A debtor is person or group of person who has to pay or return benefits or sum of amount to another person or group of persons.
A debtor can be a person, government, agency, or any institution that borrows goods/services or amount from another entity (Creditor).
In above diagram “X” has to pay a sum of amount to “Y”. Therefore” X” is the debtor of “Y” and “Y” is beneficiary.
Depreciation refers to the reduction in value of a tangible asset due to its wear and tear or obsolescence over time. It is non cash expense that reduces the value of a physical asset.
Derivative is a financial instrument whose value is derived from an underlying asset. Fluctuation in these underlying assets decides the price of derivative as its price is dependent upon the price of underlying asset.
Often stocks, bonds, commodities, currencies, interest rates and market indexes are considered as underlying assets.
Future, option, forward and swaps are most common type of derivatives.
Dividend refers to the amount of return on shares held by an investor. It is paid from the PAT and is decided by the BOD. It can be paid from current earnings or past earning (which has been kept as reserves).
A financial statement is a summarized report of a company’s financial activities over a period of time. Financial statements are meant to provide financial information of a company. Financial statements are composition of mainly three statements. These are Balance sheet, Income statement (P&L Account) and Cash flow statement.
