Corporate Finance Glossary

A Cap Table, or Capitalization Table, is a detailed spreadsheet or document that outlines the equity ownership, types of shares, and ownership percentages of a company. It includes information on founders, investors, and employees, as well as the dilution of shares over time through various funding rounds and option grants.

Capacity utilization compares actual output with defined practical or full output capacity available during the same period.

Capital allocation is the board-led choice of how a company deploys or preserves cash and financing capacity across competing strategic uses.

A capital call is a formal fund or vehicle notice requiring an investor to contribute part of an existing unfunded commitment under governing documents.

Capital expenditure is spending on long-term assets that is capitalized when the applicable accounting recognition criteria are met, rather than expensed immediately.

Capital structure is the mix and priority of equity, debt and other financing claims used to fund a company and allocate risk, control and returns.

The cash conversion cycle estimates the days between funding operating inputs and collecting customers, after recognizing the period of supplier credit.

A cash flow statement reports how cash and cash equivalents changed during a period across operating, investing and financing activities.

Cash runway estimates how long usable liquidity will last under a stated burn pattern before funding or operational action becomes necessary.

Cash-free, debt-free is a pricing convention that values operations before financing and then adjusts enterprise value for agreed cash and debt to derive equity value.

Churn rate measures the share of an opening customer, contract or recurring-revenue base lost during a stated period under a defined loss rule.

A clawback provision is a contractual clause that allows an employer or investor to reclaim previously distributed compensation or bonuses from an employee or executive. This provision is typically included in employment contracts, bonus agreements, and investment terms to protect against misconduct, underperformance, or financial restatements.

A co-investment is a separately documented investment made alongside a lead fund, sponsor or investor in the same underlying company or transaction.

Cohort analysis groups customers or transactions by a shared starting characteristic and compares their behavior at equivalent stages of maturity.

Commercial due diligence tests a target's market, customers, competition, proposition, pricing and revenue outlook against the transaction's commercial assumptions.

Common stock represents ownership in a corporation, giving shareholders voting rights and a residual claim on corporate earnings in the form of dividends. Common shareholders have the potential for capital appreciation but are last in line for asset claims in case of liquidation.

Completion accounts measure defined financial balances at the transaction completion date so the final consideration can be adjusted under the sale agreement.

Contribution margin is revenue minus variable costs, showing the amount available to cover fixed costs and then contribute to operating profit.

A control premium is the extra price a buyer pays above a company's standalone or minority-share value to acquire control in an M&A transaction or valuation.

A convertible note is debt that may convert into equity under agreed triggers, while its maturity, interest and repayment terms continue to govern if conversion does not occur.

Cost of debt is the effective required return or financing cost on a company's borrowings, reflecting interest, fees, credit risk, tenor and structure.

Cost of equity is the return equity investors require for bearing the risk of owning a company, estimated for a stated market, currency and valuation date.

A cost synergy is an incremental cost reduction expected from combining businesses or operations that neither party can achieve on the same basis alone.

In the context of debt, a covenant is a clause in a loan agreement or bond indenture that imposes certain conditions or restrictions on the borrower. Covenants are designed to protect the interests of lenders by ensuring that the borrower maintains a certain level of financial health and operates within agreed parameters. These conditions can be financial (financial covenants) or operational (non-financial covenants) and are critical in debt agreements to mitigate risk.

Covenant headroom is the difference between a forecast or actual financial covenant result and the contractual limit, measured on the agreement's exact definitions.

Customer acquisition cost is defined sales and marketing expenditure attributable to acquiring customers, divided by the matched number of new customers acquired.

Customer lifetime value estimates the economic contribution expected from a defined customer relationship using stated margin, retention, horizon and discount assumptions.