotiations), accounts receivable, stock inventory, supplies, and the portion of prepaid liabilities (sometimes referred to as prepaid expenses) which will be paid within a year. In simple words, assets which are held for a short period are known as current assets. Such assets are expected to be realised in cash or consumed during the normal operating cycle of the business. On a balance sheet, assets will typically be classified into current assets and long-term assets. The current ratio is calculated by dividin ...
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Current Liability
In accounting, current liabilities are often understood as all liabilities of the business that are to be settled in cash within the fiscal year or the operating cycle of a given firm, whichever period is longer. A more complete definition is that current liabilities are obligations that will be settled by current assets or by the creation of new current liabilities. Accounts payable are due within 30 days, and are paid within 30 days, but do often run past 30 days or 60 days in some situations. The laws regarding late payment and claims for unpaid accounts payable is related to the issue of accounts payable. An operating cycle for a firm is the average time that is required to go from cash to cash in producing revenues. For example, accounts payable for goods, services or supplies that were purchased for use in the operation of the business and payable within a normal period would be current liabilities. Amounts listed on a balance sheet as accounts payable represent all bills ...
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Fixed Cost
In accounting and economics, 'fixed costs', also known as indirect costs or overhead costs, are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be recurring, such as interest or rents being paid per month. These costs also tend to be capital costs. This is in contrast to variable costs, which are volume-related (and are paid per quantity produced) and unknown at the beginning of the accounting year. Fixed costs have an effect on the nature of certain variable costs. For example, a retailer must pay rent and utility bills irrespective of sales. As another example, for a bakery the monthly rent and phone line are fixed costs, irrespective of how much bread is produced and sold; on the other hand, the wages are variable costs, as more workers would need to be hired for the production to increase. For any factory, the fix cost should be all the money paid on capitals and land. Such fixed costs as buying machines and ...
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Cash And Cash Equivalents
Cash and cash equivalents (CCE) are the most liquid current assets found on a business's balance sheet. Cash equivalents are short-term commitments "with temporarily idle cash and easily convertible into a known cash amount". An investment normally counts as a cash equivalent when it has a short maturity period of 90 days or less, and can be included in the cash and cash equivalents balance from the date of acquisition when it carries an insignificant risk of changes in the asset value. If it has a maturity of more than 90 days, it is not considered a cash equivalent. Equity investments mostly are excluded from cash equivalents, unless they are essentially cash equivalents (e.g., preferred shares with a short maturity period and a specified recovery date). One of the company's crucial health indicators is its ability to generate cash and cash equivalents. So, a company with relatively high net assets and significantly less cash and cash equivalents can mostly be considered an in ...
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Promissory Note
A promissory note, sometimes referred to as a note payable, is a legal instrument (more particularly, a financing instrument and a debt instrument), in which one party (the ''maker'' or ''issuer'') promises in writing to pay a determinate sum of money to the other (the ''payee''), either at a fixed or determinable future time or on demand of the payee, under specific terms and conditions. Overview The terms of a note usually include the principal amount, the interest rate if any, the parties, the date, the terms of repayment (which could include interest) and the maturity date. Sometimes, provisions are included concerning the payee's rights in the event of a default, which may include foreclosure of the maker's assets. In foreclosures and contract breaches, promissory notes under CPLR 5001 allow creditors to recover prejudgement interest from the date interest is due until liability is established. For loans between individuals, writing and signing a promissory note are oft ...
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Cryptographic Protocol
A security protocol (cryptographic protocol or encryption protocol) is an abstract or concrete protocol that performs a security-related function and applies cryptographic methods, often as sequences of cryptographic primitives. A protocol describes how the algorithms should be used and includes details about data structures and representations, at which point it can be used to implement multiple, interoperable versions of a program. Cryptographic protocols are widely used for secure application-level data transport. A cryptographic protocol usually incorporates at least some of these aspects: * Key agreement or establishment * Entity authentication * Symmetric encryption and message authentication material construction * Secured application-level data transport * Non-repudiation methods * Secret sharing methods * Secure multi-party computation For example, Transport Layer Security (TLS) is a cryptographic protocol that is used to secure web ( HTTPS) connections. It ha ...
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Proofs Of Liabilities
Proof most often refers to: * Proof (truth), argument or sufficient evidence for the truth of a proposition * Alcohol proof, a measure of an alcoholic drink's strength Proof may also refer to: Mathematics and formal logic * Formal proof, a construct in proof theory * Mathematical proof, a convincing demonstration that some mathematical statement is necessarily true * Proof complexity, computational resources required to prove statements * Proof procedure, method for producing proofs in proof theory * Proof theory, a branch of mathematical logic that represents proofs as formal mathematical objects * Statistical proof, demonstration of degree of certainty for a hypothesis Law and philosophy * Evidence, information which tends to determine or demonstrate the truth of a proposition * Evidence (law), tested evidence or a legal proof * Legal burden of proof, duty to establish the truth of facts in a trial * Philosophic burden of proof, obligation on a party in a dispute to provide ...
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Proof Of Asset
Proof most often refers to: * Proof (truth), argument or sufficient evidence for the truth of a proposition * Alcohol proof, a measure of an alcoholic drink's strength Proof may also refer to: Mathematics and formal logic * Formal proof, a construct in proof theory * Mathematical proof, a convincing demonstration that some mathematical statement is necessarily true * Proof complexity, computational resources required to prove statements * Proof procedure, method for producing proofs in proof theory * Proof theory, a branch of mathematical logic that represents proofs as formal mathematical objects * Statistical proof, demonstration of degree of certainty for a hypothesis Law and philosophy * Evidence, information which tends to determine or demonstrate the truth of a proposition * Evidence (law), tested evidence or a legal proof * Legal burden of proof, duty to establish the truth of facts in a trial * Philosophic burden of proof, obligation on a party in a dispute to provide ...
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Blockchain
A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree, where data nodes are represented by leaves). The timestamp proves that the transaction data existed when the block was created. Since each block contains information about the previous block, they effectively form a ''chain'' (compare linked list data structure), with each additional block linking to the ones before it. Consequently, blockchain transactions are irreversible in that, once they are recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks. Blockchains are typically managed by a peer-to-peer (P2P) computer network for use as a public distributed ledger, where nodes collectively adhere to a conse ...
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