Glossary – The Rainmaker

Glossary

Acceleration clause. Clause requiring repayment of a debt if specified events occur or specific terms are not met.

Acceptance criteria. The criteria by which a product or system is judged at acceptance testing. Usually derived from commercial or other requirements.

Acceptance date. Time limit given to a prospective shareholder to accept an offer of shares in a “rights” issue.

Acceptance test. The final functional testing used to evaluate the state of a product and determine its readiness for the end user. A “gateway” or “milestone” that must be passed.

Account. A trading period whose dates are fixed by the stock exchange authorities.

Accountability. To ensure that a result is achieved, usually through the effort of others.

Accounting policies. Principles, bases, conventions, rules, and procedures adopted by management in preparing and presenting financial statements.

Accounts payable. Bills which have to be paid as part of the normal course of business.

Accounts receivable. Debts owed to your company from credit sales.

Accumulated depreciation. Total accumulated depreciation reduces the book value (formal accounting value) of assets. The value of an asset is reduced each month by a predetermined amount and timeframe. An asset worth $100, depreciated by $10 per month, would be written off over 10 months.

Accuracy rating. A high, medium, or low rating that depicts the level of confidence that the team has in an estimate.

Acid test. A ratio used to determine how liquid a company is. It is determined by subtracting short-term assets from accounts receivable and inventory which is then divided by short-term liabilities.

Ad hoc. Member attendance at team meetings is by invitation only.

Affinity diagram. A team-based tool for identifying and organizing ideas.

Agenda. Notice of a meeting that states meeting location, time, and date of the meeting and the items to be discussed.

Agent. A member who acts on behalf of a client and has no personal interest in the order.

AIM. The anagram for the UK-based Alternative Investment Market.

Alpha. It is the first version of product where all of the intended functionality has been implemented, but interface has not been completed, and bugs have not been fixed.

Analyze. The first phase in many developmental and delivery methodologies. The analyze phase involves examination of the proposal to determine the requirements and “what” is to be addressed by the project.

Arbitrage. A purchase or sale by a member on his or her own account of securities on one stock exchange with the intent to sell or buy those securities on another stock exchange to profit by the difference between the prices of those securities on such stock exchanges.

Asset swap. A transaction that complies with all the requirements of their Federal Banks in respect of the same.

Asset turnover. Sales divided by total assets. Important for comparison over time and to other companies of the same industry.

Assumptions. Statements describing situations that are taken to be true.

Authorized/issued share capital. While the authorized share capital is the maximum number of shares a company is permitted to issue over time, the issued share capital is the actual number of shares in issue. These figures are specified in preincorporation agreements (memorandum and articles of association). Investors can find these figures in a company’s annual report.

Bad debts. An amount payable by debtors that the firm determines is irrecoverable.

Balance sheet. A statement that shows a company’s financial position on a particular date.

Bankers’ acceptance. A bill of exchange, or draft, drawn by the borrower for payment on a specified date and accepted by a chartered bank. Upon acceptance, the bill becomes, in effect, a postdated certified cheque.

Bankruptcy. A legal procedure for formally liquidating a business carried out under the jurisdiction of courts of law.

Baseline. A snapshot at a point in time of part of a project plan. A “schedule baseline” is a snapshot of the schedule at that point in time which can be compared over time.

Benefits realization review. The process of reviewing the extent of realized benefits once the solution has been delivered and implemented. Measured benefits are compared with those originally proposed in the business case.

Benefits tracking. The process of quantitatively measuring over a period of time the extent of realized benefits once the solution has been delivered and implemented.

Best efforts. This term is used to describe a deal in which underwriters only agree to “do their best” in selling shares to the public. An initial public offering (IPO) is more commonly provided on a bought-or-firm commitment basis in which the underwriters are obligated to sell the allotted shares.

Beta. It is the first version of a product where all of the functionality has been implemented and the interface is complete, but the product still has problems or defects.

Blank check. A company that indicates no specific industry, business, or venture when its securities are publicly offered for sale and the proceeds of the offering are not specifically allocated.

Bond. Usually a fixed-interest security under which the issuer contracts to pay the lender a fixed principal amount at a stated date in the future and a series of interest payments, either semiannually or annually. Interest payments may vary throughout the life of the bond.

Book value. The net amount of an asset shown in the books of a company, that is, the cost of purchasing a fixed asset less the depreciation on that asset.

Bookkeeping. The process of collecting, classifying, recording, and summarizing a business financial transactions in what are known as journals and ledgers.

Bottom Up. Building or designing a product from elementary building blocks, starting with the smaller elements and evolving into a larger structure.

Brainstorming. A technique for generating ideas.

Break-even point. The unit sales volume or actual sales amount that a company needs to equal its running expenses rate and not lose or make money in a given month. Breakeven is based on regular running expenses, unlike the standard accounting formula that is based on technical fixed expenses.

Broker. The name given to a natural person recognized by an official stock exchange.

Budget risk. The risk of potential problems that could cause the team to overspend the budget.

Budget. Planned expenditure and funds allocated for a project.

Burden rate. Refers to personnel burden, which is the sum of employer costs above salaries.

Business process. A set of steps that turns inputs into repetitive outputs. One of the ways, besides projects, by which work is accomplished.

Business case. A document detailing the justification for the proposed business project.

Business owner. The person(s) in the organization that will take ownership of the project’s outputs and use them for the benefit of the organization.

Business requirements specification. A document that states specifically the business needs that the project’s outputs must satisfy. It is basically the “what” aspect of the project.

CAPEX. Capital expenditure. Typically includes purchase of new equipment.

Capital assets. Long-term assets, also known as fixed assets (plant and equipment).

Capital expenditure. Expenses made on capital assets.

Capital input. New money being invested in the business. New capital will increase your cash and will also increase the total amount of paid-in capital.

Capital structure. Usually refers to the structure of ordinary and preference shares and long-term liabilities.

Capital turnover. Annual sales divided by average stockholder equity (net worth) (i.e., total sales for each dollar of equity).

Capital. This is also known as total shares in issue, owner’s equity, or shareholders’ funds.

Capitalization. The total amount of debt and equity issued by a company.

Cash Budget. A plan or projection of cash receipts and disbursements for a given period of time. It is essential for the determination of cash deficiencies or excess cash balances.

Cash conversion cycle. The time it takes for a company to pay cash for a product, add its value to the product, and then receive cash from the sale of that product.

Cash equivalents. Instruments or investments of such high liquidity and safety that they are virtually equal to cash.

Cash flow. A statement that shows the net difference between cash received and paid during the company’s operating cycle.

Cash. The bank balance, or checking account balance, or real cash in bills and coins.

Cash-flow forecast. An estimate of the timing and amount of a company’s inflow and outflow of money measured over a specific period of time; typically, monthly for 1 to 2 years, then annually for an additional 1 to 3 years.

Change log. The means by which a project leader tracks the status of change requests.

Change management. A structured process for making changes to the project plan.

Change request. A request from inside or outside the project to amend the project plan.

Change control. The set of practices around effectively managing changes to the project so that they are raised, assessed, prioritized, and implemented efficiently and with a known impact on the project.

Charter. A document stating the desired output of the initiation phase. It outlines the expectations and constraints that the team has when they plan the project.

Close-out stage. The final project management phase in which the project is evaluated, feedback is elicited, and lessons learned are captured.

Close-out report. The output of the close-out phase. It includes the final status report, evaluation and feedback documents, lessons learned, and recommendations for improving the project system.

Collection period (days). The average number of days that pass between delivering an invoice and receiving the money.

Collections days. See Collection period

Commission. The brokers charge a fee for buying and selling shares, which is brokerage or commission earned on a deal.

Commissions percent. An assumed percentage used to calculate commissions expense as the product of this percentage multiplied by gross margin.

Conceptual view. A very high-level summary of what the solution will look like once it is implemented. It can be presented as a diagram.

Consensus. Agreement within a group to a decision that everyone can live with.

Constraint. Something that the team is not allowed to do or a resource that is not available to the project.

Contingency. Reserve resources (time, effort, or money) that are set aside because of the unpredictability of the future.

Convertible and redeemable preference shares. An alternative mechanism to ordinary shares. It enables companies to issue other shares that can either be bought back from investors or converted into ordinary shares at a later date.

Corporate finance transaction. A transaction that is entered into in writing and requires public notification in the press in terms of the listings requirements of an exchange.

Cost of sales. The costs associated with producing the sales. In a standard manufacturing or distribution company, this is about the same as the costs for people delivering the service or subcontracting costs.

Cost risk. The same as budget risk. The risk of potential problems that could cause the team to overspend the budget.

Countermeasure. An activity or deliverable that will prevent or reduce a risk.

Credit risk. Risk that a borrower may default on obligations, thus posing a danger that repayment will not take place.

Creditors. People or companies that you owe money to. This is the old name for accounts payable.

Criteria. The factors used to make a decision.

Critical path. The minimum set of tasks that must be completed to conclude a phase or a project. The path through the schedule in which there is no slack. The critical path is the longest path through the schedule, and it determines the final delivery date in the project.

Crossed market. Where a bid price is higher than the offer price for a security.

Current assets. Those assets that can be quickly converted into cash and include accounts receivable, stock, and debtors book. These are often called liquid assets.

Current debt. Short-term debt or short-term liabilities.

Current liabilities. A company’s short-term debt, which must be paid within the firm’s operating cycle, that is, less than 1 year.

Customer acceptance criteria. The criteria the customer will use to determine if he or she is satisfied with the final deliverable.

Customer evaluation. An assessment by the customer, after the final deliverable has been delivered, of his or her level of satisfaction with the project.

Customer need. The problem that the final deliverable will help the customer resolve.

Customer requirements. Specific features or functions that the customer wants from the final deliverable.

Deadline. The date for delivery of a deliverable that is set by someone outside the project team, usually the sponsor or customer.

Deal breaker. A significant issue relating to the proposed financing between the prospective investor and the entrepreneur that must be resolved in order to close the deal.

Debenture. A bond that is not secured by fixed assets.

Debt and equity. The sum of liabilities and capital. This should always be equal to total assets.

Debtors. People or companies that owe your company money. It is the old name for accounts receivable.

Decision options. The choices available before a final decision is made.

Deliverable. An item produced by a project or part of a project that is tangible and objectively verifiable.

Deliverables schedule. The schedule that shows the delivery date for each of the project’s deliverables and the interdependencies between them.

Deliverables staff effort. The internal effort required to create the deliverables for the project.

Delivery date. The date a deliverable is scheduled to be turned over to the next customer in the technical process.

Demand loan. A loan that must be repaid in full on demand.

Depreciated replacement value. The value of an asset with reference to the cost of replacing the asset with a new asset of similar utility minus an amount reflecting the depreciation of the existing asset.

Depreciation. An accounting and tax concept used to estimate the loss of value of assets over time. For example, cars depreciate with use.

Dilution. A reduction in per share participation in net earnings and ownership through an increase in the issued stock.

Directive project management. The old management approach in which the project manager did the planning, delegated tasks to team members, monitored the project, and then shut it down.

Discount rate. A rate of return used to convert a monetary sum, payable or receivable in the future, into present value.

Discounted cash flow (DCF). Techniques for establishing the relative worth of a future investment by discounting (at a required rate of return) the expected net cash flow from the project.

Discounting. The process of finding the present value of a series of future cash flows. It is the reverse of compounding.

Divestiture. The sale of part of a company. It is the opposite of a merger.

Dividend coverage. Number of times a company’s dividend is covered by earnings available to pay it.

Due diligence review. The investigatory and review procedures carried out by strategists, accountants, and lawyers.

Due diligence. A reasonable investigation conducted by the parties involved in preparing a disclosure document to form a basis for believing that the statements contained therein are true and that no material facts are omitted.

Duration. The length of calendar time required to complete a project or part of a project.

Earned value analysis. A technique for determining the value delivered by a project to date compared with what it planned to deliver in the first place.

Earnings. Also called income or profits, earnings are the famous “bottom line”: sales less costs of sales and expenses.

Earnout. A method of structuring a transaction whereby the ultimate purchase price depends in part on the future performance of the business being acquired.

EBIT. Earnings before interest and taxes.

EBITDA. Earnings before interest, income taxes, depreciation, and amortization.

Effort. The measure of the amount of work required to complete a project or part of a project.

Empirical approach. A valuation approach whereby the value of a company is determined by reference to open-market transactions involving similar companies or by reference to value relationships implied in the stock price of publicly traded companies.

End customer. The customer that will ultimately use the product or service being developed. The end user.

End user. The person who uses a product, service, or process.

End-user requirements. The performance characteristics of the final product, service, or process that are requested by the end user.

Equity. Business ownership; capital. Equity can be calculated as the difference between assets and liabilities.

Escrow. An agreement put into the custody of another party until certain conditions are fulfilled.

Estimate. A calculated guess of the size, cost, and duration of a future project.

Evaluate. A phase in some project methodologies in which the success of the project in meeting its objectives is measured and reported.

Exchange risk. The risk associated with an asset or liability denominated in a foreign currency. It is vulnerable to the movement of exchange rates.

Execution stage. The stage in the project management process in which the deliverables are created and their progress is tracked.

Executive summary. A concise summary of an investment proposal that describes a company’s background, products or services, financial needs, financial requirements, management capabilities, market description, and financial data.

Exit options. A variety of options available to investors to recover their invested capital and the return on their investment.

Expectations. It is what the client hopes will be accomplished.

Expected return. The total amount of money (return) an investor anticipates to receive from an investment.

External costs. Expenses for the project that originate outside the organization.

External customer. A customer who resides outside the organization.

Facilitation. The act of helping a person or group to work through a process.

Feature/scope creep. The relentless tendency of a project to self-inflate and take on more features or functionality than what was originally intended. Also known as “scope creep.”

Features. Specific attributes of final deliverables.

Final deliverable. The final output from the execution stage of the project that is delivered to the project customer.

Final status report. The last status report for the project that is completed after the project client has accepted the final deliverable.

Financial notes. Information explaining financial figures (balance sheet, income statement, and cash flow).

Fixed costs. Running costs that take time to wind down: usually rent, overhead, and some salaries. Technically, fixed costs are those that the business would continue to pay even if it went bankrupt. In practice, fixed costs are usually considered the running costs.

Fiscal year. Standard accounting practice allows the accounting year to begin in any month. Fiscal years are numbered according to the year in which they end. For example, a fiscal year ending in February of 1992 is fiscal year 1992, even though most of the year takes place in 1991.

Fixed assets. Includes all fixed (immovable) assets, namely property, vehicles, machinery, and equipment. It cannot usually be converted into cash within the firm’s operating cycle.

Fixed expenses. Cost of doing business that does not change with the volume of business. Examples might be rent for business premises, insurance payments, and heat and light.

Fixed rate loan. Loan for a fixed period of time with a fixed interest rate for the life of the loan.

Flipping. This is when an investor has acquired an IPO at its offering price and sells it immediately for a quick gain soon after it starts trading on the open market. A practice discouraged by underwriters that can lead such investors to unfavorable relationships with their underwriters with future IPOs.

Floating charge. Charge or assignment on a company’s total assets as security for a loan on total assets without citing specific assets.

Floating rate. A situation where the interest rate or rate of exchange is determined solely by market forces.

Forecast. Future-oriented financial information prepared using assumptions, all of which reflect the entity’s planned courses of action for the period covered, given management’s judgment as to the most probable set of economic conditions.

Foreign exchange. Claims payable abroad in a foreign currency, including bank deposits, bills, and checks. Foreign exchange rates refer to the number of units of one currency required to buy another.

Forming stage. The first stage of team development. It is when people are getting to know one another.

Front-end fees. Fees paid when, for example, a financial instrument such as a loan is arranged.

Front-end loading. Charges or fees that are greater at the starting phase of a loan or investment than in its later stages.

Functional manager. The person accountable for a department or a set of resources. Also known as a resource manager.

Funding consolidation. The process of replacing short-term debt with long-term securities (shares or bonds).

Funding costs. The price of obtaining capital, either borrowed or equity, with intent to carry on business operations.

Gantt chart. A schedule that visually shows the duration for each deliverable or activity.

Going concern. A company that is operating, that is, has not stopped producing goods or providing a service, and one which has not been placed under liquidation or curatorship.

Goodwill. An intangible asset reflected in balance sheets, which indicate an excess over market value for assets paid by the firm.

Gross geographic product. A statistic that shows the remuneration received by the production factors (land, labor, capital, and entrepreneurship) for their participation in production of goods and services in a defined area.

Gross margin percent. Gross margin divided by sales, displayed as a percentage. Acceptable levels depend on the nature of the business.

Gross margin. Sales less cost of sales.

Historical data. Data collected from past projects.

Horizontal analysis. The process of comparing consecutive financial statements by examining the increases or decreases between the periods in terms of absolute dollar and percentages.

Hurdle rate. A predetermined benchmark rate of return. If the rate of return expected from the project or investment falls below the benchmark, the projected investment will no longer be accepted. The hurdle rate should be the marginal cost of capital adjusted for the project’s risk.

Hypothecation. The pledge of property and assets to secure a loan. Hypothecation does not transfer title, but it does provide the right to sell the hypothecated property in the event of default.

Immediate deal. A transaction in a listed security where settlement is to take place the next business day.

Impact analysis. The assessment of what effect something will have on the project plan.

Implement. The phase of a project involved with delivering the solution to the business owner.

Income statement. A statement showing net income or loss for a specified period.

Incremental development. The development of a product in a piece-by-piece fashion, allowing for a gradual implementation of functionality without having the whole thing finished.

Initial team. The team originally selected to be on the project.

Initiation. The first project management phase. In this phase the overall direction and constraints for the project are set.

Input–output chain. The workflow of interconnected or interdependent deliverables that creates the final deliverable.

Input. A supply that is used in a process.

Interdependencies. The dependencies that exist in any system, where one team member depends on another for certain inputs or to receive certain outputs.

Interest expense. Interest that is paid on debts and is deducted from profit as expenses.

Interim deliverable. A deliverable that is produced in the technical process before the production of the final deliverable.

Internal costs. Expenses for the project that are cross-charged by a department inside the organization.

Internal customer. A customer that is inside the organization.

Interrelationship digraph. A team-based tool that helps a team identify root causes.

Inventory turnover. Sales divided by inventory. Usually calculated using the average inventory over an accounting period, not an ending-inventory value.

Inventory turns. Inventory turnover (above).

Inventory. This is another name for stock. Goods in stock, either finished goods or materials to be used to manufacture goods.

Issues list. A list to record issues that must be resolved or action items that are not significant enough to be put on the project schedule.

Issues management. A set of practices designed to effectively identify, prioritize, and monitor issues and manage them through to resolution.

Kick-off. Typically, the first meeting of the project team, when the project is officially launched.

Labor. In business plans the word “labor” often refers to the labor costs associated with making goods to be sold. This labor is part of the cost of sales and part of the manufacturing and assembly. In economic terms, labor often denotes the sale of a skill to produce a product or service.

Large project. A project with more than 10 team members.

Letter of acceptance. The investor may receive such a letter if the company accepts his or her application for shares.

Leverage ratio. A financial ratio that measures a firm’s debt burden. The debt, times interest earned, and fixed charges coverage ratios are leverage ratios.

Leverage. The relationship between interest-bearing debt and equity in a company (financial leverage) or the effect of fixed expense on after-tax earnings (operating leverage).

Liabilities. Debts; money that must be paid. Usually, debt on terms of less than five years is called short-term liabilities, whereas debt on terms of longer than five years is called long-term liabilities.

Liaison. A person on the project team assigned to communicate with a stakeholder.

Limit order. An order that may only be effected at prices equal to or better than the price on the order.

Liquidity. A company’s ability to pay short-term debt with short-term assets.

Listing. The official granting of a listing of a company’s shares on a stock exchange.

Long-term assets. Assets like plant and equipment that are depreciated over terms of more than five years and are likely to last that long too.

Long-term interest rate. The interest rate charged on long-term debt. This is usually higher than the rate on short-term debt.

Long-term liabilities. This is the same as long-term loans. Most companies call a debt long term when it is on terms of five years or more.

Management leveraged buyout. The situation when the management of a company purchases all the company’s shares or assets. Usually, the company’s assets become security for the loans necessary to make the purchase.

Management of investments. The management of investments on behalf of a client by a member or an approved person.

Management. Individuals in an entity that have the authority and the responsibility to manage the entity. The positions of these individuals, and their titles, vary from one entity to another and, to some extent, from one country to another depending on the local laws and customs. Thus, when the context requires it, the term includes the board of directors or committees of the board that are designated to oversee certain matters (e.g., an audit committee).

Market capitalization. Used to denote a company’s size and is calculated by multiplying a company’s issued share capital by its current share price.

Market indicators. Statistics that give an overall picture of how the market is performing.

Market risk. The part of a security’s risk that cannot be eliminated by diversification.

Marketable securities. All instruments legally permitted to trade on a stock exchange. These include shares (ordinary and preference), bonds, futures, and options.

Materials. Included in the cost of sales. These are not just any materials but materials involved in the assembly or manufactured of goods for sale.

Maturity date. The date on which a debt is due for payment.

Mentor. A close personal contact, usually in your industry, who has a network of contacts in the investment community and can assist you in achieving your objectives.

Method. A system for getting something done.

Mezzanine debt. Nonconventional debt that has a greater element of risk than secured debt but less risk than equity.

Milestone schedule. The schedule used to communicate the dates that major accomplishments in the project will be completed.

Milestone. A major accomplishment of a project. A significant point in a project schedule that denotes the delivery of a significant portion of the project. Normally associated with a particular “deliverable.”

Minority shareholders. Shareholders who by virtue of their percentage ownership of the company do not have voting control of the company.

Minutes. Notes taken during a meeting that summarize discussions and agreed-on actions.

Monopoly. When one company controls and dominates a particular company.

Mortgage. Debt instrument by which the borrower (mortgagor) gives the lender (mortgagee) a lien on a property as security for the repayment of a loan.

Mourning stage. The last stage in the team-development process.

Multivoting. A team-based tool for selecting one or more options for a decision.

Negative covenant. A promise not to do certain things.

Net cash flow. This is the projected change in cash position, an increase or decrease in cash balance.

Net income. The level of profit in a business after the deduction of income taxes, depreciation, operating expenses, and other expenses. It is also known as after-tax profit or net profit.

Net present value (NPV). A method of ranking investment proposals. NPV is equal to the present value of future returns, discounted at the cost of capital, minus the present value of the cost of the investment.

Net profit. The operating income less taxes and interest. The same as earnings or net income.

Net realizable value. Selling price of an asset minus the expenses of bringing the asset into a saleable state and expenses of the sale.

Net working capital. Total of all current assets minus the total of all current liabilities of a company.

Net worth. This is the same as assets minus liabilities and the same as total equity.

Networking. Making use of contacts, associates, and friends.

Non-assignable. Restriction in a contract limiting the ability of a shareholder to transfer the rights, benefits, or obligations pursuant to that contract.

Non-compete. Generally refers to a clause in a contract that restricts a person from starting a similar business or working for a competitor. It is normally time and area specific.

Oligopoly. A situation when a few companies control and dominate a particular market.

Ordinary shares. A commercial paper issued to investors to raise capital. Investors hold these shares as part owners in the firm.

Other short-term assets. These are securities and business equipment.

Other ST liabilities. These are short-term debts that don’t cause interest expenses. For example, they might be loans from founders or accrued taxes (taxes owed, already incurred, but not yet paid)

Output. A product that is produced as a result of a process.

Overheads. Running expenses not directly associated with specific goods or services sold but with the general running of the business

Oversight. The act of high-level monitoring to assure that a project is on track.

Over-the-counter (OTC) market. A market made up of dealers who make a market for those securities not listed on an exchange. An over-the-counter market exists between buyers and sellers over the telephone rather than the electronic market found on some exchanges.

Paid-in capital. Real money paid into the company as investments. This is not to be confused with par value of stock or market value of stock. This is actual money paid into the company as equity investments by owners.

Paper profit. A surplus income over expense, which has not yet been released, that is, share prices that have increased above the price at which they were bought but not yet sold.

Par value. The nominal value of a share and is an arbitrary amount placed on the share by the company.

Participative project management. A new approach to managing a project in which the team collaborates with the project leader to create a project plan, monitor and track the project, and close down the project.

Payment days. The average number of days that pass between receiving an invoice and paying it.

Payroll burden. Payroll burden includes payroll taxes and benefits. It is calculated using a percentage assumption that is applied to payroll. For example, if payroll is $1,000 and the burden rate 10 percent, then the burden is an extra $100. Acceptable payroll burden rates vary by market, by industry, and by company.

Phase gate. A go-no go decision point at the end of each project management stage.

Phase. A set of activities within the project management process.

Plan. A document that describes how something should be accomplished.

Planning stage. The second stage of the project management process in which a plan for how the project will be executed is developed and approved.

Plant and equipment. This is the same as long-term assets, or fixed assets, or capital assets.

Portfolio. A schedule, normally computer generated, listing the relevant details in respect of the securities held by an investor.

Post-implementation review. A review conducted sometime after the completion of a project in order to determine whether the project has met its objectives; usually abbreviated to PIR.

Predecessor. A deliverable or activity that must be done before the next deliverable or activity can be completed.

Price–earnings (P/E) ratio. The market price of securities divided by its earnings. It expresses the number of years’ earnings (at the current rate) which a buyer is prepared to pay for a security.

Principal transaction. A transaction where a member trades with a counterparty or another member.

Private placement. An offering of a limited amount of shares or units, in which the recipients receive restricted stock from the issuer.

Process. A set of steps that transforms an input(s) into an output(s).

Product development. Expenses incurred in the development of new products; salaries, laboratory equipment, test equipment, prototypes, research and development, etc.

Product development life cycle. A methodical approach to designing and delivering new products.

Product. A tangible or intangible good produced via a process.

Profit before interest and taxes. This is also known as EBIT, for earnings before interest and taxes. It is gross margin minus operating expenses.

Project management staff effort. The amount of time that people on the project team will spend in project management activities such as attending meetings, writing reports, and planning.

Project management. The application of knowledge, skills, tools, and techniques to meet or exceed customer expectations from a project.

Project objectives. The purpose of a project. The significant accomplishments that the project must achieve.

Project plan. A complete plan for how a project will be executed. The output of the planning phase.

Project priorities. The ranking of the triple constraints for the project—scope versus schedule versus budget.

Project team members. The people on the main project team.

Project board. A group of people ultimately responsible for a project’s success through monitoring its progress, reviewing its continued relevance to the organization’s objectives, and overcoming institutional barriers. In some organizations, it may be referred to as a steering committee.

Project definition. A document describing succinctly the project objectives, scope, summarized costs, and resource requirements. In some organizations, it may be referred to as the project brief or terms of reference.

Project manager. The person selected by the organization to manage the project resources and activities in order to deliver the agreed-on project outputs.

Project sponsor. A senior person within an organization that has ultimate responsibility for the success of a project through overcoming organizational barriers and advocating for the project. They may devote resources to the project and in some cases is the business owner.

Project. A set of interrelated activities managed in a coordinated way and designed to deliver a unique product or service within a given timeframe and resources.

Projection. Future-oriented financial information prepared using assumptions that reflect the entity’s planned courses of action for the period.

Prospectus. This document is an integral part of a documentation that must be filed with the stock exchange. It defines, among many things, the company’s type of business, use of proceeds, competitive landscape, financial information, risk factors, and strategy for future growth and also lists its directors and executive officers.

Prototype. A simple model of a product that is used to resolve a design decision in the project.

Published financial. Financial statements and financial information that are made public.

Purchase agreement. A legal document recording the final understanding of the parties with respect to the proposed transaction.

Ratchet clause. A clause in a contract that adjusts the rights of the parties to the contract on the completion of mutually agreed-upon performance criteria.

Rate of return. Return on invested capital (calculated as a percentage). Often, an investor has, as one investment criterion, a minimum acceptable rate of return on an acquisition.

Real property. Real estate, including land and buildings.

Receivable turnover. Sales on credit for an accounting period divided by the average accounts receivable balance.

Recourse. The right to receive payment in the event a person defaults on a loan. Recourse could give the lender the ability to take possession of the borrower’s assets.

Redundant assets. Assets that are not required for the ongoing operation of the business and could be withdrawn without affecting future earning potential.

Registration. A new shareholder is registered when his name is placed on the roll of shareholders for a specific company.

Renunciation date. The date set by a company by which a shareholder has to decide whether he or she will take up the rights issue.

Replacement Value. Cost of acquiring a new asset to replace an existing asset with the same functional utility.

Representations. Statements made by either party with respect to certain elements of the proposed transaction that, if proven untrue, may give the other party the right to claim for damages from the party making the warranty.

Requirement. A statement of need from a project stakeholder that identifies a required attribute of the system or product to be delivered.

Research and development incentives. Government programs to promote research and development.

Residual value. Typically estimated based on the present value of the after-tax cash flow expected to be earned after the forecast period.

Resistance. When stocks go up, they tend to reach a point where investors think that they are overvalued, and sellers of the stock outnumber buyers. This causes the price of the stock to stop dead in its tracks. It cannot go higher because there are no buyers. This point is called “resistance.”

Resource managers. Also known as functional managers. They provide the resources, primarily the people, to work on the project.

Resource planning. The plan for who will be involved in the project, how much time it will take, and what it will cost.

Resource. People, materials, tools, and systems needed during a project.

Restricted liquidity. Inability of an individual or company to convert an asset into cash, or cash equivalent, without significant cost.

Retained earnings. A figure that shows the sum of a company’s net profit less dividends paid to shareholders.

Return on assets. Net profit divided by total assets. A measure of profitability.

Return on equity. A ratio used to show how profitable a business is to the shareholders.

Return on investment. Net profits divided by net worth or total equity; yet another measure of profitability. Also called ROI.

Return on sales. Net profits divided by sales, another measure of profitability.

Return on investment. The financial benefit resulting from a project once the cost of the project is deducted from the financial gain.

Rework. Doing the work over because the work was not done right the first time.

Rights issues. There are several methods that a company can use to increase the size of its share capital. If it decides to offer its existing shareholders first option on the issue, it is called a “rights” issue. The dealers would note that such an issue is in progress as it would be quoted as cum-capitalization and after the completion of the issue it would be quoted as ex-capitalization.

Risk assessment. The process of identifying, analyzing, and preventing risks from occurring.

Risk identification. The process of brainstorming what potential problems might occur in the project.

Risk impact. The effect a risk would have on the project if it occurred.

Risk probability. The likelihood that a risk will occur.

Risk rating. The level of risk that the team determines is in the project.

Risk management. A set of practices designed to effectively identify, prioritize, and monitor risks and plan for their mitigation.

Risk. An event that could possibly occur and which would have an impact on the project if it happens.

ROI (return on investment). A ratio that compares the monetary outlay for a project to the monetary benefit. Used to show the success of a project.

ROI. Return on investment; net profits divided by net worth or total equity; yet another measure of profitability.

Sales breakeven. The sales volume at which costs are exactly equal to sales.

Sales on credit. Sales on credit are sales made on account, shipments against invoices to be paid later.

Schedule risk. Potential problems that could occur that would prevent the team from meeting its deadline dates.

Schedule. The dates of completion for deliverables or activities mapped against the project’s timelines.

Scope boundaries. The fence that is placed around the scope of the project to delineate what is inside and outside the project scope.

Scope description. A written explanation of features and functions of the final deliverable.

Scope plan. The part of the project plan that relates to scope. It includes the scope description of the final deliverable, customer acceptance criteria, scope boundaries, and a stakeholder list.

Scope risk. Potential problems that could prevent the team from meeting the customer’s acceptance criteria.

Scope. A clear description of the breadth of a project—what is in and what is out.

Scrap value. An amount left after an asset has been fully depreciated, that is, if an asset of $115 is depreciated by $10 per month over 11 months, the scrap value would be $5.

Securities. Includes stocks, shares, debentures (issued by a company having a share capital), notes, units of stock issued in place of shares, options on stocks or shares or on such debentures, notes or units, and rights thereto, and options on indices of information as issued by a stock exchange on prices of any of the aforementioned instruments.

Seed financing/capital. Generally refers to the first contribution of capital toward the financing requirements of a start-up business.

Sensitivity analysis. A technique used to determine the effects on net income or cash flow due to changes in assumptions (i.e., “what if” analysis).

Service. The act of one person doing for another.

Settlement value. Dollar amount of the final payment in a lease.

Settlement. Procedure for brokers to close off their books on a particular transaction. The client is expected to pay for his or her new shares on or before the settlement date, and he or she, in turn, can expect to be paid (on selling shares) within the same period (also called the settlement period).

Share capital. Total shares authorized to be issued, or actually issued, by a company.

Shareholders. Owners of one or more shares in a company.

Short-term assets. Cash, securities, bank accounts, accounts receivable, inventory, business equipment, and assets that last less than five years or are depreciated over terms of less than five years.

Short-term notes. This is the same as short-term loans. These are debts on terms of five years or less.

Short-term. Normally used to distinguish between short-term and long-term, when referring to assets or liabilities. Definitions vary because different companies and accountants handle this in different ways. Accounts payable is always short-term assets. Most companies call any debt of less than five-year terms short-term debt. Assets that depreciate over more than five years (e.g., plant and equipment) are usually long-term assets.

Shotgun. A clause in a shareholder’s agreement whereby if one party offers to buy out the other at a certain price, the other party has, within a limited period, the right either to accept the price or buy the offeror out at the same price.

Sinking funds. A required annual payment designed to amortize a bond or an issue of preferred shares. The sinking fund may be held in the form of cash or marketable securities, but generally the money put into the fund is used to retire some of the securities in question each year.

Sizing. A preliminary guess with a wider degree of tolerance than an estimate. The tolerance could be as wide as ± 50%.

Slack time. Free time that exists between the completion of a predecessor and the start of a successor.

Small project. A project with 10 or fewer team members.

Spending budget. The approved spending estimate.

Spending estimate. The projected costs of the project.

Spending limit. The maximum amount of money that can be spent on the project.

Sponsor evaluation. The evaluation of the project by the sponsor.

Sponsor. The person who acts as a liaison between the project leader and the management team, providing oversight to the project.

Spread. The differential between a bid and an offer price.

Staff effort. The amount of time that people inside the organization will spend on the project.

Staff-effort budget. The approved staff-effort estimate.

Staff-effort costs. The commercial rate for each person or subproject multiplied by the staff-effort estimate for that person or subproject.

Staff-effort estimate. The projected amount of time that each person or subproject will need to spend to complete the project.

Staff-effort limit. The maximum amount of time that people inside the organization can spend working on the project.

Stage gates. Go-no go decision points within the technical process for a project.

Stakeholder group. Stakeholders that have similar interests in a project.

Stakeholder. Any person that may have an interest in the process, outputs, or outcomes of a project.

Standby fee. A fee charged on the unused portion of the credit under a revolving credit or line of credit arrangement.

Starting year. A term to denote the year that a company started operations.

Statement of changes in financial position. A financial document that presents the increases or decreases in funds of a business for all its accounts broken down under three major headings: operating activities, financing activities, and investing activities.

Statement of retained earnings. A financial document that shows how much of the net income of a business has been retained over a given period of time and how much has been paid out to the owners.

Status report. The report issued during the execution phase of the project that denotes whether the project is on track or not.

Steering committee. A group of people ultimately responsible for a project’s success through monitoring its progress, reviewing its continued relevance to the organization’s objectives, and overcoming institutional barriers. In some organizations, it may be referred to as a project board.

Subordinated debt. A nonconventional financing instrument where the lender accepts a reduced rate of interest in exchange for equity participation.

Subproject leader. The person who leads the subproject team through the project management process.

Subproject team. The group of people who complete the work of a subproject.

Subproject tree. The organizational chart for the project that shows subprojects, deliverables within each subproject, and accountability for each subproject.

Subproject. A subsection of the main project responsible for producing a set of deliverables.

Successor. A deliverable that comes immediately after a predecessor deliverable.

Sustainable growth rate. The rate of increase in sales that a company can attain without changing its profit margin, assets-to-sales ratios, debt-to-equity ratio, or dividend payout ratio. It is the rate of growth that a company can finance without excessive borrowing or a new stock issue.

Syndication. A method of selling an investment through the use of a group of companies or investors.

Tax rate percent. An assumed percentage applied against pretax income to determine taxes.

Taxes incurred. Taxes owed but not yet paid.

Team contract. An agreement developed by the team that defines the guidelines that the team will follow as they work together as a team.

Team process. The process that helps the team work through the stages of team development.

Team leader. A person assigned to manage a team in order to produce a discrete set of deliverables within a project.

Team-based tools. Tools that are specifically designed to enhance team participation and that incorporate the three different sensory learning styles: auditory, visual, and kinesthetic.

Test. The process of checking the outputs of a project against a predetermined set of agreed-on criteria.

Tick size. The specified parameter or its multiple by which the price of a security may vary when trading it at a different price from the last price, whether it be up or down movement from the last price.

Timeline. A length of the entire project, broken down into days, weeks, or months.

Top-down building. Designing a product by constructing a high-level structure and then filling in the gaps in that structure.

Total quality. The management technology that addresses customer focus, prevention, and assurance of quality.

Tracking project progress. The act of determining if the project is on track to meet the commitments outlined in the project plan.

Triple constraint. The three interdependent variables in a project: scope, schedule, and cost.

Undepreciated capital costs. The tax definition of the value of an asset that is eligible for tax depreciation.

Undercapitalization. A situation in which a business does not have sufficient equity in its capital structure.

Unencumbered. Property free and clear of all liens (creditors’ secured claims).

Unit variable cost. The specific labor and materials associated with a single unit of goods sold. It does not include general overhead.

Units breakeven. The unit sales volume at which the fixed and variable costs are exactly equal to sales.

Variance. The difference between what occurred and what was planned or projected to occur.

What-if scenarios. Analysis of the economic effect of possible future situations, such as economic downturns, loss of key customers, changes in interest rates or price levels, or new competitors or technologies.

Withdrawn/postponed. From time to time a company will decide that market conditions are out of favor and not conducive to a successful IPO. There are many reasons why a company will decide to withdraw its IPO. Among these reasons are a simple lack of willing investors at that time, market volatility, or the emergence of a bear market.

Work process. A set of steps that produces an output or a deliverable.

Work breakdown structure. A tabular or graphical hierarchical breakdown of the project work into related tasks.

Working capital. The excess of current assets over current liabilities. This represents the amount of net non-fixed assets required in day-to-day operations.

Write-off. A debt that cannot be collected and finally written off as bad. Such a debt is a loss to the company, and the greater the level of bad debts, the less likely an entrepreneur will be able to obtain bank financing. Maintaining bad debts to a minimum is seen as the ability of a company to run efficiently and to have efficient systems in place.