Definition: A deferred tax asset is created by overpaying taxes during a given time period. This usually occurs as a result of timing differences based on how the company depreciates its assets. This deferred tax asset reduces the company's tax liability in the future.
Advice: Deferred tax assets are good because they reduce the liability in the future. Because this has value, they're recorded as an asset.
Investors should give these a little consideration when analyzing a company's financials because high deferred tax assets and liabilities may signal that the company is too aggressive in its accrual accounting.
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Claim Dilution - a claim dilution is a decrease in the likelihood that one or more parties in a contract will be repaid in full. A dilution is a change on earnings per share of a stock, and a claim dilution may occur if the following happens. A company adds...
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