Standard advisory glossary

accounting · intro

IFRS

Also called: International Financial Reporting Standards

International Financial Reporting Standards, the accounting standards used by companies in most countries outside the United States to prepare financial statements, developed and maintained by the International Accounting Standards Board. Efforts to converge IFRS and the United States' GAAP standards have narrowed, though not eliminated, differences between the two systems.

organizational · intro

Incentive Alignment

The design of compensation, performance measurement, and reward systems so that individuals' personal incentives lead them to act in ways that also serve the organisation's broader goals. Poor incentive alignment is a common root cause of otherwise puzzling organisational behaviour, since people generally respond rationally to how they are actually measured and rewarded.

accounting · intro

Income Statement

Also called: profit and loss statement, P&L

A financial statement summarising a company's revenues, expenses, and resulting profit or loss over a specific reporting period, such as a quarter or a year. It is also commonly called the profit and loss statement, and its bottom line, net income, is one of the most widely used single measures of company performance.

ma · intermediate

Indemnification

A contractual obligation for one party to compensate the other for specified losses, such as those arising from a breach of representations and warranties discovered after a deal closes. Indemnification provisions in acquisition agreements typically specify caps, thresholds, and time limits on how much can be claimed and for how long.

governance · intro

Independent Director

A member of a company's board of directors who has no material financial or personal relationship with the company beyond board service, intended to provide objective oversight of management free from the potential conflicts of interest that affect executive or affiliated directors.

finance · intro

Initial Public Offering

Also called: IPO

The process by which a private company first offers its shares to the public on a stock exchange, converting it into a publicly traded company. It is a major event in a company's lifecycle, typically pursued to raise capital, provide liquidity to early investors, and raise the company's public profile, while also bringing new regulatory and disclosure obligations.

ma · intermediate

Integration (Post-Merger)

Also called: post-merger integration, PMI

The process of combining two companies' operations, systems, cultures, and personnel following the close of a merger or acquisition, aimed at realising the synergies and strategic goals that justified the deal. Integration is widely regarded as the stage where many otherwise well-structured deals fail to deliver their expected value.

finance · intro

Internal Rate of Return

Also called: IRR

The discount rate at which an investment's projected cash flows produce a net present value of exactly zero, commonly used as a single summary figure for an investment's expected annualised return. It is often compared against a company's cost of capital or a minimum acceptable return, or hurdle rate, to decide whether a project is worth pursuing.

accounting · intermediate

Inventory Turnover

A measure of how many times a company sells and replaces its inventory over a given period, calculated by dividing cost of goods sold by average inventory. A low turnover ratio can indicate weak sales or excess inventory, while a very high ratio can sometimes indicate insufficient stock to meet demand.