Accounting: The action or process of keeping financial accounts.

Acquisition: An act of purchase of one company by another.

Add Back: Profit and Loss Statement expense items that are added back to the business net pretax operating profit in order to arrive at an accurate estimate of the business profitability.

Assess: To calculate or estimate the price or value of.

Asset (Asset-Based) Approach: A general way of determining a value indication of a business, business ownership interest, or security using one or more methods based on the value of the assets net of liabilities.

Audit: An official inspection of an individual's or organization's accounts, typically by an independent body.

Balance Sheet: A statement of the assets, liabilities and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.

Business Cycle: A cycle or series of cycles of economic expansion and contraction.

Business Valuation: The act or process of determining the value of a business enterprise or ownership interest therein.

Business Valuation Report: A document detailing the scope, key assumptions, business valuation methods, and conclusions of a business appraisal assignment.

Buy Out: The purchase of a controlling share in a company.

Capital: Wealth in the form of money or other assets owned by a person or organization or availability or contributed for a particular purpose such as starting a company or investing.

Capital Structure: The composition of the invested capital of a business enterprise; the mix of debt and equity financing.

Capitalization of Earnings Business Valuation Method: A common income-based small business valuation method that establishes the business value by dividing the expected business economic benefit, such as the seller's discretionary cash flow, by the capitalization rate.

Capital Asset Pricing Method (CAPM): A cost of capital model, which represents the required rate of return on business investment as a sum of the risk-free return plus a weighted risk premium.

Capitalization Rate: A value, typically expressed as a fraction, used to divide a business economic benefit to arrive at the business value.

Cash Cow: A business, investment, or product that provides a steady income or profit.

Cash Flow: Cash that is generated over a period of time by an asset, group of assets, or business enterprise.
Contingency Fund: A reserve of money set aside to cover possible unforeseen future expenses.

Corporation: A company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.

Cost Accounting: The recording of all the costs incurred in a business in a way that can be used to improve its management.

Cost of Capital: The expected rate of return that the market requires in order to attract funds to a particular investment.

Credit: The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.

Current Assets: Cash and other assets that are expected to be converted to cash within a year.

Current Liabilities: Amounts due to be paid to creditors within a year.

Debt Financing: Raising capital to acquire a business or fund business operations by borrowing money from creditors.

Debt Service Coverage Ratio: The ratio of the total available cash flow divided by the business debt service.

Dilution: A reduction in the value of a share holding due to the issue of additional shares in a company without increasing the values of its assets.

Discount Rate: A rate of return used to convert a future monetary sum into present value.

Discounted Cash Flow: A method of assessing investments taking into account the expected accumulation of interest.

Discounted Cash Flow Method: A method within the income approach whereby the present value of future expected net cash flows is calculated using a discount rate.

Discount for Lack of Control: An amount or percentage deducted from the pro rate share of value of 100% of an equity interest in a business to reflect the absence of some or all of the powers of control.

Discount for Lack of Marketability: An amount or percentage deducted from the value of an ownership interest to reflect the relative absence of marketability.

Disinvest: Withdraw or reduce an investment.

Distressed Sale: Sale below market value due to damaged or previous use.

Diversify: Enlarge or vary its range of products or field of operation.

Divest: Rid oneself of something that one no longer wants or requires, such as business interest or investment.

Due Diligence: An investigation of the facts surrounding the business prior to making the business purchase decision.

Earnings per Share: A company's after-tax profit, minus payments to preferred shareholders and bondholders, divided by the total number of outstanding shares.

Earn-out: A part of the small business Purchase Agreement which sets a portion of the price contingent upon the business achieving some future financial performance goal.

Employee Stock Option Plan (ESOP): An ESOP is an incentive ownership arrangement funded by the employer. Generally, employer stock is contributed instead of cash. ESOPs provide capital, liquidity, and certain tax advantages for private companies whose owners do not want to go public

Entrepreneur: A person, who starts, organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.

Equity: The value of the shares issued by a company.

Expense Account: An arrangement under which sums or money spent in the course of business by an employee is later reimbursed by their employer.

Face Value: The value printed or depicted on a coin, banknote, postage stamp, ticket etc., especially when less than the actual or intrinsic value.

Fair Market Value: When referring to the transfer of a business asset, the fair market value is defined as a monetary amount that a buyer may reasonably offer, and a seller accept, in exchange for the asset.

Fixed Assets: Assets that are purchased for long-term use and are not likely to be converted quickly into cash. For e.g. land, buildings and equipment.

Fixed Cost: Business costs, such as rent, that are constant whatever the amount of goods produced.

Goodwill: The established reputation of a business regarded as a quantifiable asset, e.g., as represented by the excess of the price paid at a takeover for a company over its fair-market value.

Going Concern: An ongoing operating business enterprise.

Going Concern Value: The value of a business enterprise that is expected to continue to operate in the future. The intangible elements of Going Concern Value result from factors such as having a trained work force, an operational plant, and the necessary licenses, systems, and procedures in place.

Growth Stock: Shares of a company whose profits promise to grow more quickly that those of its peers, thus generating a substantial capital gain.

Income: Money received, especially on a regular basis, for work or through investments.

Initial Public Offering: A company's flotation on the stock exchange.

Intangible Assets: Non-physical assets such as franchises, trademarks, patents, copyrights, goodwill, equities, mineral rights, securities and contracts (as distinguished from physical assets) that grant rights and privileges, and have value for the owner.

Internal Rate of Return: The rate of return in a capital investment project which makes the Net Present Value equal to zero.

Intrinsic Value: The value that an investor considers, on the basis of an evaluation or available facts, to be the "true" or "real" value that will become the market value when other investors reach the same conclusion.

Interest: Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.

Investment: The action or process of expending money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture.

Joint Venture: A commercial enterprise under-taken jointly by two or more parties that otherwise retains their distinct identities.

Liquidation Value: The net amount that would be realized if the business is terminated and the assets are sold.

Loan: A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.

Market Value: The amount for which something can be sold on a given market.

Market Multiple: The market value of a company's stock or invested capital divided by a company measure (such as economic benefits, number of customers).

Merger: A combination of two companies into one.

Net Asset Value: The value of a mutual fund that is reached by deducting the fund's liabilities from the market value of all of its shares and then dividing by the number of issued shares.

Net Book Value: The value of an asset as recorded in the accounts of its owner.

Net Present Value: The value, as of a specified date, of future cash inflows less all cash outflows (including the cost of investment) calculated using an appropriate discount rate.

Net Profit: The actual profit after working expenses not included in the calculation gross profit have been paid.

Payback: Financial return or reward, especially profit equal to the initial outlay of an investment.

Payback Period: The length of time required for an investment to recover its initial outlay in terms of profits or savings.

Portfolio: A range of investments held by a person or organization.

Pre-emptive: Relating to the purchase of goods or shares by one person or party before the opportunity is offered to others.

Present Value: The value, as of a specified date, of future economic benefits and/or proceeds from sale, calculated using an appropriate discount rate.

Private Enterprise: Business or industry that is managed by independent companies or private individuals rather than by the state.

Price/Earnings Multiple- The price of a share of stock divided by its earnings per share.

Profit Margin: The amount by which revenue from sales exceeds costs in a business.

Rate of Return: The annual income from an investment expressed as a proportion (usually a percentage) of the original investment.

Recapitalize: Provide a business with more capital, especially by replacing debt with equity.

Return on Investment: The ratio of gains realized from an investment divided by the investment required.

Self-liquidating: Denoting an asset that earns back its original cost out of income over a fixed period.

Sell Out: The selling of entire business or company.

Share: A part or portion of a larger amount that is divided among a number of people, or to which a number of people contribute.

Stakeholder: A person with an interest or concern in something, especially a business.

Stock Split: An issue of new shares in a company to existing shareholders in proportion to their current holdings.

Terminal Value: The value as of the end of the discrete projection period in a discounted future earnings model.

Undervalue: Underestimate the financial value of any enterprise or stock.

Un-hedged: Not protected against loss by balancing or compensating contracts or transactions.

Valuation: The monetary worth of something, especially as estimated by an appraiser.

Valuation Multiple: A value, typically expressed as a factor, used to multiply a business economic benefit to arrive at the business value.

Value Added: The amount by which the value of an article is increased at each stage of its production, exclusive of initial costs.

Value Analysis: The systematic and critical assessment by an organization of every feature of a product to ensure that its cost is no greater than is necessary to carry out its functions.

Venture: A business enterprise involving considerable risk.

Venture Capital: Capital invested in a project in which there is a substantial element of risk, typically a new or expanding business.

Weighted Average Cost of Capital (WACC): The cost of capital (discount rate) determined by the weighted average, at market value, of the cost of all financing sources in the business enterprise's capital structure.

Working Capital: The capital of a business that is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

Write-down: A reduction in the estimated or nominal value of an asset, for accounting purpose.

Write-up: An increase in the estimated or nominal value of an asset, for accounting purpose.

Write-off: A cancellation from an account of a bad debt or worthless asset.