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Glossary

The IB interview glossary

Every term an interviewer might drop — defined in plain English, with why it comes up in the room.

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A

Absolute Priority Rule Accounts Payable (AP)Accounts Receivable (AR)Accretion / Dilution Accrual Accounting AFFO (Adjusted Funds From Operations)Amortization ARR (Annual Recurring Revenue)Assets Under Management (AUM)

B

Balance Sheet Basis Point (bp)Beta Bid-Ask Spread Block Trade Bookbuilding Breakup Fee Bulge Bracket

C

Call Protection Cap Rate (Capitalization Rate)Capital Expenditures (CapEx)CAPM (Capital Asset Pricing Model)Cash Flow Statement CET1 Ratio Chapter 11 Claims Waterfall Combined Ratio Comparable Companies Analysis (Comps)Convertible Bond Convexity Cost of Debt Cost of Equity Covenant Credit Spread

D

Days Sales Outstanding (DSO)Debtor in Possession Deferred Tax Asset (DTA)Deferred Tax Liability (DTL)Definitive Agreement Depreciation DIP Financing Direct Listing Discounted Cash Flow (DCF) Analysis Distressed Debt Dividend Discount Model (DDM)Dividend Recapitalization Dry Powder Due Diligence Duration

E

Earnout EBIT EBITDA Elite Boutique Enterprise Value (EV)Equity Risk Premium (ERP)Equity Value EV/EBITDA Exchange Ratio Exit Multiple Method

F

Fairness Opinion Federal Funds Rate FFO (Funds From Operations)Financial Sponsor Fixed Charge Coverage Ratio (FCCR)Follow-On Offering Free Cash Flow (FCF)Fulcrum Security Fully Diluted Shares

G

GMV (Gross Merchandise Value)Goodwill Gordon Growth Model (Perpetuity Growth Method)Greenshoe (Overallotment Option)Gross Margin

H

High-Yield Bond HireVue Hostile Takeover

I

Income Statement Incurrence Covenant Informational Interview Insurance Float Intangible Assets Intercreditor Agreement Interest Coverage Ratio Inventory Inverted Yield Curve IPO (Initial Public Offering)IRR (Internal Rate of Return)

L

LBO Debt Capacity League Tables Letter of Intent (LOI)Leverage Ratio Leveraged Buyout (LBO)Levered Free Cash Flow (LFCF)Lockup Period

M

Maintenance Covenant Management Rollover Market Capitalization Merger Model Mezzanine Debt Middle Market Bank Minority Interest (Noncontrolling Interest)MOIC (Multiple on Invested Capital)

N

Net Debt Net Income Net Interest Margin (NIM)Net Operating Income (NOI)Net Revenue Retention (NRR)

O

Operating Margin Original Issue Discount (OID)

P

P/E Ratio Paper LBO PEG Ratio PIK Interest (Payment-in-Kind)Precedent Transactions Analysis Price-to-Book (P/B) Ratio Price-to-Tangible-Book (P/TBV)Proxy Fight Purchase Price Allocation (PPA)

R

REIT (Real Estate Investment Trust)Restructuring Advisor Retained Earnings Returns Bridge (Value Creation Bridge)Revenue Recognition Revolving Credit Facility (Revolver)Rights Issue Risk-Weighted Assets (RWA)Roadshow Rule of 40

S

Sell-Side vs Buy-Side Shelf Registration Short Selling SPAC (Special Purpose Acquisition Company)Spaced Repetition Stock-Based Compensation (SBC)Superday Synergies

T

Take Rate Tangible Book Value (TBV)Tender Offer Term Loan B Terminal Value The Three Financial Statements Treasury Stock Method (TSM)

U

Underwriting Spread (Gross Spread)Unitranche Unlevered Free Cash Flow (UFCF)

W

WACC (Weighted Average Cost of Capital)White Knight Working Capital

Y