Glossary

Glossary

Termsort descending Definition
Book Value Book Value is the value of an asset as carried on a company’s balance sheet.
Discount Rate Discount rate refers to the interest rate used in discounted cash flow analysis.
Discounted Cash Flow (DCF) Discounted cash flow (DCF) is a valuation method used to estimate the attractiveness of an investment opportunity. DCF analysis uses future free cash flow projections and discounts them to arrive at a present value estimate, which is used to evaluate the potential for investment.
Economic Moat An economic moat refers to a business' ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms.
Enterprise Value (EV) Enterprise value (EV) is a company’s market capitalization plus debt, minority interest and preferred shares, and less total cash and cash equivalents.
Enterprise Value to Sales (EV/sales) Enterprise value to sales (EV/sales), is a valuation measure that compares a company’s enterprise value to the company’s sales.
EV/EBITDA EV/EBITDA is a ratio comparing a company’s enterprise value and its earnings before interest, taxes, depreciation and amortization.
Free Cash Flow (FCF) Free Cash Flow (FCF) is a measure of a company’s ability to generate the cash flow necessary to maintain operations. Generally, it is calculated as operating cash flow minus capital expenditures.
Free Cash Flow Yield (FCF Yield) Free Cash Flow Yield (FCF Yield) equals a company’s free cash flow per share divided by the current market price per share.
M&A M&A stands for mergers and acquisitions.
Margin of Safety “Margin of Safety” is a reference to the difference between a stock’s market price and Southeastern’s calculated appraisal value. It is not a guarantee of investment performance or returns.
Operating Income (OI) Operating income (OI) is the income from a company’s primary business operations, excluding extraordinary income and expenses. It is also referred to as earnings before interest and taxes (EBIT).
Private Market Value (PMV) Private market value (PMV) is the break-up market value of all divisions of a company if divisions were each independent and established their own market stock prices.
Return on Equity (ROE) Return on equity (ROE) is a measure of profitability that calculates how many dollars of profit a company generates with each dollar of shareholders' equity.
Spin Off A spin off is a type of corporate action where a company "splits off" sections as a separate business.
Working Capital Working capital is the amount of current assets minus the amount of current liabilities as of a specific date.