What is Amortization?
A definition of Amortization
“Amortization is the gradual repayment of a loan over time. It involves periodic payments that include both principal and interest amounts until the total debt is paid off.”

Business Glossary > What is Amortization?
Examples of Amortization in a Sentence:
The company uses amortization to reduce its debt gradually.
Amortization schedules help determine monthly loan payments.
Understanding amortization is vital for managing long-term finances.
Why is Amortization Important in Business?
Amortization matters because it allows businesses and individuals to manage large debts efficiently. By understanding amortization, entities can align their financial planning with debt obligations, making it crucial for budgeting and forecasting.
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Associated Terms
Here are some associated business terms and synonyms for “Amortization”:
- Debt Repayment
- Loan Reduction
- Principal Paydown
Microsoft Amortization Approach
Microsoft employs amortization strategies in financing its infrastructure investments. The company uses a structured amortization schedule to ensure that the repayments align with its cash flow strategies efficiently.
Final Notes on Amortization
Entities must understand their cash flow capabilities when planning amortization. Proper amortization planning helps avoid liquidity issues and aligns debt repayments with operational cash flows.
This has been a definition of Amortization meaning.
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