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Frequently Used Terms

The Bridge Built by Citi glossary has a comprehensive list of financial terms and definitions found on the Bridge website. Please see below for more information.

Accounts Receivable
Claim against a debtor for an uncollected amount, generally from a completed transaction of sales or services rendered.
A non-cash operating expense that reduces the value of intangible assets (such as patents, trademarks or goodwill) in a systematic manner. Amortization is recorded in the financial statements of an entity as a reduction in the carrying value of the intangible asset in the balance sheet and as an expense in the income statement.
Commercial Mortgage
Legal instrument evidencing a security interest in assets, usually real estate.
A non-cash operating expense that reduces the value of a tangible asset as a result of wear and tear, age, or obsolescence. Depreciation is recorded in the financial statements of an entity as a reduction in the carrying value of the asset in the balance sheet and as an expense in the income statement.
Estimate Property Value
Approximate amount someone is willing to pay for a property and the amount the seller is willing to accept in a given market at a given time. For context: this would be the price of the property you have agreed to pay the seller if you are requesting a Commercial Mortgage.
Earnings before interest, taxes, depreciation, and amortization (EBITDA). This metric reflect a company’s progress absent financing decisions, taxes, and various non- cash expenses.
Amount charged by a bank to provide their services. Could be an annual or one time charge at the loan closing.
Financial Covenants
Promises or agreements by the borrower to fulfill terms set by the bank. For example: Total Leverage Covenant of 3.50x would mean, you need to maintain your Total Debt / EBITDA below 3.50x.
A party who will guarantee repayment or performance of a covenant.
Interest Expense
Payment for the use or forbearance of money.
Interest Rate
The cost of money expressed as an annual percentage
Tangible property held for sale, or materials used in a production process to make a product.
London Interbank offered rate- serves as a globally accepted key benchmark interest rate that indicates how much it costs to the banks to borrow from each other.
Creditor’s claim against property. For example, a mortgage is a lien against a house.
Line of Credit or "LOC"
A line of credit is more like cash on demand for a set amount. You can draw funds up to the credit limit set when your company needs it, and you only pay interest on the funds you withdraw.
North American Industry Classification System, used throughout North America to classify businesses with a six-digit number based on the primary type of work the business performs.
Net Income
Revenues – Expenses = Net Income/Loss
Net Worth
The total wealth of an individual/ business or household considering assets and liabilities (found on the balance sheet). Total Assets- Total Liabilities= Total Net Worth.
One-time or Non-cash Expenses
A write-down or accounting charge that does not involve a cash payment. Depreciation, amortization, depletion, stock-based compensation, and asset impairments are common non-cash charges that reduce earnings but not cash flows.
Personal Guarantee
The assumption of responsibility for payment of a debt or performance of some obligation if the liable party fails to perform to expectations. For context: Banks are looking for a personal guarantee for an extra level of protection if the borrower is unable to repay their loan.
Interest charged on loan.
Rate of INTEREST charged by major U.S. banks on loans made to their preferred customers.
Sales or royalty proceeds. Quantity times price sold.
Tax Expense
The total amount of taxes owed by an individual, corporation, or other entity to a taxing authority. Income tax expense is arrived at by multiplying taxable income by the effective tax rate.
Term Loan
Loan for a specified time period.
Total Assets
An economic resource that is expected to be of benefit in the future. Probable future economic benefits obtained as a result of past transactions or events. Anything of value to which the firm has a legal claim. Any owned tangible or intangible object having economic value useful to the owner.
Total Liabilities
Debts or obligations owed by one entity (debtor) to another entity (creditor) payable in money, goods or services.
Total Net Worth
Similar to Equity. The excess of assets over liabilities.
Working Capital
The deployment of current assets and current liabilities so as to maximize short-term liquidity.
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