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What is Ability to Pay Analysis? Ability-to-Pay Analysis (ATP) is a method used by private equity investors to guide pricing and determine t ...

What is the Absolute Priority Rule (APR)? The Absolute Priority Rule (APR) refers to the underlying principle dictating the order of claims ...

What is the Absorption Rate? The Absorption Rate is a measure of supply and demand in the commercial real estate market, most often segmente ...

What is the Accounting Equation? The Accounting Equation is a fundamental principle that states assets must equal the sum of liabilities and ...

Common Accounting Interview Questions In the following post, we’ve compiled a list of the most frequently asked accounting questions f ...

What is Accounting Rate of Return? The Accounting Rate of Return (ARR) is the average net income earned on an investment (e.g. a fixed asset ...

What is Accounts Payable? Accounts Payable is a current liability recognized on the balance sheet to measure the unpaid bills owed to suppli ...

What is Accounts Payable Turnover? The Accounts Payable Turnover is a working capital ratio used to measure how often a company repays credi ...

What is Accounts Receivable? Accounts Receivable (A/R) is defined as payments owed to a company by its customers for products and/or service ...

What is Accounts Receivable Turnover? The Accounts Receivable Turnover is a working capital ratio used to estimate the number of times per y ...

An important part of investment banking is understanding mergers and acquisitions (M&A). Within M&A, One of the core models investment banking analysts and associates have to build when analyzing an acquisition is the accretion/dilution ...

What are Accruals? Accruals describe revenues earned and expenses incurred on the income statement, irrespective of whether cash was actuall ...

Accrual Accounting vs. Cash-Basis Accounting: What is the Difference? Under Accrual Accounting, revenue is recognized once earned, and expen ...

What is Accrued Expense vs. Accounts Payable? Accrued Expense and Accounts Payable each refer to unfulfilled 3rd party payments, but for acc ...

What are Accrued Expenses? Accrued Expenses refer to a company’s incurred expenses related to employee wages or utilities yet to be pa ...

What is Accrued Interest? Accrued Interest represents an unfulfilled interest expense amount still owed by a borrower to a lender as of a pa ...

What are Accrued Wages? Accrued Wages represent the unmet employee compensation remaining at the end of a reporting period, i.e. the balance ...

What is an Accumulated Deficit? The Accumulated Deficit line item arises when a company’s cumulative profits to date have become negative, w ...

What is Accumulated Depreciation? Accumulated Depreciation reflects the cumulative reduction in the carrying value of a fixed asset (PP& ...

What is Acid Test Ratio? The Acid Test Ratio, or “quick ratio”, is used to determine if the value of a company’s short-ter ...

What is Acquisition Financing? Acquisition Financing refers to the initial capital sources obtained to fund the purchase of a target busines ...

What is Activation Rate? The Activation Rate (%) represents the percentage of users that complete a specific action defined by a SaaS compan ...

What is Active vs. Passive Investing? Active vs Passive Investing is a long-standing debate within the investment community, with the centra ...

What is an Activist Investor? An Activist Investor seeks to be the catalyst of a turnaround of an underperforming publicly-traded company to ...

What is Activity Ratio? An Activity Ratio is a measure of operating efficiency, with regard to a company’s capacity to utilize its ass ...

What is an Add On Acquisition? An Add On Acquisition in private equity refers to the purchase of a smaller-sized target by an existing portf ...

What is Additional Paid-In Capital? Additional Paid-In Capital (APIC) represents the value received in excess of the par value from issuance ...

How to Adjust Column Width in Excel The following tutorial demonstrates the process of how to adjust the column width in Excel using keyboar ...

What is Adjusted EBITDA? Adjusted EBITDA is a non-GAAP measure of operating profitability determined by discretionary add-backs dictated by ...

What is Adjusted EBITDA Margin? The Adjusted EBITDA Margin measures the core operating profitability of a company on a normalized basis, i.e ...

What is AFFO? Adjusted Funds from Operations (AFFO) measures the financial performance of real estate investment trusts (REITs), particularl ...

What is Adjusted Net Income? Adjusted Net Income is a non-GAAP measure of a company’s net profitability, from which the effects of non-cash ...

What is Adjusted Present Value (APV)? The Adjusted Present Value (APV) is defined as the sum of the present value of a project assuming sole ...

Advanced LBO Modeling Test: Training Guide The following Advanced LBO Modeling Test training guide provides a step-by-step tutorial to compl ...

What is AFFO Yield? The AFFO Yield is the ratio between the AFFO per share of a REIT and its current market price, expressed as a percentage ...

What is After Tax Cash Flow? The After Tax Cash Flow is the residual income generated by a real estate property investment once tax obligati ...

What is After-Repair Value? The After-Repair Value (ARV) of a commercial rental property is the market value of the property upon completing ...

You have two options to choose from when using the Alignment Tool in PowerPoint: ‘Align Selected Objects’ and ‘Align to Slide’. If you don’t know how these options work (and affect the alignment of ...

What is Allowance for Doubtful Accounts? The Allowance for Doubtful Accounts is a contra-asset account that estimates the future losses incu ...

What is Alpha? Alpha (α) in finance is a measure of the excess return on an investment or portfolio above the benchmark return.

What are Alternative Investments? Alternative Investments are comprised of non-traditional asset classes, such as private equity, hedge fund ...

What is the Altman Z-Score? The Altman Z-Score, designed by NYU Professor Edward Altman, is a model used to predict the near-term likelihood ...

What is the Valuation of Amazon? Amazon (NASDAQ: AMZN) is an e-commerce company that offers online retail shopping and advertising services ...

What is Amortization of Intangible Assets? The Amortization of Intangible Assets is the accounting process whereby purchases of non-physical ...

What is Annual Contract Value (ACV)? The Annual Contract Value (ACV) refers to the annualized revenue per customer contract, excluding any o ...

What is Annual Income? Annual Income, or yearly income”, refers to the total earnings generated by an individual or corporation over a ...

What is APR? The Annual Percentage Rate (APR) is the interest rate charged by a lender on a yearly basis, expressed in the form of a percent ...

What is APY? The Annual Percentage Yield (APY) calculates the interest rate earned on a deposit or investment while incorporating the effect ...

What is Annual Recurring Revenue (ARR)? Annual Recurring Revenue (ARR) estimates the predictable revenue generated per year by a SaaS compan ...

What is the Annual Report? The two terms, Annual Report and Form 10-K, are often used interchangeably. However, the annual report is more ma ...

What is an Annuity? An Annuity is a type of bond that offers a stream of periodic interest payments to the holder until the date of maturity ...

What is ARR Multiple in SaaS? The ARR Multiple is an industry-specific valuation ratio commonly used in the SaaS industry and for subscripti ...

What is ASC 606? ASC 606 is the revenue recognition standard established by the FASB and IASB that governs how revenue generated by public a ...

What is ABS? Asset Backed Securities (ABS) are financial instruments collateralized by an underlying set of liquid, financial assets pledged ...

What is the Asset Coverage Ratio? The Asset Coverage Ratio measures the number of times a company could hypothetically repay its debt obliga ...

When one company acquires another company, what does the seller actually give the buyer? The answer depends on whether the deal is structured legally as a stock sale or as an asset sale. Broadly ...

What is Asset Turnover Ratio? The Asset Turnover Ratio is a financial metric that measures the efficiency at which a company utilizes its as ...

What are Assets? Assets are resources with positive economic value that can either be sold for money if liquidated or be used to generate fu ...

What is Assets Under Management? Assets Under Management (AUM) refers to the market value of the capital contributed to a fund, from which a ...

What is Attrition Rate? The Attrition Rate measures the percentage at which a company’s employees churned over a predefined period (i. ...

What is the Average Annual Growth Rate (AAGR)? The Average Annual Growth Rate (AAGR) is calculated by taking the arithmetic mean of a series ...

What is the Average Collection Period? The Average Collection Period represents the number of days that a company needs to collect cash paym ...

What is Average Cost? The Average Cost, or “per unit cost”, is an economic term that describes the approximate cost incurred to manufacture ...

What is the Average Cost Method? The Average Cost Method assigns inventory costs using a weighted average approach, wherein the costs of pro ...

What is the Average Daily Rate? The Average Daily Rate (ADR) measures the average revenue generated per occupied room or rental unit, expres ...

What is Average Fixed Cost? The Average Fixed Cost (AFC) is the fixed costs incurred by a company that remain constant irrespective of outpu ...

What is Average Inventory Period? The Average Inventory Period is the approximate number of days it takes a company to cycle through its inv ...

What is AOV? Average Order Value (AOV) estimates the typical amount spent by a customer in each order, commonly placed on a website (i.e. e- ...

What is the Average Payment Period? The Average Payment Period represents the approximate number of days it takes a company to fulfill its u ...

What is Average Revenue Per Account (ARPA)? Average Revenue Per Account (ARPA) quantifies a SaaS or subscription-based company’s avera ...

What is ARPU? The Average Revenue Per User (ARPU) quantifies the amount of revenue generated on average from each customer. The implied ARPU ...

What is Average Selling Price? The Average Selling Price (ASP) is a financial metric that measures the approximate amount paid by a customer ...

What is Average Time on Page? The Average Time on Page measures the approximate time spent on a specific webpage by the visitors of a websit ...

What is Average Total Cost? The Average Total Cost (ATC) is the total cost per unit of output, inclusive of both fixed costs and variable co ...

What is Average Variable Cost? The Average Variable Cost (AVC) is the variable cost per unit incurred by a business across a given period. T ...

What is Backward Integration? Backward Integration is a strategy where a company gains more control over the functions in the earlier stages ...

What is Bad Debt? The Bad Debt Expense is a company’s outstanding receivables that were determined to be uncollectible and are thereby treat ...

What is Balance of Trade? The Balance of Trade is the value of a country’s exports (“outflows”) minus the value of its imports (“inflows”). ...

What is Balance Sheet? The Balance Sheet—or Statement of Financial Position—is a core financial statement that reports a snapshot of a compa ...

How to Forecast the Balance Sheet Our Balance Sheet Forecasting Guide provides step-by-step instructions on how to forecast the key line ite ...

In a finance and investment banking interview, candidates will almost certainly be asked questions that test their understanding of the relationship between the balance sheet income statement, and cash flow statement. The reason is ...

What is Bank Debt? Bank Debt is the most common form of corporate debt, which at the most basic level is conceptually the same as any other ...

What is the Efficiency Ratio? The Efficiency Ratio is a risk measure used to evaluate the cost-efficiency and profitability of a bank. The o ...

What is a Bank Run? A Bank Run occurs when customers start to collectively withdraw their funds from banks under the belief that the bank is ...

What are Barriers to Entry? Barriers to Entry deter new entrants from entering a market and protect the profits of existing incumbents. The ...

What is Basic EPS? The Basic EPS is a profitability ratio used to measure the residual net income allocatable to common shareholders on a pe ...

What is Basic Earnings Power Ratio? The Basic Earnings Power Ratio determines the efficiency at which a company utilizes its assets to produ ...

What is an LBO Model Test? The LBO Model Test refers to a common interview exercise given to prospective candidates during the private equit ...

How to Build an LBO Model LBO Modeling is a method to measure the implied returns on a leveraged buyout transaction (LBO), which is a specia ...

What are Basis Points? Basis Points (bps) represent a unit of measurement for interest rates in finance and are equal to 1/100th of 1.0%. Th ...

What is BCG Growth Share Matrix? The BCG Growth Share Matrix is a framework designed for companies to better understand a market’s cur ...

What is Before-Tax Cash Flow? The Before-Tax Cash Flow (BTCF) is the rental income generated by a property prior to the deduction of income ...

What is the Berry Ratio? The Berry Ratio is a profitability measure used to compare a company’s gross profit to its operating expenses, such ...

What is the Bessemer Efficiency Score? The Bessemer Efficiency Score is a measure of capital allocation and spending habits to determine the ...

What are the Best Finance Newsletters? Financial Newsletters are the preferred option for practitioners to stay on top of the markets and be ...

What is Beta in Finance? Beta (β) measures the sensitivity of a security or portfolio of securities to systematic risk (i.e. volatility) rel ...

What is the Bid-Ask Spread? The Bid-Ask Spread represents the difference between the quoted ask price and the quoted bid price of a security ...

What is a Black Swan Event? A Black Swan Event is a metaphor describing a rare, unexpected phenomenon with a low probability of occurrence y ...

Bloomberg vs. Capital IQ (CapIQ) vs. Factset vs. Refinitiv Bloomberg, Capital IQ (CapIQ), Factset and Refinitiv are the leading providers of ...

What is Blue Ocean Strategy? The Blue Ocean Strategy is oriented around creating a market and generating consumer demand for a new product o ...

BMC Software Recapitalization In our LBO Modeling courses, our students learn that private equity investors have 3 strategies that they can ...

Bank of America this morning announced that it will fire 2,000 investment bankers on top of the 30,000 announced last year in an attempt to regain profitability. This looked like another run-of-the-mill mega-bank layoff ...

What is Bond Yield? The Bond Yield is the rate of return expected to be received by a bondholder from the date of original issuance until ma ...

What are Bonds Payable? Bonds Payable are a form of debt financing issued by corporations, governments, and other entities in order to raise ...

What is Book Value of Equity? The Book Value of Equity (BVE) is the residual proceeds received by the common shareholders of a company if al ...

What is Book Value Per Share? The Book Value Per Share (BVPS) is the per-share value of equity on an accrual accounting basis that belongs t ...

What are Bookings vs. Billings? Bookings are a SaaS metric that represents the value of a customer contract with a contractual spending comm ...

What is Borrowing Base? The Borrowing Base is the limit placed by a lender on a financing arrangement based on the collateral pledged to sec ...

What is Bottom Up Forecasting? Bottom Up Forecasting consists of breaking a business apart into the underlying components that ultimately dr ...

*Updated for 2023: List of Boutique and Middle-Market Investment Banks* Miller Buckfire & Co. (Restructuring focused) Morgan Keegan & Co. WR Hambrecht & Co. Montgomery & Co.  (Media & Internet and Technology focused) Stephens, Inc. ...

What is Break-Even Point? The Break-Even Point (BEP) is the inflection point at which the revenue output of a company is equal to its total ...

What is Break-Even Analysis? Break-Even Analysis quantifies the total number of units that must be sold, or the minimum sales threshold, for ...

What is Breakeven Occupancy? The Breakeven Occupancy Ratio is the minimum occupancy rate threshold of a property to ensure its operating exp ...

A breakup fee refers to a payment a seller owes a buyer should a deal fall through due to reasons explicitly specified in the merger agreement. For example, when Microsoft acquired LinkedIn in June ...

What is Bridge Loan? A Bridge Loan is a source of short-term financing until the borrower secures long-term financing or removes an existing ...

The world is evolving rapidly, and these transformations have significant implications for every sector, including finance. In a recent webinar hosted by Wall Street Prep, panelists explored the impact of these changes, particularly in ...

What is Budget to Actual Variance Analysis? Budget to Actual Variance Analysis is among one of the key functions for a FP&A professional ...

Wall Street Prep put together this list of the top global bulge bracket investment banks. Learn more about these prestigious banks below. Bank of America Merrill Lynch Barclays Capital Citi Credit Suisse Deutsche Bank ...

What is a Bullet Loan? For a Bullet Loan, the entire principal of the debt obligation is repaid in a single, “lump sum” payment on the date ...

What is the Burn Multiple? The Burn Multiple measures the amount a startup is spending in order to generate each incremental dollar of annua ...

What is Burn Rate? The Burn Rate is the rate at which a company spends its cash, most often used to analyze the spending of early-stage star ...

You'll often hear finance professionals describe their role as being either on the “sell side” or on the “buy side.” As is the case with a lot of finance jargon, what this exactly means ...

What is Buyback Yield? The Buyback Yield is the ratio between the value of a company’s net stock repurchases and its market capitaliza ...