57 terms

FFA Banking Terms

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Account Recievable
A sum of money due from another party
Accrued Interest
Interest that has been earned but not yet paid or due
Acre
An area of land containing 43,560 square feet
Amortize
To provide payment of a debt by scheduled installments of principal and interest over a specified period of time
Appraisal
A written statement of estimated value
Assets
Any item of value owned by an individual or entity
Current Assets
Assets that will be turned into cash within a year
Intermediate Assets
The sum of resources primarily used to support farm production
Fixed Assets
Property or goods that are permanent in nature
Balance Sheet
A list of all assets and liabilities of an individual or entity
Capacity
An individuals ability to repay a loan
Capital
All the kinds of equity of the owners of an organization
Cash Flow
The sum of all cash transfers available during a specified period of time to meet obligations
Collateral
Specific property pledged by a borrower to a lender as security for the repayment of a loan
Commercial Loans
Short-term operating and Intermediate-term loans
Credit Factors
Items evaluated when acting on a credit request. Character, capital, capacity, conditions, and collateral
Deed
A legal document that conveys title to property from the former owner to the new owner
Deed of Trust
An instrument by which property is conveyed to a trustee to secure payment of a debt to the lender
Depreciation
A decrease in the value of assets; that portion of the cost of capital goods (that have determinable useful life exceeding one year) which is used up or expensed in the course of a predetermined time period, as in a business year.
Intermediate Term Assets:
Assets which have economic lives between one and ten years.
Equipment, vehicles, breeding livestock, cooperative stock, unlisted stock, cash value of life insurance (CVLI), etc
Long Term Assets:
Assets which have useful lives in excess of ten years.
Real estate, buildings, orchard improvements, retirement funds, and other long term investments.
Current Liabilities:
Obligations due and payable within one year.
Bank notes payable, accounts payable, current portion (principal) of long term debt (CPLTD), accrued interest, taxes now due, accrued expenses, etc.
Intermediate Term
Liabilities:
Obligations due and payable between one and ten years.
Equipment loans, vehicle loans, capital lease obligations. intermediate term notes payable.
Long Term Liabilities:
Obligations due in excess of ten years
Real estate mortgages, long term loans, notes payable due in more than seven years.
Contingent Liabilities:
Liabilities that depend on certain extraneous factors.
Guaranteed loans, co-signed loans, pending lawsuits, environmental lawsuits, other obligations which may materialize.
Equity:
The amount of capital invested or earned in an entity (partnership, corporation, estate, trust, or sole proprietorship).
Common stock at par value, paid in capital, retained earnings, partner's capital accounts, owner's equity.
Earned Surplus:
The profits of an enterprise that remain undistributed and have been made through the regular operations of the enterprise.
Eligible Loan:
A loan that meets the standards set by the rules and regulations of a lending institution.
Farm Credit Act of 1971:
The federal law under which the Farm Credit System operates and is governed.
Farm Related Business:
A person engaging in furnishing to farmers and ranchers custom-related services either performed on the farm or related directly to their on-farm needs.
Financial Statement:
Same as balance sheet.
Financial Trend:
Comparison of current net worth and financial position with that of previous years.
Gross Income:
The total returns from operating a business before allowance is made for any costs related to the operation.
Gross Loan:
Total liability including that advanced for Farm Credit stock.
Income Statement:
A statement of a customer's income and expenses for a specific period. An income statement may be in a lender-provided format, IRS records, or acceptable accounting records. Same as a profit and loss statement.
Insolvent:
Unable to pay all debts when they come due since assets are not sufficient to meet all debts.
Interest:
A sum paid, or accrued, in exchange for the use of another's money.
Leverage:
The use of debt financing.
Liabilities:
Any debts or obligations owed, such as monies borrowed, balances unpaid on purchases, unpaid taxes, unpaid wages, unpaid interest, etc.
Lien:
A legal claim on real and/or personal property of another for payment of a just debt.
Liquidity:
The ability of a business to meet its cash or short run obligations when due without disrupting normal business operation.
Loan:
A specific amount of credit extended and available to a borrower for a specific purpose, whether represented by one note or several notes all having a common maturity date.
Mortgage:
An instrument by which the borrower (mortgagor) gives the lender (mortgagee) a lien on property (commonly real property) as security for the payment of an obligation.
Net Income:
The sum remaining from the gross or total returns of a business after deducting therefrom all costs related to operating the business, including taxes, interest, depreciation, etc.
Personal Property:
Identifiable portable and tangible objects which are considered by the general public as being "personal," Such as furnishings, art work, antiques, livestock, inventories, accounts receivable, vehicles, machinery, and equipment.
Primary Security:
The basic collateral securing the loan.
Profit and Loss Statement:
Same as an income statement.
Real Estate:
Land and anything permanently affixed to land.
Real Property:
All interests, benefits, and rights inherent in the ownership of real estate.
Repayment Capacity:
The ability of a farm unit to produce income equal to or greater than operating credit extended, capital credit payments, living expenses, and other overhead costs including capital replacement costs.
Secured Loan:
A loan that is supported by a security agreement, mortgage, or other lien on personal or real property.
Security:
A pledge, mortgage, deposit, lien, etc., given by a debtor in order to ensure the payment or performance of his/her debt by furnishing the creditor with a resource to be used in case of a failure to repay the obligation.
Short Term:
A loan usually made for one year or less; for example, most regular operating loans.
Solvency:
A concept relating to capital structure and long-term ability of a business to pay off it's financial obligations if assets are liquidated.
Standards:
Minimally acceptable levels of performance and means of conducting business adopted by a System entity's board of directors.
Unsecured Loan:
A loan made by a lender based on credit information of the borrower and his/her integrity and ability to repay obligation. The loan is not secured by collateral but is made the signature of the borrower.
Working Capital:
The value of current assets which will produce cash income or will be converted to cash during the normal business cycle, less current liabilities. Also defined as current assets less current liabilities.
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