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Cushion

   Also found in: Dictionary/thesaurus, Medical, Legal, Acronyms, Idioms, Encyclopedia, Wikipedia, Hutchinson 0.02 sec.
Cushion
In the context of project financing, the extra amount of net cash flow remaining after expected debt service.

cushion

Cushion
1. Period of time during which a bond cannot be called. Interest payments are guaranteed during the cushion, but not after, as the bond may be prematurely redeemed at any point after the call date.

2. A reserve account, or the function a reserve account serves, usually to pay off bad debt.

3. An advantageous debt-to-equity ratio, usually less than 40%.


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