| Business Enterprise Value (BEV) or Enterprise Value (EV) | A level value representing the operations calculated as invested capital less cash |
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| Book Value | An accounting based indication of cost less depreciation or amortization or assets less liabilities |
| Capitalization Rate | A rate of return required for an investment utilized to determine the value associated with a stream of consistent cash flows typically determined from capitalization rates of comparable investments or a discount rate less a perpetual growth rate |
| Cash Flow | A metric of financial return represented by the net amount of cash in and out of an investment, sometimes industry specific (e.g., funds from operations, EBITDA less capital expenditures, net operating income) |
| Comps (or Guideline) | Companies, properties, or other investments chosen for the similarity of risks, returns, and growth, utilized to determine the appropriate market multiples, discount rates, or capitalization rates in a valuation |
| Cost Approach | One of the three valuation approaches (income and market being the others) which measures the value of an investment based on the cost to reconstruct or replace it with another of like utility (including, at times, economic and functional obsolescence and lost profits during the reconstruction process) |
| Debt | Money borrowed to finance an investment that is senior in preference to equity (including senior and subordinate loans, credit lines, preferred stock that is redeemable and typically not convertible or participating with equity, and contingent consideration / earnouts) |
| Discounted Cash Flow Method | An income approach method in which multiple years of cash flow and a terminal or exit value (if appropriate) are discounted to the present to arrive at a current value |
| Dividend Discount Model | A valuation model in which cash flow is divided by a capitalization rate (e.g., Gordon Growth, H Model) |
| Earnings | Net income available to equity holders (typically common equity only – i.e., after payments to debt and preferred stock holders, minority interests, and others) |
| EBITDA | Earnings before debt related interest expense, income taxes, and depreciation and amortization expenses |
| Equity | The value of assets less liabilities which can includes and common stock, warrants, options, and certain types of preferred |
| Income Approach | One of the three valuation approaches (cost and market being the others) which measures value by applying risk adjusted discount rates to present value future economic benefits that include cash flows for a discrete period (unusually until growth and profitability stabilize or the point at which a liquidity event may occur) and a terminal or exit value that captures the economic benefits or the sale value after the discrete period (if any) |
| Invested Capital (IC) | A level of value calculated as debt plus market value of preferred stock, minority interests, and common equity |
| Market Approach | One of the three valuation approaches (cost and income being the others) which measures value through the application of market multiples from comps (guideline companies and transactions) with profiles similar enough to adjust for the relative levels of operational and financial risk, cash flows, and growth |
| Market Multiples | The ratio of value (IC, BEV or P) to revenue, earnings, cash flow, or other financial metric derived from publicly-traded companies or transactions in which the total invested capital or total equity can be determined, which is relevant to the industry and/or situationv |
| Market Value of Equity | A level of value calculated as stock price times shares outstanding (this level can include equity participating / convertible preferred and common stock – in publicly-traded stocks this is typically common stock only and represents the P or price in P/E) |
| Return | Profit on an investment that can be in many forms including cash, equity, PIK (payment in kind), and others |
| Revenue | Revenue or net revenue based on industry standards |
| Terminal or Exit Value | The anticipated sale price or value of an investment at the end of the final year of the projected cash flows presented in a discounted cash flow model which be calculated by market multiples, dividend discount, or other models |
| Value (financial value) | The present value of all future cash flows |
