Vijay Shankar Sharma
Textbook finance, M&A, governance, strategy, and organisation terms. Not UNITE and not Layer 4. 147 terms. Textbook meanings only.
21 terms. Page 1 of 1.
finance · intro
Also called: capitalization table
A capitalisation table: a record of a company's ownership structure, listing all shareholders, the type and number of shares or options each holds, and the resulting ownership percentages. It is used especially by startups to track how ownership changes across successive rounds of investment and option grants.
finance · intro
Also called: capex
Funds a company spends to acquire, upgrade, or maintain physical assets such as property, equipment, or technology infrastructure, as distinguished from operating expenses incurred in day-to-day business activity. Capital expenditure is recorded on the balance sheet and depreciated over time, rather than expensed immediately on the income statement.
finance · intro
The specific mix of debt and equity a company uses to finance its overall operations and growth. A company's chosen capital structure affects its cost of capital, financial risk, and flexibility, and is a central decision in corporate finance, balancing the tax advantages of debt against the increased financial risk it creates.
accounting · intro
A financial statement showing the cash generated and used by a company across operating, investing, and financing activities during a reporting period, providing a picture of actual cash movement that can differ significantly from the accrual-based profit reported on the income statement.
organizational · intermediate
The concentration of decision-making authority at a central point within an organisation, such as senior leadership or corporate headquarters, rather than distributing it to lower levels or local units. It can improve consistency and control at the cost of responsiveness to local conditions.
governance · intermediate
An arrangement in which the same individual holds both the role of chief executive officer and chairman of the board, combining the top management role with leadership of the body responsible for overseeing management. Governance advocates frequently argue that separating the two roles improves board independence and oversight.
organizational · intro
A structured approach to preparing, supporting, and helping individuals and an organisation as a whole move through significant organisational change, such as a merger, restructuring, or new technology rollout, aimed at reducing resistance and ensuring the change is actually adopted rather than merely announced.
finance · intermediate
Also called: comps, trading comparables
A valuation method that estimates a company's worth by examining the valuation multiples, such as price-to-earnings or enterprise-value-to-EBITDA, of similar publicly traded companies, then applying those multiples to the company being valued. Its reliability depends heavily on how genuinely comparable the selected peer companies actually are.
strategy · intro
A durable competitive advantage that protects a company's market position and profitability from competitors over time, commonly arising from factors such as brand strength, network effects, high switching costs, patents, or economies of scale. The term draws an analogy to the water-filled trench that historically protected a castle from attack.
governance · intro
A situation in which a person's personal interests, or their obligations to another party, could improperly influence their judgement or actions in a role where they owe a duty of loyalty to someone else, such as a company or its shareholders. Governance structures such as disclosure requirements and recusal from related decisions are designed to manage and limit the effects of unavoidable conflicts.
accounting · intermediate
A potential financial obligation that depends on the outcome of a future, uncertain event, such as a pending lawsuit or a product warranty claim, which may or may not ultimately become an actual liability. Depending on how likely and how estimable the potential obligation is, it may be recorded on the balance sheet or merely disclosed in the notes to the financial statements.
ma · intermediate
The additional amount, above a target company's current trading price, that an acquirer typically pays to gain a controlling ownership stake, reflecting the value of being able to direct the company's strategy and operations rather than holding a passive minority position.
finance · intermediate
A short-term debt instrument that converts into equity, typically at a discount or valuation cap, upon a future triggering event such as a subsequent financing round, commonly used in early-stage startup financing when it is difficult to agree on a precise company valuation.
strategy · intro
A specific capability, skill, or resource that a company possesses and does particularly well, that is difficult for competitors to replicate, and that provides genuine access to a range of markets or contributes significantly to the value customers perceive in its end products. It is a central concept in strategic planning focused on building competitive advantage from internal strengths.
governance · intro
The overall system of rules, practices, and processes by which a company is directed and controlled, encompassing the relationships and balance of power between shareholders, the board of directors, and management. Strong corporate governance is widely associated with lower risk of fraud, better long-term decision-making, and greater investor confidence.
finance · intermediate
The effective interest rate a company pays on its borrowed funds, typically lower than its cost of equity because lenders are repaid before shareholders in the event of financial difficulty and their returns are contractually fixed rather than residual. Because interest payments are often tax-deductible, the after-tax cost of debt is generally used in valuation calculations.
finance · intermediate
The return a company's shareholders require to compensate them for the risk of holding its stock, often estimated using models such as the capital asset pricing model, which relates the required return to a stock's volatility relative to the broader market. It is typically higher than a company's cost of debt, since equity holders bear more risk and are paid after creditors in the event of financial distress.
risk · intermediate
The risk that the other party in a financial transaction, such as a loan, derivative contract, or trade, will fail to fulfil its contractual obligations, resulting in a loss to the other party.
risk · intro
The risk that a borrower or counterparty will fail to meet its contractual debt obligations, resulting in a financial loss to the lender. It is a central consideration in lending decisions, bond pricing, and the credit ratings assigned to companies and governments by rating agencies.
strategy · intro
Also called: CAC
The average cost a company incurs to acquire a single new customer, typically calculated by dividing total sales and marketing spend over a period by the number of new customers gained in that period. It is commonly analysed alongside customer lifetime value to assess whether a company's growth is being achieved economically.
strategy · intro
Also called: LTV, CLV
An estimate of the total net profit a company expects to generate from a single customer over the entire duration of their relationship with the business. Comparing customer lifetime value to customer acquisition cost is a common way of assessing whether a company's growth strategy is fundamentally sound.