Guide to Analysing Companies

Account
The balance of a customer’s borrowing and lending with a
bank. This type of account can take several forms, as follows.
 Current account. An account on which cheques can
be drawn and an overdraft arranged. Current
accounts do not usually pay significant amounts of
interest on positive balances. charges are usually
related to the volume of transactions, the size of the
balance on the account and the type of service provided.
 deposit account. An account which is always kept in
credit, and on which interest is paid. 
 Savings account. An account designed specifically to
assist customers to accumulate large sums by means of
small, regular payments.
 Budget account. An account designed to help individuals
make bulky, bothersome payments (like telephone or
electricity bills) more smoothly. Regular payments into
the account allow the account holder to borrow several
times the value of each payment. Sometimes such an
account is in credit; sometimes it is overdrawn. The aim,
however, is that it should have the same balance at the
end of the year as it has at the beginning.
 Term account. An account designed for savers who
have spare cash and do not mind tying it up for several
months or years at a time. In return, they receive a higher
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interest rate; generally, the longer the period it is on
deposit, the higher the rate is. A snag is that usually a
minimum amount has to be deposited and there are
often penalties for withdrawing part or all of the money
early.
Although bank accounts follow a similar pattern in most de-
veloped countries, there are important variations. In France, for
example, it is illegal to write a cheque without sufficient funds in
an account to cover it. Those flouting the law may be banned from
holding a bank account and reported to the country’s central
bank. By contrast, German banks will continue to provide cash
through automatic teller machines even if there is not
enough money in the account to cover the withdrawal. However,
the interest rate charged on the amount withdrawn can be high
and the account holder may suffer other penalties.
Accrual rate
The rate at which interest is charged on a loan or mort-
gage. Most such rates are set directly by the market or by ref-
erence to a market index, plus a margin for the lender. In the
UK, the term usually applies to the rate at which a pension in-
creases each year, usually expressed as a fraction. Most people
are part of a one-eighth or one-sixteenth pension scheme. This
means that for each year that they are in the scheme they
receive one-eighth or one-sixteenth of their pensionable earn-
ings on retirement.