Financial glossary
Plain-language definitions for the terms behind your books, reports, and restaurant finances.
43terms to explore
Showing all 43 terms.
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- 409A valuationA 409A valuation is a mandatory independent assessment that determines the fair market value (FMV) of a private company's common stock, primarily for the…
- 83(b) electionA tax filing that allows recipients of restricted stock to pay taxes on the grant value immediately rather than waiting until the shares vest.
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- Accounts PayableAccounts Payable (AP) is the record of money a business owes to vendors and suppliers for purchased goods or services. It represents short-term debt obli…
- Accounts ReceivableAccounts Receivable (AR) represents the money customers owe your business for products or services you've already delivered. It's essentially your compan…
- Adjusted Gross Income (AGI)Adjusted Gross Income (AGI) represents your total income from all sources, minus allowable deductions, and it can be tailored for startup founders by inc…
- Adjusted Operating Income (AOI)Adjusted Operating Income (AOI) is a refined measure of a startup’s core operational performance, stripping out non-recurring, extraordinary, or one-time…
- Administration FeeAn Administration Fee is a charge imposed by a lender, bank, fund, or investment group to cover the costs of setting up and managing a new loan, line of…
- AmortizationAmortization is an accounting process that systematically spreads the cost of an intangible asset over its useful life. It can also refer to the gradual…
- Asset LiteAsset Lite refers to a business model that minimizes reliance on physical or tangible assets, focusing instead on digital technology, outsourcing, and st…
- Authorized SharesAuthorized Shares represent the maximum number of shares a company is legally allowed to issue, as defined in its articles of incorporation. This limit s…
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- Cash DisbursementA cash disbursement is the systematic release of funds from a company's treasury to fulfill financial obligations, including all outgoing monetary transa…
- Common stockCommon stock represents the fundamental ownership units of a corporation, entitling holders to a portion of the company's success and a voice in its gove…
- Compound Annual Growth Rate (CAGR)Compound Annual Growth Rate (CAGR) represents the mean annual growth rate of an investment or business metric over a specified time period, accounting fo…
- Contra RevenueContra revenue represents negative adjustments to gross sales that determine a company's net revenue figure on financial statements.
- Convertible EquityConvertible Equity is a financing instrument used primarily by startups that allows investors to convert their investment into equity at a later financin…
- Cost of Goods Sold (COGS)Cost of Goods Sold (COGS) represents the direct expenses incurred in creating products or services that your business sells to customers. Think of it as…
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- EBITDAEBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) serves as a financial spotlight that illuminates a company's operational profita…
- Equity StakeAn equity stake represents an ownership portion in a business entity, typically measured as a percentage of the total company. This ownership interest gr…
- Expense Recognition Principle (aka The Matching Principle)The Expense Recognition Principle, often referred to as The Matching Principle, mandates that expenses be recorded in the same period as the revenues the…
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- Federal Unemployment Tax Act (FUTA)The Federal Unemployment Tax Act (FUTA) is a federal law that imposes a payroll tax on employers to help fund unemployment benefits. It underpins state u…
- Free Cash Flow (FCF)Free Cash Flow represents the cash a company generates from its operations after subtracting capital expenditures—investments in long-term physical asset…
- Fully Diluted SharesFully Diluted Shares represent the total number of shares that would be outstanding if all convertible securities, options, warrants, and other potential…
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- Peer-to-Peer LendingPeer-to-peer (P2P) lending is a decentralized financing model that connects individual borrowers directly with individual lenders through online platform…
- Preferred StockIn the tech startup ecosystem, preferred stock is a pivotal financial instrument used during early-stage funding and pre-IPO rounds. While still offering…
- Priced RoundA priced round is a financing round where the company's valuation is explicitly determined, and new shares are issued at a set price, granting investors…
- Private PlacementA private placement represents a strategic funding mechanism where companies issue securities—including equity shares, bonds, or other debt instruments—t…
- Private Placement MemorandumA Private Placement Memorandum (PPM) is a detailed disclosure document provided by companies during a private securities offering. It outlines key invest…
- Pro Rata RightsPro Rata Rights are contractual privileges that allow existing investors to maintain their ownership percentage by participating in future financing roun…
- Profit MarginProfit margin is a financial metric that indicates the percentage of revenue that exceeds the costs. It is a key indicator of a company's profitability a…
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- Retained EarningsRetained Earnings represent the portion of a company's profits that have been kept within the business rather than distributed to shareholders as dividen…
- Return on Equity (ROE)Return on Equity (ROE) is a performance indicator that reveals how effectively a company converts shareholder investments into profits. Think of it as a…
- Roll-Up Vehicle (RUV)A Roll-Up Vehicle (RUV) is an investment consolidation mechanism structured as a Special Purpose Vehicle that enables multiple angel investors to collect…
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- Serviceable Available Market (SAM)The Serviceable Available Market (SAM) represents the realistic portion of a market that your business can actually serve with its current capabilities,…
- Serviceable Obtainable Market (SOM)The Serviceable Obtainable Market (SOM) represents the realistic market share your business can capture in the near term, considering your current capabi…
- Silent PartnerA Silent Partner is an investor or business partner who provides capital to a company without taking an active role in its daily operations or management…
- Simple Agreement for Future Equity (SAFE)A SAFE is a financing instrument that gives investors the right to receive equity in a startup during a future funding round or exit event, without creat…
- Special Purpose Vehicle (SPV)A Special Purpose Vehicle (SPV) is a legal entity created as a financial "container" for a specific, isolated purpose. Typically structured as a Limited…
- Stock WarrantStock warrants are long-term securities created and issued directly by companies, granting holders the right to purchase (or sometimes sell) company shar…
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