Glossary

Operating profit before financing, tax, and non-cash charges. Used to compare companies with different capital structures.

Similar to EBITDA but excludes depreciation. Shows core operating earnings before financing costs.

When a private company lists shares on a stock exchange for the first time, raising capital and creating liquid equity.

Acquiring a company mostly with debt, using the target’s cash flows to repay the loan. Common in private equity.

Firms that buy and restructure companies, usually taking them private, improving operations, and selling later.

Early-stage equity funding for high-growth startups, typically in exchange for minority ownership.

Buying, selling, or combining companies. A major path to scale, market share, and liquidity events.

Total market value of investments a fund or advisor manages on behalf of clients.

Value of a fund’s assets minus liabilities, divided by shares outstanding. Used for mutual funds and ETFs.

Net profit divided by number of outstanding shares. A core metric for public company profitability.

Share price divided by earnings per share. Indicates how much investors pay for each dollar of profit.

Financial metrics calculated over the past 12 months, not just the latest quarter or fiscal year.

Total value returned divided by capital invested. Common PE/VC performance metric.

Annualized return rate that makes the net present value of cash flows equal zero. Used to compare investments over time.

Valuation method based on projected future cash flows, discounted to present value.

Money spent on long-term assets like factories, equipment, or infrastructure.

Day-to-day running costs: salaries, rent, marketing, and other recurring expenses.

Revenue minus cost of goods sold, as a percentage. Shows pricing power and production efficiency.

Net income divided by shareholder equity. Measures how efficiently a company uses owner capital.

Profit generated per dollar of total capital (debt + equity). Key measure of capital allocation skill.