Glossary: Financial Management Report

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Accounts Receivable: Balance Sheet account. Amount owed to a business for goods or services purchased by its customers.

Borrowing Base Assets: Finance term. For purposes of the analyses contained on this site, Accounts Receivable; Inventory; and Property, Plant and Equipment (Net).

Capital Expenditures (Net): Balance Sheet-related account. Periodic (e.g., annual, monthly, etc.) amount spent by a business on Property, Plant and Equipment. (The amount is net of disposals of Property, Plant and Equipment owned by the business).

Cash Available for Debt Service: Finance term. Free Cash Flow, plus Total Interest Expense.

Common Shares Outstanding (Fully Diluted): Balance Sheet-related account. The number of common equity shares outstanding, plus the additional number of common shares that would be outstanding if the holders of securities with common stock rights or conversion rights (e.g., options, warrants, convertible debt, preferred stock, etc.) were to exercise their rights and/or convert their securities into common stock.

Cost of Goods Sold: Statement of Net Earnings account. The direct and indirect product costs associated with the Net Sales recognized in an accounting period.

Current Assets: Balance Sheet account classification. Assets that are expected to be converted into cash within one year. For purposes of the analyses contained on this site, Current Assets are: Cash; Accounts Receivable; Inventory; and Other Current Assets.

Current Liabilities: Balance Sheet account classification. Liabilities that are expected to be paid within one year. For purposes of the analyses contained on this site, Current Liabilities are: Line of Credit; Current Maturities; Other Current Obligations; Accounts Payable; Accrued Expenses; Taxes Payable; and Other Current Liabilities.

Current Maturities: Balance Sheet account. The amount of long term debt (Term Loan and Subordinated Debt) that is expected to be paid within one year.

Current Ratio: Finance statistic. Current Assets, divided by Current Liabilities.

Debt Service Coverage: Finance statistic. Cash Available for Debt Service, divided by Required Debt Service.

Debt-to-Worth Ratio: Finance statistic. Total Liabilities, divided Owners' Equity.

Depreciation (Net): Balance Sheet-related account. A period cost of operations reflecting the decline in the value of Plant, Property and Equipment due to use and the passage of time. (The amount is net of reductions in Accumulated Depreciation resulting from disposals of Property, Plant and Equipment)

Dividends: Balance Sheet-related account. A distribution to the owners of a business of either cash or securities.

Earnings Before Income Taxes: Statement of Net Earnings statistic. Net Earnings, plus Income Taxes.

Earnings Before Income Taxes as % of Net Sales: Statement of Net Earnings statistic. Earnings Before Income Taxes, divided by Net Sales.

EBITDA: Finance statistic. Net Earnings, plus Interest Expense, plus Income Tax Expense, plus Depreciation, plus Amortization of Intangible Assets.

EBITDA as % of Net Sales: Finance statistic. EBITDA, divided by Net Sales.

EBITDA Coverage of Required Debt Service: Finance statistic. EBITDA, divided by Required Debt Service.

EBITDA Coverage of Senior Interest Expense: Finance statistic. EBITDA, divided by Senior Interest Expense.

EBITDA Coverage of Total Interest Expense: Finance statistic. EBITDA, divided by Total Interest Expense.

EBITDA Minus Capex, Divided by Required Debt Service: Finance Statistic. EBITDA Minus Capex, divided by Required Debt Service.

Estimated Amount Available to Borrow: Finance statistic. Borrowing Base Assets (i.e., Accounts Receivable; Inventory; and Plant, Property and Equipment) times the applicable Borrowing Base Percent.

Estimated Borrowing Base %: Finance statistic. Percent of asset values of Borrowing Base Assets on which banks and other lenders base their eligible loan amounts.

Estimated Net Bank Borrowing Availability: Finance statistic. Estimated Gross Amount of Senior Debt Available, minus Senior Debt Outstanding.

Fixed Asset Turnover: Finance statistic. Net Sales, divided by net Property, Plant and Equipment.

Free Cash Flow: Finance statistic. Net Earnings, plus Depreciation, minus Capital Expenditures, minus Dividends.

Gross Margin %: Statement of Net Earnings statistic. Gross Margin on Sales, divided by Net Sales.

Gross Margin on Sales: Finance Statistic. Net Sales, minus Cost of Goods Sold.

Interest on Line of Credit: Statement of Net Earnings account. Interest expense on Line of Credit borrowings.

Interest on Subordinated Debt: Statement of Net Earnings account. Interest expense on Subordinated Debt.

Interest on Term Loan: Statement of Net Earnings account. Interest expense on Term Loan and Current Maturities outstanding.

Inventory: Balance Sheet account. Lower of total cost or market value of raw materials, work in process and finished goods (all net of valuation reserves) owned by a business.

Line of Credit: Balance Sheet account. A credit facility, either unsecured or secured (secured
usually by the pledge of Accounts Receivable and Inventory), provided usually by a financial institution (e.g., commercial bank, finance company, etc.)

Loans Outstanding: Finance statistic. For purposes of the analyses contained on this site, the total of Line of Credit; Current Maturities; and Term Loan outstanding.

Long Term Liabilities as % of Total Assets: Finance statistic. Total Long Term Liabilities, divided by Total Assets.

Net Earnings: Statement of Net Earnings account. Net Sales recognized in an accounting period, minus all of the costs and expenses (including income taxes) incurred in the accounting period.

Net Earnings as % of Net Sales: Finance statistic. Net Earnings, divided by Net Sales.

Net Earnings Per Share: Finance term. Net Earnings, divided by Common Shares Outstanding (Fully Diluted).

Net Property, Plant and Equipment: Balance sheet statistic. Property, Plant and Equipment, minus Accumulated Depreciation.

Net Working Capital: Finance statistic. Current Assets, minus Current Liabilities.

Net Working Capital Turnover: Finance statistic. Net Sales, divided by Net Working Capital.

Non-Senior Interest Expense: Finance statistic. Interest expense on Subordinated Debt.

Number of Days Cost of Goods Sold in Accounts Payable: Finance statistic. Accounts Payable, divided by Cost of Goods Sold, divided by 365.

Number of Days Cost of Goods Sold in Inventory: Finance statistic. Inventory, divided by Cost of Goods Sold, divided by 365.

Number of Days Operating Expenses in Accrued Expenses: Finance statistic. Accrued Expenses, divided by Operating Expenses, divided by 365

Number of Days Sales in Accounts Receivable: Finance statistic. Accounts Receivable, divided by Net Sales, divided by 365.

Operating Earnings: Statement of Net Earnings statistic. For businesses which have Cost of Goods Sold, Operating Earnings equal Gross Margin, minus Operating Expenses. For businesses which do not have Cost of Goods Sold, Operating Earnings equal Net Sales, minus Operating Expenses.

Operating Earnings %: Finance statistic. Operating Earnings, divided by Net Sales.

Owners' Equity: Balance Sheet account classification. The cumulative dollar value of ownership's investment and earnings retained in a business. For purposes of the analyses contained on this site, Owners' Equity equals the sum of the following accounts: Common Stock; Preferred Stock; Treasury Stock; Retained Earnings; Other Equity; and Contributed Capital.

Property, Plant and Equipment: Balance Sheet account. The dollar cost of land, buildings, equipment and associated productive assets used in the operations of a business.

Property, Plant and Equipment (Net): Finance Term. Property, Plant and Equipment, minus Accumulated Depreciation.

Quick Ratio: Finance statistic. Cash, plus Accounts Receivable, divided by Current Liabilities.

Required Debt Service: Finance statistic. Total Interest Expense, plus Current Maturities.

Senior Interest Expense: Finance statistic. Interest Expense on Line of Credit, plus Interest Expense on Term Loan.

Subordinated Debt: Balance Sheet account. A long term liability (payable after twelve months from the Balance Sheet date) payable to a class of creditors whose rights are junior to some other class or classes of creditors of a business.

Term Loan: Balance Sheet account. A long term liability (payable after twelve months from the Balance Sheet date) payable to a class of creditors whose rights are senior to the providers of Subordinated Debt.

Total Asset Turnover: Finance statistic. Net Sales, divided Total Assets.

Total Assets: Balance Sheet Statistic. The total dollar cost of all tangible, intangible real and other property owned by a business. For the purpose of analyses contained on this site, the sum of Current Assets; Net Property, Plant and Equipment; Intangibles; Investments; and Other Assets.

Total Interest Expense: Finance statistic. Senior Interest Expense, plus Subordinated Debt Interest Expense.

Total Liabilities and Owners' Equity: Balance Sheet statistic. The amounts of Total Assets owed to creditors; and owned by owners of a business. For purposes of the analyses contained on this site, the sum of Current Liabilities; Total Long Term Liabilities; and Owners' Equity.

Total Liabilities as % of Total Assets: Finance term. Total Liabilities, divided by Total Assets.

Total Long Term Liabilities: Balance Sheet statistic. Liabilities that are expected to be paid beyond one year. For purposes of the analyses contained on this site, the sum of Term Loan; Subordinated Debt; Other Long Term Obligations; and Other Liabilities.