Difference between revisions of "Compensating balance"
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| − | + | [[Compensating balance]] (also known by its acronym, [[CB]]) is a minimum checking account balance that a firm must maintain with a bank to compensate the bank for services rendered or for making a loan; generally equal to 10%–20% of the loans outstanding. | |
==Definitions== | ==Definitions== | ||
According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]], | According to [[Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition)]], | ||
| − | : | + | :[[Compensating balance]] (''CB''). A minimum checking account balance that a firm must maintain with a bank to compensate the bank for services rendered or for making a loan; generally equal to 10%–20% of the loans outstanding. |
==Related concepts== | ==Related concepts== | ||
Latest revision as of 07:49, 30 October 2019
Compensating balance (also known by its acronym, CB) is a minimum checking account balance that a firm must maintain with a bank to compensate the bank for services rendered or for making a loan; generally equal to 10%–20% of the loans outstanding.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Compensating balance (CB). A minimum checking account balance that a firm must maintain with a bank to compensate the bank for services rendered or for making a loan; generally equal to 10%–20% of the loans outstanding.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
