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Amortisation
The part of a loan payment that reduces the balance. Principal repayment is a balance-sheet shift, not automatically an economic cost.
Simple definition
The part of a loan payment that reduces the balance. Principal repayment is a balance-sheet shift, not automatically an economic cost.
Why it matters
This term changes how inputs, cash flows or results should be interpreted. RATIOXA keeps it explicit so two options are compared on the same basis.
Worked example
With a €1,500 payment and €1,000 interest, €500 repays principal.