Term

Accounts Receivable

Advance Rate

Asset

Bankruptcy

Basis points (BPS)

Borrower

Borrowing Base

Capital

Capital Expenditure

Cash Burn

Cash Cap

Cash Floor

Cash Flow

Cash Flow Leverage

Collateral

Collateral Deficiency
Covenant

Customer Concentration

Cyclicality

DIO (Days Inventory Outstanding)

Dividend

Downside Scenario

DPO (Days Payable Outstanding)

DSO (Days Sales Outstanding)

EBITDA

EBITDA Cushion

Economic Recession

Excess collateral

Facility

Financial Performance

Financial Risk

Fixed Charge Coverage

Fixed Charges
Free Cash Flow

Funded Debt

General Corporate Purposes

Intangible Asset

Interest Coverage

Interest Rate

Inventory

Lender

Liquidity

Litigation

Marketable Securities

Maturity

Minimum Liquidity

Mitigant

Net Cash Flow Leverage

Net Working Capital (NWC)

Net Worth
Property Plant & Equipment

Qualitative

Quantitative

Real-Estate

Revolving Line of Credit

Seasonality

Segment

Spread

Sub-vertical

Tangible Asset

Tangible Net Worth

Tenor

Use of Proceeds
 Definition
Accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used but not yet paid for by c
owed by customers for purchases made on credit.

The percentage of the value of collateral that a lender uses to determine the amount of a loan. For example, if one pledges a co

An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that
increase a firm's value or benefit the firm's operations. An asset can be thought of as something that, in the future, can generat

Bankruptcy is a legal proceeding involving a person or business that is unable to repay their outstanding debts. The bankruptcy
common. All of the debtor's assets are measured and evaluated, and the assets may be used to repay a portion of outstanding

Basis points, otherwise known as bps or "bips," are a unit of measure used in finance to describe the percentage change in the
to 0.01% (1/100th of a percent) or 0.0001 in decimal form. Likewise, a fractional basis point such as 1.5 basis points is equivale

A person or company that has received money from another party with the agreement that the money will be repaid. I.e. in this

A borrowing base is the amount of money that a lender is willing to loan a company, based on the value of the collateral the com
lender determines a discount factor, which is then multiplied by the value of the collateral in question. The resulting numerical fi

Capital is a term for financial assets, such as funds held in deposit accounts and/or funds obtained from special financing sourc
to finance or expand.

Capital expenditures, commonly known as CapEx, are funds used by a company to acquire, upgrade, and maintain physical as

The burn rate is usually quoted in terms of cash spent per month. For example, if a company is said to have a burn rate of $1 m

Maximum amount of cash that can be applied to any scenario that involves using a cash metric.

Minimum amount of cash that can be applied to any scenario that involves using a cash metric.

Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business. At the most fundamenta
flows, or more specifically, maximize long-term free cash flow (FCF).

(Total Funded Debt/EBITDA): Ensures the company is generating enough cash flow in a specific period to cover its debt obliga
of transactions.

The term collateral refers to an asset that a lender accepts as security for a loan. Collateral may take the form of real estate or
lender. That is, if the borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or

Lack of collateral to support loan amount. Loan amount is greater than collateral values of company.
In legal and financial terminology, a covenant is a promise in an indenture, or any other formal debt agreement, that certain act
to terms in a financial contract, such as a loan document or bond issue stating the limits at which the borrower can further lend.

A measure of how total revenue is distributed among your customer base. A company serving a large number of small-volume
majority of its business

A cyclical industry is a type of industry that is sensitive to the business cycle, such that revenues generally are higher in periods
Companies in cyclical industries can deal with this type of volatility by implementing employee layoffs and cuts to compensate d

This addresses the question of how many days it takes to sell the entire inventory. The smaller this number is, the better.

A dividend is the distribution of a portion of the company's earnings, decided and managed by the company’s board of directors
eligible as long as they own the stock by the ex-dividend date. Dividends may be paid out as cash or in the form of additional st

Worst-case scenario that could be but not limited to: economic recession, natural diaster, lawsuit affecting company operations

This involves the company's payment of its own bills or AP. If this can be maximized, the company holds onto cash longer, max

This looks at the number of days needed to collect on sales and involves AR. While cash-only sales have a DSO of zero, peopl

EBITDA, or earnings before interest, taxes, depreciation, and amortization, is a measure of a company's overall financial perfor
however, can be misleading because it strips out the cost of capital investments like property, plant, and equipment.

In setting covenants, the amount of cushion against projected results is generally established through negotiation between a bo
another default, while lenders typically seek tighter covenants in order to keep a closer eye on their troubled borrowers. EBITDA
off the chosen level.

A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region. It h
conjunction with monthly indicators such as a rise in unemployment.

Excess collateral to support loan amount. Loan amount is less than collateral values of company.

A facility is a formal financial assistance program offered by a lending institution to help a company that requires operating capi
loans, letters of credit, and swingline loans. A facility is essentially another name for a loan taken out by a company.

Financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and genera

Risk is defined in financial terms as the chance that an outcome or investment's actual gains will differ from an expected outcom

EBITDA less capital Expenditures divided by total fixed charges): Assesses the ability of a company to pay off outstanding fixed
has term debt and/or other required payments. A ratio less than 1.0x represents deficiency in ability to meet fixed charges wher

A fixed charge is any type of expense that recurs on a regular basis, regardless of the volume of business. Fixed charges main
to include insurance, utilities, and taxes for the purposes of drawing up loan covenants by lenders.
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and m
the non-cash expenses of the income statement and includes spending on equipment and assets as well as changes in workin

Funded debt is a company's debt that matures in more than one year or one business cycle. This type of debt is classified as s

General corporate purposes are the highest-level objectives in a business. Companies normally lay out general purposes for th

An intangible asset is an asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as pate
which include land, vehicles, equipment, and inventory.

(EBITDA/Interest): Assesses if operating earnings can cover interest payments. An interest coverage covenant would be most
has a revolving line of credit facility which requires interest only payments until maturity.

The interest rate is the amount a lender charges for the use of assets expressed as a percentage of the principal. The interest r
could include cash, consumer goods, or large assets such as a vehicle or building.

Inventory is the term for the goods available for sale and raw materials used to produce goods available for sale. Inventory repr
primary sources of revenue generation and subsequent earnings for the company's shareholders

A lender is an individual, a public or private group, or a financial institution that makes funds available to another with the expec
occur in increments (as in monthly mortgage payment) or as a lump sum.

Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price.

The act, process, or practice of settling a dispute in a court of law.

Marketable securities are investments that can easily be bought, sold, or traded on public exchanges. The high liquidity of mark
investments can be debt securities or equity securities.

Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it wil

Minimum Liquidity (Permit at any time its total of cash and marketable securities, to be less than a $ amount): Ensures the com
are historically tight on cash and or/marketable securities.

A factor that mitigates or alleviates something.

(Total Funded Debt less Cash / EBITDA): Similar to above, the difference here lies in the deduction of cash. This covenant is ty
gives the company cushion: the more cash they have, the lower their leverage ratio giving them the availability to borrow more.

Working capital, also known as net working capital (NWC), is the difference between a company’s current assets, such as cash
and its current liabilities, such as accounts payable. Net operating working capital is a measure of a company's liquidity and refe

Net worth is the value the assets a person or corporation owns, minus the liabilities they owe. It is an important metric to gauge
Property, plant, and equipment (PP&E) are long-term assets vital to business operations and not easily converted into cash

Qualitative analysis uses subjective judgment to analyze a company's value or prospects based on non-quantifiable information

Quantitative analysis (QA) is a technique that seeks to understand behavior by using mathematical and statistical modeling, me

Real estate is property made up of land and the buildings on it, as well as the natural resources of the land including uncultivate

Revolving credit refers to a situation where credit replenishes up to the agreed upon threshold, known as the credit limit, as the

Seasonality is a characteristic of a time series in which the data experiences regular and predictable changes that recur every c
seasonal.

A segment is a component of a business that generates its own revenues and creates its own product, product lines, or service

A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or

An industry like energy, healthcare or information technology is broad. An industry vertical (also called a vertical market) is mor

A tangible asset is an asset that has a finite monetary value and usually a physical form.

(Net Worth - Intangible Assets): Used to assess a company’s actual net worth while excluding any assumptions of intangible as
not lend more than the company’s assets are worth. This covenant would be used for a company who is asset heavy and would

Tenor refers to the length of time remaining before a financial contract expires. It is sometimes used interchangeably with the te

Use of proceeds summarizes how a company that aims to secure additional capital is going to spend the funds.
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https://www.investopedia.com/terms/a/accountsreceivable.asp

https://financial-dictionary.thefreedictionary.com/Advance+Rate

https://www.investopedia.com/terms/a/asset.asp

https://www.investopedia.com/terms/b/bankruptcy.asp

https://www.investopedia.com/ask/answers/what-basis-point-bps/

https://financial-dictionary.thefreedictionary.com/borrower

https://www.investopedia.com/terms/b/borrowing-base.asp

https://www.investopedia.com/terms/c/capital.asp

https://www.investopedia.com/terms/c/capitalexpenditure.asp

https://www.investopedia.com/terms/b/burnrate.asp

https://www.investopedia.com/terms/c/cashflow.asp

https://www.investopedia.com/terms/f/freecashflow.asp

https://www.investopedia.com/terms/c/collateral.asp

https://www.investopedia.com/terms/c/covenant.asp
https://www.investopedia.com/terms/c/cyclical_industry.asp

https://www.investopedia.com/terms/e/ebitda.asp

https://www.investopedia.com/terms/r/recession.asp

https://www.investopedia.com/terms/f/facility.asp

https://www.investopedia.com/terms/f/fixed-charge.asp

https://www.investopedia.com/terms/f/fundeddebt.asp

https://smallbusiness.chron.com/general-corporate-purposes-definition-65747.html

https://www.investopedia.com/terms/f/financialperformance.asp

https://www.investopedia.com/terms/i/intangibleasset.asp

https://www.investopedia.com/terms/i/interestrate.asp

https://www.investopedia.com/terms/i/inventory.asp

https://www.investopedia.com/terms/l/lender.asp

https://www.investopedia.com/terms/l/liquidity.asp
https://www.merriam-webster.com/dictionary/litigation

https://www.investopedia.com/ask/answers/033015/what-are-some-common-examples-marketable-securities.asp

https://www.investopedia.com/terms/m/maturity.asp

https://www.merriam-webster.com/dictionary/mitigant

https://www.investopedia.com/terms/n/networth.asp

https://www.investopedia.com/terms/p/ppe.asp

https://www.investopedia.com/terms/q/qualitativeanalysis.asp

https://www.investopedia.com/terms/q/quantitativeanalysis.asp

https://www.investopedia.com/terms/r/realestate.asp

https://www.investopedia.com/terms/r/revolvingcredit.asp

https://www.investopedia.com/terms/r/revolvingcredit.asp

https://www.investopedia.com/terms/s/seasonality.asp

https://www.investopedia.com/terms/s/spread.asp

https://www.investopedia.com/terms/t/tangibleasset.asp

https://www.investopedia.com/articles/pf/13/calculating-your-tangible-net-worth.asp

https://www.investopedia.com/terms/t/tenor.asp

https://corporatefinanceinstitute.com/resources/knowledge/finance/use-of-proceeds-statement/
https://www.investopedia.com/terms/s/segment.asp

https://www.investopedia.com/terms/w/workingcapital.asp

https://pitchbook.com/blog/what-are-industry-verticals

https://www.investopedia.com/articles/06/cashconversioncycle.asp

https://www.investopedia.com/articles/06/cashconversioncycle.asp

https://www.investopedia.com/terms/d/dividend.asp

https://www.abi.org/abi-journal/setting-financial-covenants-in-troubled-debt-situations
e-securities.asp