Glossary

Accounts Payable -   Amount of money owed to suppliers and other short term debt to creditors.  Accounts payable is a source of cash on the cash flow statement and related to the COGS on the income statement, but not necessarily the same if the company still owes money.

Accounts Receivable-  Money that is owed to a company for providing a service or good. It is typically recorded as an asset on a company’s balance sheet below “cash and equivalents and represents credit that the company has extended.  Looked at in the context of sales performance, accounts receivable can suggest how quickly customers are paying their bills.

Accounts Receivable Turnover Ratio- An asset utilization ratio that is used to determine how well a company collects receivables and short term IOU’s from customers. The accounts receivable turnover ratio is calculated by dividing a company’s sales by its accounts receivable, (sales/accounts receivable). The ratio is also an indication of a company’s financial liquidity. The lower the ratio, the greater a company’s liquidity.

Accrual Accounting- A form of accounting whereby revenues are recognized when they are earned, not when they are received. In accrual accounting, cash does not need to  change hands before the revenue is recognized. 

Accumulation- The investing stage in which an individual is building their wealth. During the accumulation stage, investors are likely to be involved in riskier investments because they have a longer-term investing horizon in which they can potentially recoup losses 

Acquisition – The purchase of one company by another business entity. 

Acquisition of Assets – An acquirer purchases the selling company’s assets.

Acquisition of Stock – An acquirer purchases the capital stock of the target company.

Additional Paid-in Capital – Amount paid for stock over and above its par value.

Amortization – Recognition as an expense of part of an intangible asset’s cost during each period of its useful life

Basis Point – The smallest measure used for quoting interest yields.

Bond – A debt issued for a period of more than a year.

Book Value –  A company’s total assets minus intangible assets and liabilities.

Break-Even – The level of revenues and expenses at which a project would make zero profit.

Bullet Loan – A term loan that calls for no amortization and a lump sum payment at maturity.

Capital Budget – A company’s plan for capital expenditures (acquisition of fixed assets).

Capital Expenditures – Money used to acquire or improve fixed assets.

Capital Stock – Stock authorized by a firm’s charter.

Capitalization – The debt and equity combination that funds a company’s assets.

Cash and Equivalents – Assets that can be converted into cash immediately.

Cash Flow Coverage Ratio – The ratio of financial obligations to earnings before interest, taxes, depreciation and amortization.

Cash Flow From Operations – A company’s net cash flow resulting directly from its regular operations.


CDO – Collateralized Debt Obligation – Security backed by a pool of bonds, loans or other assets containing different types of credit risk with each tranche having a different maturity and risk associated with it.

CLO – Collateralize Loan Obligation – Securities collateralize by bank commercial loan portfolios.

CMO – Collateralize Mortgage Obligation – A mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders with varying maturities and risk levels.

Collateral – Assets which can be repossessed in the event of default on a loan.

Commitment Fee – A fee paid to a financial institution in return for its commitment to lend funds that have not yet been advanced.

Common Stock Equivalents – Securities that can be converted into common stock

Compensating Balance – Excess balances left in a bank account to provide indirect compensation for loans or services.

Compound Interest – Interest paid on previously earned interest as well as on the principal.

Consolidation – The joining of two or more companies to form a new company.

Covenants – Conditions agreed to in debt agreements designed to protect the lender’s interests.

Corporation – Legal entities which are separate and distinct from its owners, and can own assets, incur liabilities, and issue stock.

Coverage Ratio – A formula used to assess the adequacy of cash flow generated through earnings for the purposes of meeting debt and lease obligations.

Current Assets – Assets that could be converted to cash in less than a year.

Current Liabilities – Salaries, interest, accounts payable and other debts due within one year.

Current Ratio – A measure of debt paying ability, current assets divided by current liabilities.

Debt to Equity Ratio – Total debt divided by stockholders’ equity – a gauge of leverage and ability to repay obligations.

Deferred Revenue - Liability arising upon the prepayment for goods or services yet to be delivered.

Depreciation – The charge to amortize the cost of long-term assets over the useful life of the assets.

Derivative – Financial contract whose value is determined by fluctuations in value of the underlying assets and is generally used as an instrument to hedge risk.

Discounting – Calculating the present value of a future amount.

E.B.I.T. - Earnings Before Interest and Taxes.

E.B.I.T.D.A. – Earnings Before Interest, Taxes, Depreciation and Amortization.

EDGAR – Electronic Data Gathering and Exchange accesses S.E.C filings to investors.

Equity Kicker – Warrants issued in conjunction with privately placed debt.

FIFO – First In, First Out – Method of valuing inventory where goods first purchased/manufactured are treated as the first sold.

GAAP – Generally Accepted Accounting Principles – standards, conventions, and rules to record, summarize financial transactions and prepare issued    by the American Institute of Certified Public Accountants.
General Partnership – Partnership in which all partners are general partners.

I.P.O. – Initial Public Offering. A company’s first sale of stock to the public.

Insolvency Risk – The risk that a company will not be able to satisfy its debts.

Insolvent – A firm whose liabilities are greater than its debts.

Intangible Asset - Goodwill, intellectual property, patents, copyrights, trademarks, etc.

Interest – The price paid for borrowing money.

LIFO – Last In, First Out – Method of valuing inventory where goods most recently purchased/manufactured are treated as first sold.

Line of Credit – Short-term credit available to businesses from banks.

Liquid Asset - An asset that is easily converted into cash.

L.I.B.O.R. – The London Interbank Offered Rate of interest that international banks in London charge each other for borrowing money.

Long-Term Debt – A debt with a maturity of more than one year.

Management Buyout – A leveraged buyout in which the acquiring group is led by the company’ s management.

Management Fee – The fee charged by the management company to an investment fund based on the fund’s average assets.

Marketable Securities – Instruments that can readily be converted into cash.

Merger – The combination of two companies.

Mortgage – Debt instrument for the purchase of property and collateralized by the property.

Net Worth / Stockholders’ Equity – Includes common stock, surplus and retained earnings.

NOL – Net Operating Loss – Excess of business expenses over revenues in a tax year

Operating Cash Flow – Earnings before depreciation minus taxes.

Par Value – Stated value of a share of stock – usually a minimal value.

Perquisites – Personal benefits such as a company car, expense account, office decor, etc.

PP&E – Property, Plant and Equipment – fixed assets with a useful life greater than one year.

Present Value – The current value of cash to be received in the future.

Prime Rate – The interest rate at which banks lend money to their best customers.

Principal - The total amount of a loan.

Private Placement – The sale of a bond or security directly to a limited number of investors.

Pro Forma Financial Statements – Financial statements which have been adjusted to reflect future events.

Quick Ratio – A calculation of a company’s financial strength and liquidity – determined by subtracting inventories from total current assets dividing by current liabilities.

Replacement Cost – The cost of replacing a company’s assets.

Reserve – An accounting entry that properly reflects contingent liabilities.

Restrictive Covenant - An agreement placing constraints on the operations of a borrower.

Retained Earnings – Earnings retained by a company for reinvestment in its operations rather than paid out as of dividends.

Return on Assets (R.O.A.) – An indicator of profitability, determined by dividing net income by total average assets.

Return on Equity (R.O.E.) – Indicator of profitability, calculated by dividing net income by average common stockholder equity.

Secured Debt – Debt which is covered by specific assets in the event of a default.

Senior Debt – Debt which has a priority claim on the assets of a company.

Subordinated Debt - A debt whose holders have a claim on the company’s assets only after senior debtholders claims have been satisfied.

Tangible Asset – An asset that represents a physical object such as land, furniture, equipment and buildings.

Target Firm – A company which is has been identified as a candidate for acquisition by another company.

Term Loan – A bank loan for a specified amount with repayment schedule, often at a floating interest rate and a maturation date from one and ten years.

Treasury Stock – Stock reacquired by the issuer that has not been retired and is available for sale.

Unsecured Debt – Debt which is not covered by specific assets in the event of a default.

Useful Life – Estimate of the period of time an asset will be in use.

Warrant - Security entitling the holder to buy a proportionate amount of stock at some specified future date at a specified price.

Yield - The percentage rate of return paid on an investment.

Zero Coupon Bond – bond in which the principal and interest are paid at the maturity date rather than in increments over the life of the contract.

Glossary terms

Accounts Payable -   Amount of money owed to suppliers and other short term debt to creditors.  Accounts payable is a source of cash on the cash flow statement and related to the COGS on the income statement, but not necessarily the same if the company still owes money.

Accounts Receivable-  Money that is owed to a company for providing a service or good. It is typically recorded as an asset on a company’s balance sheet below “cash and equivalents and represents credit that the company has extended.  Looked at in the context of sales performance, accounts receivable can suggest how quickly customers are paying their bills.

Accounts Receivable Turnover Ratio- An asset utilization ratio that is used to determine how well a company collects receivables and short term IOU’s from customers. The accounts receivable turnover ratio is calculated by dividing a company’s sales by its accounts receivable, (sales/accounts receivable). The ratio is also an indication of a company’s financial liquidity. The lower the ratio, the greater a company’s liquidity.

Accrual Accounting- A form of accounting whereby revenues are recognized when they are earned, not when they are received. In accrual accounting, cash does not need to  change hands before the revenue is recognized. 

Accumulation- The investing stage in which an individual is building their wealth. During the accumulation stage, investors are likely to be involved in riskier investments because they have a longer-term investing horizon in which they can potentially recoup losses 

Acquisition – The purchase of one company by another business entity. 

Acquisition of Assets – An acquirer purchases the selling company’s assets.

Acquisition of Stock – An acquirer purchases the capital stock of the target company.

Additional Paid-in Capital – Amount paid for stock over and above its par value.

Amortization – Recognition as an expense of part of an intangible asset’s cost during each period of its useful life

Basis Point – The smallest measure used for quoting interest yields.

Bond – A debt issued for a period of more than a year.

Book Value –  A company’s total assets minus intangible assets and liabilities.

Break-Even – The level of revenues and expenses at which a project would make zero profit.

Bullet Loan – A term loan that calls for no amortization and a lump sum payment at maturity.

Capital Budget – A company’s plan for capital expenditures (acquisition of fixed assets).

Capital Expenditures – Money used to acquire or improve fixed assets.

Capital Stock – Stock authorized by a firm’s charter.

Capitalization – The debt and equity combination that funds a company’s assets.

Cash and Equivalents – Assets that can be converted into cash immediately.

Cash Flow Coverage Ratio – The ratio of financial obligations to earnings before interest, taxes, depreciation and amortization.

Cash Flow From Operations – A company’s net cash flow resulting directly from its regular operations.


CDO – Collateralized Debt Obligation – Security backed by a pool of bonds, loans or other assets containing different types of credit risk with each tranche having a different maturity and risk associated with it.

CLO – Collateralize Loan Obligation – Securities collateralize by bank commercial loan portfolios.

CMO – Collateralize Mortgage Obligation – A mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders with varying maturities and risk levels.

Collateral – Assets which can be repossessed in the event of default on a loan.

Commitment Fee – A fee paid to a financial institution in return for its commitment to lend funds that have not yet been advanced.

Common Stock Equivalents – Securities that can be converted into common stock

Compensating Balance – Excess balances left in a bank account to provide indirect compensation for loans or services.

Compound Interest – Interest paid on previously earned interest as well as on the principal.

Consolidation – The joining of two or more companies to form a new company.

Covenants – Conditions agreed to in debt agreements designed to protect the lender’s interests.

Corporation – Legal entities which are separate and distinct from its owners, and can own assets, incur liabilities, and issue stock.

Coverage Ratio – A formula used to assess the adequacy of cash flow generated through earnings for the purposes of meeting debt and lease obligations.

Current Assets – Assets that could be converted to cash in less than a year.

Current Liabilities – Salaries, interest, accounts payable and other debts due within one year.

Current Ratio – A measure of debt paying ability, current assets divided by current liabilities.

Debt to Equity Ratio – Total debt divided by stockholders’ equity – a gauge of leverage and ability to repay obligations.

Deferred Revenue - Liability arising upon the prepayment for goods or services yet to be delivered.

Depreciation – The charge to amortize the cost of long-term assets over the useful life of the assets.

Derivative – Financial contract whose value is determined by fluctuations in value of the underlying assets and is generally used as an instrument to hedge risk.

Discounting – Calculating the present value of a future amount.

E.B.I.T. - Earnings Before Interest and Taxes.

E.B.I.T.D.A. – Earnings Before Interest, Taxes, Depreciation and Amortization.

EDGAR – Electronic Data Gathering and Exchange accesses S.E.C filings to investors.

Equity Kicker – Warrants issued in conjunction with privately placed debt.

FIFO – First In, First Out – Method of valuing inventory where goods first purchased/manufactured are treated as the first sold.

GAAP – Generally Accepted Accounting Principles – standards, conventions, and rules to record, summarize financial transactions and prepare issued    by the American Institute of Certified Public Accountants.
General Partnership – Partnership in which all partners are general partners.

I.P.O. – Initial Public Offering. A company’s first sale of stock to the public.

Insolvency Risk – The risk that a company will not be able to satisfy its debts.

Insolvent – A firm whose liabilities are greater than its debts.

Intangible Asset - Goodwill, intellectual property, patents, copyrights, trademarks, etc.

Interest – The price paid for borrowing money.

LIFO – Last In, First Out – Method of valuing inventory where goods most recently purchased/manufactured are treated as first sold.

Line of Credit – Short-term credit available to businesses from banks.

Liquid Asset - An asset that is easily converted into cash.

L.I.B.O.R. – The London Interbank Offered Rate of interest that international banks in London charge each other for borrowing money.

Long-Term Debt – A debt with a maturity of more than one year.

Management Buyout – A leveraged buyout in which the acquiring group is led by the company’ s management.

Management Fee – The fee charged by the management company to an investment fund based on the fund’s average assets.

Marketable Securities – Instruments that can readily be converted into cash.

Merger – The combination of two companies.

Mortgage – Debt instrument for the purchase of property and collateralized by the property.

Net Worth / Stockholders’ Equity – Includes common stock, surplus and retained earnings.

NOL – Net Operating Loss – Excess of business expenses over revenues in a tax year

Operating Cash Flow – Earnings before depreciation minus taxes.

Par Value – Stated value of a share of stock – usually a minimal value.

Perquisites – Personal benefits such as a company car, expense account, office decor, etc.

PP&E – Property, Plant and Equipment – fixed assets with a useful life greater than one year.

Present Value – The current value of cash to be received in the future.

Prime Rate – The interest rate at which banks lend money to their best customers.

Principal - The total amount of a loan.

Private Placement – The sale of a bond or security directly to a limited number of investors.

Pro Forma Financial Statements – Financial statements which have been adjusted to reflect future events.

Quick Ratio – A calculation of a company’s financial strength and liquidity – determined by subtracting inventories from total current assets dividing by current liabilities.

Replacement Cost – The cost of replacing a company’s assets.

Reserve – An accounting entry that properly reflects contingent liabilities.

Restrictive Covenant - An agreement placing constraints on the operations of a borrower.

Retained Earnings – Earnings retained by a company for reinvestment in its operations rather than paid out as of dividends.

Return on Assets (R.O.A.) – An indicator of profitability, determined by dividing net income by total average assets.

Return on Equity (R.O.E.) – Indicator of profitability, calculated by dividing net income by average common stockholder equity.

Secured Debt – Debt which is covered by specific assets in the event of a default.

Senior Debt – Debt which has a priority claim on the assets of a company.

Subordinated Debt - A debt whose holders have a claim on the company’s assets only after senior debtholders claims have been satisfied.

Tangible Asset – An asset that represents a physical object such as land, furniture, equipment and buildings.

Target Firm – A company which is has been identified as a candidate for acquisition by another company.

Term Loan – A bank loan for a specified amount with repayment schedule, often at a floating interest rate and a maturation date from one and ten years.

Treasury Stock – Stock reacquired by the issuer that has not been retired and is available for sale.

Unsecured Debt – Debt which is not covered by specific assets in the event of a default.

Useful Life – Estimate of the period of time an asset will be in use.

Warrant - Security entitling the holder to buy a proportionate amount of stock at some specified future date at a specified price.

Yield - The percentage rate of return paid on an investment.

Zero Coupon Bond – bond in which the principal and interest are paid at the maturity date rather than in increments over the life of the contract.

Glossary terms

Accounts Payable -   Amount of money owed to suppliers and other short term debt to creditors.  Accounts payable is a source of cash on the cash flow statement and related to the COGS on the income statement, but not necessarily the same if the company still owes money.

Accounts Receivable-  Money that is owed to a company for providing a service or good. It is typically recorded as an asset on a company’s balance sheet below “cash and equivalents and represents credit that the company has extended.  Looked at in the context of sales performance, accounts receivable can suggest how quickly customers are paying their bills.

Accounts Receivable Turnover Ratio- An asset utilization ratio that is used to determine how well a company collects receivables and short term IOU’s from customers. The accounts receivable turnover ratio is calculated by dividing a company’s sales by its accounts receivable, (sales/accounts receivable). The ratio is also an indication of a company’s financial liquidity. The lower the ratio, the greater a company’s liquidity.

Accrual Accounting- A form of accounting whereby revenues are recognized when they are earned, not when they are received. In accrual accounting, cash does not need to  change hands before the revenue is recognized. 

Accumulation- The investing stage in which an individual is building their wealth. During the accumulation stage, investors are likely to be involved in riskier investments because they have a longer-term investing horizon in which they can potentially recoup losses 

Acquisition – The purchase of one company by another business entity. 

Acquisition of Assets – An acquirer purchases the selling company’s assets.

Acquisition of Stock – An acquirer purchases the capital stock of the target company.

Additional Paid-in Capital – Amount paid for stock over and above its par value.

Amortization – Recognition as an expense of part of an intangible asset’s cost during each period of its useful life

Basis Point – The smallest measure used for quoting interest yields.

Bond – A debt issued for a period of more than a year.

Book Value –  A company’s total assets minus intangible assets and liabilities.

Break-Even – The level of revenues and expenses at which a project would make zero profit.

Bullet Loan – A term loan that calls for no amortization and a lump sum payment at maturity.

Capital Budget – A company’s plan for capital expenditures (acquisition of fixed assets).

Capital Expenditures – Money used to acquire or improve fixed assets.

Capital Stock – Stock authorized by a firm’s charter.

Capitalization – The debt and equity combination that funds a company’s assets.

Cash and Equivalents – Assets that can be converted into cash immediately.

Cash Flow Coverage Ratio – The ratio of financial obligations to earnings before interest, taxes, depreciation and amortization.

Cash Flow From Operations – A company’s net cash flow resulting directly from its regular operations.


CDO – Collateralized Debt Obligation – Security backed by a pool of bonds, loans or other assets containing different types of credit risk with each tranche having a different maturity and risk associated with it.

CLO – Collateralize Loan Obligation – Securities collateralize by bank commercial loan portfolios.

CMO – Collateralize Mortgage Obligation – A mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders with varying maturities and risk levels.

Collateral – Assets which can be repossessed in the event of default on a loan.

Commitment Fee – A fee paid to a financial institution in return for its commitment to lend funds that have not yet been advanced.

Common Stock Equivalents – Securities that can be converted into common stock

Compensating Balance – Excess balances left in a bank account to provide indirect compensation for loans or services.

Compound Interest – Interest paid on previously earned interest as well as on the principal.

Consolidation – The joining of two or more companies to form a new company.

Covenants – Conditions agreed to in debt agreements designed to protect the lender’s interests.

Corporation – Legal entities which are separate and distinct from its owners, and can own assets, incur liabilities, and issue stock.

Coverage Ratio – A formula used to assess the adequacy of cash flow generated through earnings for the purposes of meeting debt and lease obligations.

Current Assets – Assets that could be converted to cash in less than a year.

Current Liabilities – Salaries, interest, accounts payable and other debts due within one year.

Current Ratio – A measure of debt paying ability, current assets divided by current liabilities.

Debt to Equity Ratio – Total debt divided by stockholders’ equity – a gauge of leverage and ability to repay obligations.

Deferred Revenue - Liability arising upon the prepayment for goods or services yet to be delivered.

Depreciation – The charge to amortize the cost of long-term assets over the useful life of the assets.

Derivative – Financial contract whose value is determined by fluctuations in value of the underlying assets and is generally used as an instrument to hedge risk.

Discounting – Calculating the present value of a future amount.

E.B.I.T. - Earnings Before Interest and Taxes.

E.B.I.T.D.A. – Earnings Before Interest, Taxes, Depreciation and Amortization.

EDGAR – Electronic Data Gathering and Exchange accesses S.E.C filings to investors.

Equity Kicker – Warrants issued in conjunction with privately placed debt.

FIFO – First In, First Out – Method of valuing inventory where goods first purchased/manufactured are treated as the first sold.

GAAP – Generally Accepted Accounting Principles – standards, conventions, and rules to record, summarize financial transactions and prepare issued    by the American Institute of Certified Public Accountants.
General Partnership – Partnership in which all partners are general partners.

I.P.O. – Initial Public Offering. A company’s first sale of stock to the public.

Insolvency Risk – The risk that a company will not be able to satisfy its debts.

Insolvent – A firm whose liabilities are greater than its debts.

Intangible Asset - Goodwill, intellectual property, patents, copyrights, trademarks, etc.

Interest – The price paid for borrowing money.

LIFO – Last In, First Out – Method of valuing inventory where goods most recently purchased/manufactured are treated as first sold.

Line of Credit – Short-term credit available to businesses from banks.

Liquid Asset - An asset that is easily converted into cash.

L.I.B.O.R. – The London Interbank Offered Rate of interest that international banks in London charge each other for borrowing money.

Long-Term Debt – A debt with a maturity of more than one year.

Management Buyout – A leveraged buyout in which the acquiring group is led by the company’ s management.

Management Fee – The fee charged by the management company to an investment fund based on the fund’s average assets.

Marketable Securities – Instruments that can readily be converted into cash.

Merger – The combination of two companies.

Mortgage – Debt instrument for the purchase of property and collateralized by the property.

Net Worth / Stockholders’ Equity – Includes common stock, surplus and retained earnings.

NOL – Net Operating Loss – Excess of business expenses over revenues in a tax year

Operating Cash Flow – Earnings before depreciation minus taxes.

Par Value – Stated value of a share of stock – usually a minimal value.

Perquisites – Personal benefits such as a company car, expense account, office decor, etc.

PP&E – Property, Plant and Equipment – fixed assets with a useful life greater than one year.

Present Value – The current value of cash to be received in the future.

Prime Rate – The interest rate at which banks lend money to their best customers.

Principal - The total amount of a loan.

Private Placement – The sale of a bond or security directly to a limited number of investors.

Pro Forma Financial Statements – Financial statements which have been adjusted to reflect future events.

Quick Ratio – A calculation of a company’s financial strength and liquidity – determined by subtracting inventories from total current assets dividing by current liabilities.

Replacement Cost – The cost of replacing a company’s assets.

Reserve – An accounting entry that properly reflects contingent liabilities.

Restrictive Covenant - An agreement placing constraints on the operations of a borrower.

Retained Earnings – Earnings retained by a company for reinvestment in its operations rather than paid out as of dividends.

Return on Assets (R.O.A.) – An indicator of profitability, determined by dividing net income by total average assets.

Return on Equity (R.O.E.) – Indicator of profitability, calculated by dividing net income by average common stockholder equity.

Secured Debt – Debt which is covered by specific assets in the event of a default.

Senior Debt – Debt which has a priority claim on the assets of a company.

Subordinated Debt - A debt whose holders have a claim on the company’s assets only after senior debtholders claims have been satisfied.

Tangible Asset – An asset that represents a physical object such as land, furniture, equipment and buildings.

Target Firm – A company which is has been identified as a candidate for acquisition by another company.

Term Loan – A bank loan for a specified amount with repayment schedule, often at a floating interest rate and a maturation date from one and ten years.

Treasury Stock – Stock reacquired by the issuer that has not been retired and is available for sale.

Unsecured Debt – Debt which is not covered by specific assets in the event of a default.

Useful Life – Estimate of the period of time an asset will be in use.

Warrant - Security entitling the holder to buy a proportionate amount of stock at some specified future date at a specified price.

Yield - The percentage rate of return paid on an investment.

Zero Coupon Bond – bond in which the principal and interest are paid at the maturity date rather than in increments over the life of the contract.

Company
Contact

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Tel: +91 997-161-8355 

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