Glossary C-D

/Glossary C-D
Glossary C-D2018-03-13T10:10:17+00:00

GLOSSARY: ALPHABETICAL ORDER

A-B | C-D | E-F | G-H | I-J | K-L | M-N | O-P | Q-R | S-T | U-Z

CAP-X: the acronym for Capital Expenditures that are necessary within the next year.
Capitalization: companies have ownership capital that includes stock and paid-in surplus plus borrowed capital that includes bank debt and bonds. The combined forms of capital, ownership, and borrowed funds is a company’s capitalization.
Capitalization rate: the conversion of income into value as part of the valuation process by the application of a capitalization factor (any multiplier or divisor used to convert income to value).
Cash cow: the amount of money left over after cost of goods sold, general, selling, and administrative expenses but before interest, depreciation, taxes, and amortization.
Collateral: property pledged by a borrower to protect the interests of the lender. Bank loans are often collateralized or secured by the company’s accounts receivable, inventory, or equipment.
Confidentiality: the entrustment of proprietary information from one party to another for their exclusive use so as not to import the obtained knowledge to others.
Contingent: dependent on or conditioned by something else. The price established for the business varies in relation to some future events.
Contingent payments: future financial obligations are dependent on contractual events that take place.
Covenants: a binding agreement between buyer and seller that restricts each party from taking certain actions particularly during the letter of intent period and closing.
Deal flow: a stream of potential business acquisitions moving across your desk in quantity that allows you to select the few that meet your criteria.
Depreciation: the amount that tangible assets decrease over the normal life cycle as designated by the parameters of SARS.
Discounted cash flow: a valuation technique that assigns a value in today’s dollars to the cash flows that are expected to occur in the future.
Due diligence: the investigation of the other party’s business practices in an attempt to uncover previously unknown information.