What is a Cap Table? A cap table (also called capitalization table) is a spreadsheet for a startup company or early-stage venture that lists all the company’s securities, such as common shares, preferred shares, warrants, who owns them, and the prices paid by the investors for these securities. It indicates each investor’s percentage of ownership…
What is the Market to Book Ratio (Price to Book)? The Market to Book Ratio (also called the Price to Book Ratio), is a financial valuation metric used to evaluate a company’s current market value relative to its book value. The market value is the current stock price of all outstanding shares (i.e. the price…
What is Unlevered Beta (Asset Beta)? Unlevered beta (a.k.a. Asset Beta) is the beta of a company without the impact of debt. It is also known as the volatility of returns for a company, without taking into account its financial leverage. It compares the risk of an unlevered company to the risk of the market. It…
What are the Main Valuation Methods? When valuing a company as a going concern, there are three main valuation methods used by industry practitioners: (1) DCF analysis, (2) comparable company analysis, and (3) precedent transactions. These are the most common methods of valuation used in investment banking, equity research, private equity, corporate development, mergers &…
Business Valuation Glossary This business valuation glossary covers the most important concepts to know in valuing a company. This guide is part of CFI’s Business Valuation Modeling Course. Alpha See firm-specific risk for the definition of Alpha. Beta The Beta (β) of a stock or portfolio is a number describing the correlated volatility of an…
What is a Markup Percentage? Markup percentage is a concept commonly used in managerial/cost accounting work and is equal to the difference between the selling price and cost of a good, divided by the cost of that good. This guide outlines the markup formula and also provides a markup calculator to download. Markup percentages are…
What is a Fund of Funds (FOF)? A Fund of Funds (FOF) is an investment vehicle where a fund invests in a portfolio composed of shares of other funds rather than investing directly in stocks, bonds, or other securities. The strategy of investing in a fund of funds aims to achieve broad diversification and asset…
What is a Structured Investment Vehicle (SIV)? A structured investment vehicle (SIV) is a non-bank financial entity set up to purchase investments designed to profit from the difference in interest rates – known as the credit spread – between short-term and long-term debt. The long-term debt investments frequently include structured financial products like asset-backed securities (ABS),…
What is a Stop-Loss Order? A stop-loss order is a tool used by traders and investors to limit losses and reduce risk exposure. With a stop-loss order, an investor enters an order to exit a trading position that he holds if the price of his investment moves to a certain level that represents a specified…
