Category: Financial Terms

Delivered Duty Unpaid (DDU): What It Means and How It Works What is DDU? Delivered Duty Unpaid (DDU) is an international shipping term that places responsibility for transporting goods to an agreed destination on the seller, while leaving payment of import duties, taxes, customs clearance, and any onward transport at destination to the buyer. In…

Delivered Duty Paid (DDP): What It Means for Importers and Exporters Key takeaways * Delivered Duty Paid (DDP) is an Incoterm under which the seller bears nearly all costs and risks of delivering goods to a named place in the buyer’s country. * The seller is responsible for transportation, export and import clearance, duties, taxes,…

Delivered-at-Place (DAP) Definition Delivered-at-Place (DAP) is an Incoterm that places responsibility on the seller to deliver goods to an agreed destination and bear all costs and risks of transport up to that point. The buyer assumes responsibility once the goods arrive at the named place, including unloading, import clearance, duties, and taxes. DAP was introduced…

Delivered at Frontier (DAF): Definition and Overview Delivered at Frontier (DAF) is an international shipping term that requires the seller to deliver goods to a specified border location (the “frontier”). Under DAF the seller arranges and pays for transport to the agreed border point and is responsible for costs and risks up to the moment…

Deliverables What are deliverables? Deliverables are the measurable goods, services, or outputs that must be produced and handed over at the completion of a project—or at defined milestones within a project. They can be tangible (hardware, buildings) or intangible (software, training, reports) and may be delivered internally or to external customers. Key takeaways Deliverables define…

Delisting: Process, Implications, and Investor Tips Delisting is the removal of a security from a stock exchange. It can be voluntary (a company choosing to go private) or involuntary (the exchange removes the listing for failing to meet requirements). Delisted shares do not disappear, but they usually become harder to trade and carry greater risk…

Delinquent Account Credit Card: Definition, Impact, and What to Do What is a delinquent credit card account? A credit card account is considered delinquent when the cardholder fails to make at least the minimum required payment within 30 days of the payment due date. Lenders typically begin outreach after 30 days past due and escalate…

Delinquent (Financial Delinquency) What it means Delinquency in finance means being late or overdue on a payment—such as a credit card bill, mortgage, student loan, or tax obligation. An account is typically considered delinquent once it is at least 30 days past due, though some lenders report at 45 or 60 days. Delinquency can apply…

Delinquency Rate: Definition, Tracking, and Reporting What is the delinquency rate? The delinquency rate is the percentage of loans in a lender’s portfolio with overdue payments. Lenders and analysts commonly measure delinquency once a borrower has missed multiple consecutive payments (for example, 60 days past due), and they use the rate to assess credit performance…

Deleveraging: Definition, How It Works, Risks, and an Illustrative Example What is deleveraging? Deleveraging is the process of reducing financial leverage—that is, lowering the amount of debt on a balance sheet relative to assets or equity. It typically means paying down liabilities without taking on new debt. The objective is to reduce financial risk and…

Delayed Draw Term Loan What is a Delayed Draw Term Loan (DDTL)? A Delayed Draw Term Loan (DDTL) is a committed loan facility that lets a borrower withdraw predefined amounts at scheduled times or after specified milestones from a pre-approved total commitment. It provides periodic access to capital while limiting the amount outstanding at any…

Delaware Corporations What is a Delaware corporation? A Delaware corporation is a company legally incorporated in the state of Delaware. It may conduct business anywhere in the U.S., but its formation and corporate governance are governed by Delaware law. Over the past century Delaware developed a business-friendly legal framework that attracted many companies to incorporate…

Degrees of Freedom (DF) — A Concise Guide What are degrees of freedom? Degrees of freedom (DF) measure how many independent values in a data set can vary while still satisfying any constraints imposed on the set. In many common settings, DF tells you how many observations can be freely chosen before the remaining values…

Degree of Operating Leverage (DOL) What DOL Is and Why It Matters The Degree of Operating Leverage (DOL) measures how sensitive a company’s operating income (EBIT) is to a change in sales. Firms with a higher proportion of fixed costs relative to variable costs have higher operating leverage, which amplifies the effect of sales changes…

Degree of Financial Leverage Definition The degree of financial leverage (DFL) measures how sensitive a company’s earnings per share (EPS) are to changes in operating income (EBIT) due to its use of debt. It expresses the percentage change in EPS for a given percentage change in EBIT and helps assess the risk and reward of…

Degree of Combined Leverage (DCL) The Degree of Combined Leverage (DCL) measures how a percentage change in sales is expected to affect earnings per share (EPS) by combining the effects of operating leverage and financial leverage. It helps assess how sensitive a firm’s EPS is to changes in sales and aids in evaluating the trade-off…

Deflation: Causes, Effects, and How Economies Respond Key takeaways Deflation is a sustained decline in general price levels, increasing the purchasing power of money. Common causes include falling aggregate demand, contractions in money/credit, and productivity or technological gains. Deflation benefits consumers through lower prices but harms borrowers and can destabilize financial markets. Policymakers counter deflation…

Defined Contribution Plan A defined contribution (DC) plan is a retirement savings arrangement in which contributions are made to an individual account for an employee. Contributions come from the employee, the employer, or both, and the account balance grows (typically tax‑deferred) based on investment returns. The eventual retirement benefit depends on how much is contributed…

Defined-Benefit Plan Overview A defined-benefit plan (commonly called a pension) is an employer-sponsored retirement plan that guarantees a specific benefit at retirement. The benefit is calculated using a formula that typically considers factors such as final salary and years of service. The employer manages the plan assets and is responsible for paying the promised benefits,…

Deficit Spending Unit: What It Means and How It Works Key takeaways * A deficit spending unit spends more than it earns over a given period. * Deficit units include governments, businesses, households, sectors, or entire countries. * Short-term deficits can stimulate growth; prolonged deficits raise debt, tax, and default risks. * The opposite is…

Deficit Spending Deficit spending occurs when a government’s expenditures exceed its revenues during a fiscal period, producing a budget deficit. Often used as a deliberate policy tool, deficit spending aims to boost aggregate demand and stimulate economic activity, especially during recessions. Key takeaways Deficit spending means government spending surpasses revenue in a given period. It…

Deficit A deficit occurs when outflows exceed inflows: expenses surpass revenues, imports exceed exports, or liabilities exceed assets. It represents a shortfall that increases borrowing or reduces savings and can apply to individuals, businesses, or governments. Key takeaways A deficit is the opposite of a surplus: spending or imports larger than income or exports. Governments…

Deferred Tax Liability What it is A deferred tax liability (DTL) is a tax obligation a company has incurred but will pay in the future. It arises from temporary differences between the way income and expenses are recognized for financial reporting (GAAP/IFRS) and for tax purposes. A DTL reflects taxes that will become payable when…

Deferred Tax Asset A deferred tax asset (DTA) is an item on a company’s balance sheet that represents future tax reductions. DTAs arise when a company has paid more tax or has deductible amounts now that will reduce taxable income in future periods. They reflect timing or recognition differences between accounting rules and tax laws…

Deferred Revenue Key takeaways * Deferred revenue (also known as unearned revenue) is cash received in advance for goods or services a company has not yet delivered. * Under accrual accounting and revenue-recognition standards (ASC 606 / IFRS 15), advance payments are recorded as liabilities and recognized as revenue only as performance obligations are satisfied….

Deferred Profit Sharing Plan (DPSP) Key takeaways * A DPSP is an employer-sponsored, registered Canadian retirement plan in which only employers make contributions. * Employer contributions and investment earnings grow tax-deferred; employees pay tax when funds are withdrawn. * Contributions are flexible and can be tied to company profits; most plans include a vesting period…

What is deferred interest? Deferred interest is a financing feature that postpones interest charges for a defined promotional period. If you pay the entire balance before that period ends, you owe no interest. If you do not, interest is often charged retroactively (backdated) to the date of the original purchase or loan, which can produce…

Deferred Income Tax Explained: Definition, Purpose, and Key Examples What is deferred income tax? Deferred income tax is an accounting recognition of taxes that will be paid or recovered in the future because tax rules and financial accounting rules recognize income and expenses at different times. It reflects temporary differences between taxable income (what’s reported…

Understanding Deferred Compensation: Benefits, Plans, and Tax Implications Deferred compensation lets an employee postpone receipt of part of their salary (or bonus) to a future date—often retirement—in order to defer income tax and potentially grow savings tax-deferred. It appears in many forms, and its rules and protections depend on whether the plan is qualified or…

Deferred Annuity A deferred annuity is an insurance contract that provides a stream of income or a lump-sum payment at a future date. Unlike an immediate annuity, payments are postponed until after an accumulation period, allowing the contract value to grow on a tax-deferred basis. Deferred annuities are commonly used to supplement retirement income. Key…

Deferred Acquisition Costs (DAC) — Definition and Overview Deferred acquisition costs (DAC) are the costs an insurance company incurs to acquire new policies—commissions, underwriting, policy issuance, marketing and certain distribution expenses—that are capitalized as an asset and amortized over the life of the insurance contract. Capitalizing these acquisition costs smooths earnings by matching the expense…

Deferment Period: Meaning, Applications, and Examples Key points * A deferment period is a prearranged time during which payment or certain rights are delayed. * In lending, deferment typically pauses principal and/or interest payments; whether interest accrues depends on the contract. * In securities, a deferment (call protection) is a window during which an issuer…

Defensive Stocks: Definition, Pros & Cons, and Examples Key Takeaways * Defensive stocks deliver relatively stable earnings and steady dividends regardless of overall market conditions. * Common defensive sectors include utilities, consumer staples, healthcare, and certain residential REITs. * They tend to be less volatile (beta < 1), offering lower downside risk but also smaller…

Defensive Interval Ratio (DIR) The Defensive Interval Ratio (DIR), also called the Defensive Interval Period (DIP) or Basic Defense Interval (BDI), measures how many days a company can continue operating using only its liquid (defensive) assets before needing external financing or selling long-term assets. It’s primarily a liquidity metric that relates available liquid resources to…

Defeasance — Definition and Overview Defeasance is a financial strategy that lets a borrower effectively nullify a loan or bond obligation by setting aside sufficient funds—typically cash and high-quality securities—to cover remaining payments. When properly structured and legally executed, the debt obligation is treated as satisfied even though the borrower may not have paid the…