BZT

Accruals

Accruals are the balance sheet accounts that show accrued charges and revenue. Those accounts include among others trade payables, receivables, tax liabilities and interest.

Example:

• "Accrued payables" are accrued unpaid debts, for ex. rent, that are recorded as debt in the balance sheet.
• "Accrued receivables" are accrued claims that have not yet been paid, for ex. trade payables, and are recorded as assets in the balance sheet.
• "Accrued revenues" are revenues that have not yet been invoiced or paid. They are recorded as assets in the balance sheet.

See also "Accrual accounting".

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Acid test ratio

A measure of a company's cash position. Also called "Quick Assets Ratio" or "Liquid ratio". This measure measures the company's capacity to pay short term liabilities.

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Accrual accounting

A device within accounting the purpose of which is to distribute receipts and costs over time so as to obtain as accurate a picture as possible of the company's financial position.

Before starting using accrual accounting business events were reported as cash transactions. But these do not always provide a true and fair view of the financial position of the company since the future income on credit or future commitments and liabilities were not recognized. Accrual accounting allows a company to show what they are required to pay and what future revenues to expect. It also makes it possible to in a fair manner show intangible assets - such as goodwill.

Rents are a cost which is usually distributed (periodized) over a period of time. If a company pays rent for three months in advance, the evaluation of the cost of rent will not be accurate if the whole payment is taken as a cost, and burdens the results, only in the month in which the rent is paid. Periodizing, in this example, means that the cost of the rent will be spread over the three months to which the payment of rent relates, with 1/3 recorded in each of those months.

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Adjusted EBITA

EBITA which has been adjusted for comparison-destroying entries.

Adjusted EBITDA

EBITDA which has been adjusted for comparison-destroying entries.

Advisor

An "Advisor" is a person who gives advice and who is engaged in connection with making investments, business developments or transactions. An Advisor may be a professional advisor, for instance an investment bank, a lawyer, or an accountant. The term Advisor is also used as a title for experienced persons who assist Venture Capitalists and Private Equity in making investments or in the development of portfolio companies.

Many growing companies often have a number of external advisors who are called "Senior Advisors" on an "Advisory Board".

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Agreement to issue shares

An agreement prepared in connection with the financing of a business. This is an agreement between the existing owners, and potentially also others who will become owners, which will govern the terms and conditions of a new issuance of shares. See more under the heading "New issuance".

Anchor investor

An Anchor investor is someone who guarantees to invest a significant amount in connection with a rights issue of financial instruments, e.g. buying a large number of shares in an initial public offering (IPO).

Anchor investors can be both an advantage and disadvantage for small investors. Professional, well-respected anchor investors give confidence that an issue of financial instruments (e.g. shares) is market priced and give a parallel guarantee that a certain number of shares are traded. However, if the anchor investor takes most of an interesting IPO, for example, a small investor may get a tiny allocation and, therefore, a disadvantage.

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Angle

An investor would most like to have a unique perspective (an angle, an insight) for an investment, which means that the investor can offer a higher price and better terms for a company than those which other purchasers can. Perhaps the investor has already invested in a similar company and has experience in the business area.

The investor may also know the management well, or have a valuable network of advisors knowledgeable in the business area.

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Arm's length

A transaction at "arm's length" is a transaction between unaffiliated parties which act independently and in their own interest. An example of a transaction that is not at arm's length is a business transaction between persons who are related to each other. Compare also "Bona fide".

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Asset Class

An asset class is a collection of securities of the same class with similar characteristics and behaviour in the market. Risk profile and return expectation are comparable within the same asset class.

Examples are:

• Shares
• Bonds
• Liquid assets
• Raw materials
• Real Estate
• Private Equity and Venture Capital

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Average Joe and Jane

Average Joe (male) or Jane (woman) is primarily used in North America to refer to an ordinary, average American person.

Compare Joe and Jane with:

• Sweden: Medelsvensson
• UK: John Smith
• Germany: Max Mustermann and Erika Mustermann
• France: Monsieur Durand and Madame Michu
• Italy: Mario Rossi.

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