Definition Estate planning is the process of arranging the management and disposal of a person’s estate during their life and after death. It involves the preparation of tasks that serve to manage an individual’s asset base in the event of their incapacitation or death. The planning includes the bequest of assets to heirs and the settlement of estate taxes. Most estate plans are set up with the help of an attorney experienced in estate law.
Definition A General Ledger (GL) is a comprehensive record-keeping system that consolidates all of a company’s financial transactions. It serves as the backbone of the accounting process, ensuring all financial data is systematically recorded organized and retrievable for reporting purposes. The GL is integral for compliance with regulatory demands and assists in financial decision-making. Components of General Ledger Accounts: A General Ledger contains numerous accounts categorized into assets, liabilities, equity, revenues and expenses, which document financial transactions.
Definition A ledger is a fundamental accounting record that provides a detailed account of all the financial transactions of a business. Acting as the core of the company’s financial records, ledgers are used to classify and summarize individual financial transactions as part of the double-entry bookkeeping system. This systematic process ensures accuracy and accountability in financial reporting. Types of Ledgers General Ledger (GL): The master ledger containing a summary of all transactions recorded in various accounts, including assets, liabilities, equity, revenue and expenses.
Definition Leverage in finance refers to the practice of using borrowed capital or debt to increase the potential return on investment (ROI). By utilizing leverage, an investor can amplify their investing power, allowing for greater exposure in various assets while using a smaller amount of their own capital. However, it’s essential to recognize that leverage magnifies both potential returns and potential losses. Components of Leverage Debt: The borrowed funds that an investor uses to enhance their investment.
Definition Mergers and Acquisitions (M&A) refer to the consolidation of companies or assets through various types of financial transactions, including mergers, acquisitions, consolidations, tender offers, purchase of assets and management acquisitions. Both mergers and acquisitions involve combining two companies into a single entity to enhance competitiveness, expand operations or gain entry into new markets. Importance of M&A M&A can dramatically reshape industries, influence competitive dynamics and drive substantial value creation.
Definition Probate is the legal process by which a deceased person’s will is validated and their estate is administered according to their wishes or under the guidance of law if there’s no will. This procedure ensures the orderly distribution of the deceased’s assets to heirs and beneficiaries, the settlement of any debts and the resolution of any disputes. Probate involves the court’s recognition of a person’s death and the appointment of an executor or administrator to manage the estate.
Definition A Share Buyback, also known as a stock repurchase, is a corporate action in which a company buys back its own outstanding shares from the stock market. This process reduces the number of shares available in the open market, which can lead to an increase in the value of remaining shares. Share buybacks signal to investors that management believes the stock is undervalued and can enhance various financial metrics such as earnings per share (EPS).