Our Affiliations • Internet Resources • Glossary of Terms
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Earn Out
A contractual provision enabling an entrepreneur to earn additional money
upon the sale of a business if certain conditions are met.
Earnings
Per Share (EPS)
EPS represents the portion of a company's profit allocated to each outstanding
share of common stock. Net income (reported or estimated) for a period
of time is divided by the total number of shares outstanding during that
period.
EBITDA
Earnings before interest, taxes, depreciation, and amortization. This
term is often used as a quick measure of operating cash flow.
Economy
of Scale
The decrease in average production costs accompanying an increase in capital
employment.
Economic
Value Added
Value given to an item as a function of its usefulness and it scarcity.
EPA Compliance
Working within the rules and regulations of the Environmental Protection
Agency so as not to create a liability for past and future shareholders.
Equity
Transfer
Refers to sale of private company equity.
Estate
Tax
All assets owned by U.S. citizens are subject to a federal tax upon any
post-death transfer. Assets held inside tax protective trusts can limit
that tax.
Excess
Earning Method
A valuation method that attempts to identify the value of goodwill by
calculating earnings, if any, in excess of those earnings expected to
be derived from the assets of the business.
External
Reorganization
A reorganization under the formal bankruptcy laws, in which a merger partner
is found for the distressed firm. Ideally, the distressed firm should
be merged with a strong firm in its own industry, although this is not
always possible.
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Our Affiliations • Internet Resources • Glossary of Terms
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