The word compensation is a word that is used a lot in the field of economics and finance, as well as business, since it means to return to a party or person something that is owed or at least equal that debt with something else or value. However, the word compensation (from the verb compensate) basically means to equalize, to equalize something for which it can be used in many different spaces and settings, such as when it is said that it is intended to compensate the inadequate results of a medicinal study through the use of a medicine in order to balance them.
As stated, the word compensate means to equalize or equal something that is out of balance. This imbalance means that one of the two parties involved in the issue is damaged or diminished and therefore must be fixed through direct action. This can then be applied to numerous situations and circumstances in which this imbalance is naturally generated, for example when a person makes a mistake and compensates for it by apologizing or performing some work for the benefit of another.
The term compensation is very common when talking about economic or financial transactions. Thus, making compensation is clearly the act of giving someone who is handicapped a way to balance or equalize the other. Compensation is common when there are situations such as when someone lends money to another and must then be compensated by the person who received the money so that there are no debts or shortages. Compensation can also be given at a more abstract level when talking about profit and loss of a company: for example, if it is said that the losses or investment of a month was very high but it was compensated with very good profits.
