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GAAP

Generally Accepted Accounting Principles, a set of accounting standards for financial reporting.

Fixed assets

Long-term tangible assets used in the operations of a business, such as buildings and machinery.

Depreciation expense

The allocation of the cost of a tangible asset over its useful life, which lowers reported income.

Cash flow

The total amount of money being transferred into and out of a business in a given period.

Discounted Cash Flow (DCF) analysis

A valuation method that estimates the value of an investment based on its expected future cash flows, adjusted to present value.

Comparables approach

A valuation method that uses data from similar businesses or assets to assess the value of a company.

Asset approach

A method of valuing a business based on the value of its assets minus liabilities.

Present value

The current worth of a cash flow or series of cash flows, discounted at a specific interest rate.

Terminal value

An estimate of a business's value at the end of a specific period, used in DCF analysis to capture future cash flows.

Control premium

The additional amount an acquirer is willing to pay for a controlling interest in a company.

Capital structure

The mix of debt and equity that a company uses to finance its operations.

Common shares

The most basic form of equity security, typically carrying voting rights and representing residual claims on the corporation's assets.

Preferred shares

Equity securities that have certain preferential rights over common shares, often regarding dividends and liquidation.

Debt securities

Instruments that represent borrowed funds that must be repaid, usually with interest.

Stock options

Contracts giving holders the right to buy or sell stock at a specified price before a certain date.

Liquidity preference

The order of claims on the assets of a company in the event of liquidation.

Equity securities

Financial instruments that represent ownership in a corporation, entitling holders to profits and losses of the company.

Convertible debenture

A type of debt security that can be converted into a specified number of common shares.

Cumulative dividends

Dividends that accumulate if not paid in a given period and must be paid before dividends on common shares.