Asset Valuation Reserve - AVR
Reserves are to businesses what savings are to individuals. This particular kind of reserve has two pieces: a default component and an equity component. The default is set to cover future potential losses. For example, insurance companies are required to have enough in reserves to cover claims. This requirement is set by the National Association of Insurance Commissioners (NAIC).
Usually, reserves are tucked away annually. The business can calculate this sum by estimating future losses, for example, or by an estimate of all outstanding assets like stocks and bonds. Basically, this is the business saying "When it rains, it pours. If a metaphorical storm hit us tomorrow, how much do we need on hand to cover everything we need to cover?" These amounts will vary based on type of business (and the laws pertaining to them)...but you get the idea.
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Finance: What is liability?3 Views
Finance allah shmoop What is a liability What is it
it's what you owe you bought four million gumballs on
credit for your party pack for the parade the money
is owed to gumballs are us in ninety days that's
a short term liability Alright next example you borrowed eighty
three million dollars to set up your new do dental
drive through service and that money is due in twelve
years at seven percent interest a year that's A long
term liability Why long term Because it comes due in
over a year and that's basically it liability comes in
two flavors short and long term and it's one of
the key elements of the balance sheet as it lives
in this space ride over here So yeah that's a
liability all this crap time now considering how many gumballs
you've consumed in the past month you really should get
yourself to a good drive through dentist or maybe sleep 00:00:56.998 --> [endTime] in mr
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