Finance and accounting, in plain language.

A weekly forecast of cash receipts, cash payments, and ending cash for the next 13 weeks. It helps a business anticipate shortfalls and plan near-term funding.

An estimate of the fair market value of a private company’s common stock used when setting stock option exercise prices for US tax purposes. It is distinct from the preferred stock valuation negotiated in a financing.

Amounts a business owes suppliers for goods or services it has received but has not yet paid for.

Amounts customers owe a business for goods or services already delivered and billed.

A record of revenue earned or an expense incurred before the related cash is received or paid. Accruals put activity in the period it belongs to.

The systematic allocation of an intangible asset’s cost or a prepaid expense over the periods that benefit. In lending, amortization means paying down loan principal over time.

The annualized value of recurring revenue from active customer subscriptions at a point in time, usually excluding one-time fees. ARR is an operating metric, not revenue recognized under accounting standards.

A financial statement showing a business’s assets, liabilities, and equity at a specific date. Assets equal liabilities plus equity.

A comparison of the cash balance in the books with the bank statement that explains timing differences and identifies items requiring correction.

The amount of borrowing supported by eligible collateral, typically receivables and inventory, after applying the lender’s advance rates, exclusions, and reserves. Actual borrowing is also subject to the credit facility’s limit and terms.

Net cash burn divided by net new ARR over the same period, used to assess how much cash a subscription business spends to grow. It is not meaningful when net new ARR is zero or negative.

A capitalization table showing a company’s ownership, including shares and instruments such as options, warrants, SAFEs, and convertible notes. It should state the assumptions used to calculate ownership percentages.

The estimated time before available cash runs out at an assumed rate of net cash burn. Changes in collections, spending, or financing can change that estimate.

A loan that can convert into equity under specified conditions, often at a later financing. Unlike a typical SAFE, it generally carries interest and a maturity date.

A promise in a contract, often a loan agreement, to meet specified financial tests or follow operating and reporting requirements.

An organized collection of company documents made available to authorized reviewers during fundraising, financing, or a transaction.

A liability recorded when a customer is billed or pays before the business has delivered the promised goods or services. Revenue is recognized as those obligations are fulfilled.

A deposit recorded in the company’s books that has not yet appeared on the bank statement at the reconciliation date.

The systematic allocation of a tangible asset’s cost, less its estimated residual value, over its useful life. It is an accounting expense rather than a current cash payment.

A reduction in an existing holder’s percentage ownership when additional shares are issued or instruments convert into shares.

In a SAFE or convertible note, a reduction from the new investors’ share price used to calculate the holder’s conversion price. The agreement determines how it interacts with a valuation cap.

A measure of earnings or cash flow available to cover required debt payments, divided by debt service for the same period. The loan agreement defines the numerator, payment obligations, and adjustments.

A structured review of a company’s financial, legal, commercial, and operating information before an investment, loan, or transaction.

Earnings before interest, taxes, depreciation, and amortization, used as a measure of operating performance. It is not cash flow and does not account for working capital needs or capital spending.

A detailed record of long-lived tangible assets, including cost, purchase and in-service dates, useful lives, depreciation, and disposals. It supports the fixed asset balances in the books.

A comparison of financial balances or results with a prior period or budget to identify and explain significant changes.

An ownership calculation that assumes specified convertible securities, options, and warrants become shares, often including the unissued option pool. The financing documents determine exactly what is included.

The central accounting record that groups a business’s transactions by account and provides the balances used to prepare financial statements.

Revenue less the direct cost of providing the goods or services sold, commonly expressed as a percentage of revenue. It shows what remains to cover operating expenses and profit.

The cushion between a measured financial result and a covenant limit. For a maximum ratio it is the room below the ceiling; for a minimum ratio it is the room above the floor.

A record of a transaction or adjustment in the accounting system, with equal total debits and credits and an explanation of the change.

A summary workpaper that groups related account balances and ties them to the financial statements and supporting schedules.

A measure of debt relative to an earnings, asset, or equity base. In lending it often means debt divided by EBITDA, using the definitions and adjustments in the credit agreement.

The significance of an omission or misstatement that could influence a financial statement user’s decisions. Both the amount and the nature of the item matter.

The process of completing, reconciling, and reviewing a month’s accounting records so financial statements can be prepared.

The amount by which cash payments exceed cash receipts over a period, commonly measured monthly and excluding financing flows. Teams should state which cash flows their calculation includes.

Shares reserved under an equity incentive plan for grants to employees, directors, or other eligible service providers. The pool can include outstanding awards and shares still available for future grants.

A check issued and recorded in the books that has not yet cleared the bank at the reconciliation date.

A “prepared by client” list of documents, schedules, and explanations an auditor requests from the company. It assigns the information needed to support the audit.

A company’s equity valuation immediately after a financing. In a straightforward priced equity round, it equals the pre-money valuation plus the new investment.

A company’s negotiated equity valuation immediately before new investment in a financing. The treatment of converting securities and the option pool affects the ownership calculation.

An asset recorded when a business pays for a benefit it will receive in future periods, such as insurance or software access. The cost becomes an expense as the benefit is used.

An analysis of how sustainable and repeatable a company’s reported earnings are, including unusual items, accounting choices, and the relationship between earnings and cash flow.

Vanward’s name for a shareable view of company information and supporting documents for selected recipients.

A journal entry that offsets a prior period’s adjustment, usually at the start of the next period. It helps prevent double counting when the underlying invoice or payment is recorded.

A revolving credit facility that lets a borrower draw, repay, and draw again within an agreed limit and term. Availability depends on the agreement’s conditions and any borrowing base.

An estimate of annual performance made by extending a recent month or quarter across a full year. It assumes that period is representative and can be misleading when activity is seasonal or unusual.

A simple agreement for future equity gives an investor contractual rights to equity on specified future events in exchange for funding now. A typical SAFE is not debt and has no interest or maturity date.

A contractual valuation ceiling used to calculate a SAFE or convertible note’s conversion price. It is not necessarily the company’s current valuation or a ceiling on its next financing valuation.

Current assets minus current liabilities, a measure of resources available to support short-term operations. Transaction and lending agreements may define adjusted working capital differently.