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Financial Ratios & Instruments

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Abstractions about measuring financial position and structuring transactions, covering valuation and risk ratios (cyclically adjusted P/E, debt service coverage ratio, Value at Risk, Sterling Ratio), balance-sheet and market concepts (deleveraging, inverted yield curve, financial network), and contractual instruments like cost-plus contract and secured transaction.

20 abstractions in this family — domain-specific abstractions that sit near one another in structural-signature space (k-means over structural-signature embeddings). Each is shown with its short description.

  • Beneficial interest — A beneficial interest is the right that a person has arising from a contract to which they are not a party, or a trust.
  • Budget-balanced mechanism — In mechanism design, a branch of economics, a weakly-budget-balanced (WBB) mechanism is a mechanism in which the total payment made by the participants is at least 0.
  • Cost-plus contract — A cost-plus contract, also termed a cost plus contract, is a contract such that a contractor is paid for all of its allowed expenses, plus an additional payment to allow for risk and incentive sharing.
  • Cyclically adjusted price-to-earnings ratio — The cyclically adjusted price-to-earnings ratio (CAPE, Shiller P/E, or P/E 10 ratio) is a stock valuation measure usually applied to the US S&P 500 equity market.
  • Debt service coverage ratio — The debt service coverage ratio (DSCR), also known as the debt coverage ratio (DCR), is a financial ratio that measures an entity's ability to generate sufficient cash to cover its debt obligations, including interest, principal, and lease payments.
  • Deleveraging — At the micro-economic level, deleveraging refers to the reduction of the leverage ratio, or the percentage of debt in the balance sheet of a single economic entity, such as a household or a firm.
  • Financial network — A financial network is a concept describing any collection of financial entities (such as payment card companies, firms, banks and financial transaction processing) and the links between them, ideally through direct transactions or the ability to mediate a transaction.
  • FISIM — In the System of National Accounts it is an estimate of the value of the services provided by financial intermediaries, such as banks, for which no explicit charges are made; instead these services are paid for as part of the margin between rates applied to savers and borrowers.
  • Implied Warranty — An implied warranty is a legally supplied assurance in a qualifying transaction even when no express promise states it.
  • Inverted yield curve — In finance, an inverted yield curve is a yield curve in which short-term debt instruments (typically bonds) have a greater yield than longer term bonds.
  • Loss ratio — A loss ratio is a ratio of losses to gains, used normally in a financial context.
  • Merger doctrine (property law) — In the law of real property, the merger doctrine stands for the proposition that the contract for the conveyance of property merges into the deed of conveyance; therefore, any guarantees made in the contract that are not reflected in the deed are extinguished when the deed is conveyed to the buyer of the property.
  • Portfolio (finance) — In finance, a portfolio is a collection of investments.
  • Rent-to-own — While rent-to-own terminology is most commonly associated with consumer goods transactions, the term is sometimes used in connection with real estate transactions.
  • Saving (economics) — In economics, saving is defined as after-tax income minus consumption.
  • Secured transaction — A secured transaction is a loan or a credit transaction in which the lender acquires a security interest in collateral owned by the borrower and is entitled to foreclose on or repossess the collateral in the event of the borrower's default.
  • Shareholder yield — Shareholder yield is the total rate at which a company returns value to shareholders through cash dividends, net share repurchases, and net debt reduction.
  • Sterling Ratio — The Sterling ratio (SR) is a measure of the risk-adjusted return of an investment portfolio.
  • Unit of account — In economics, unit of account, sometimes called currency unit or monetary unit, is a standard unit of measurement of the market value of goods, services, and other transactions.
  • Value at risk — Value at risk (VaR) is a measure of the risk of loss of investment/capital.