Category: Business – This Explainer

Cash flow forecasting maps expected receipts and payments over time so a business can spot shortages, test assumptions, and protect liquidity.

Operating margin shows how much revenue remains after ordinary operating costs, before interest and income taxes.

Burn rate measures how quickly a business uses cash faster than it generates cash, helping estimate how long current funding can last.

Bootstrapping funds a business mainly through founders’ resources and operating revenue instead of outside investment.

Convertible notes begin as debt and may convert into equity when a later financing event meets the agreement’s terms.

Deferred revenue is cash collected before a business has delivered the promised goods or services. This explainer shows why the amount starts as a liability, how it becomes revenue as obligations are fulfilled, and what the balance can reveal about operations.

A cap table summarizes a company’s ownership across founders, employees, and investors. This explainer covers issued shares, options, convertible securities, dilution, and why teams model ownership before a financing decision.

Due diligence is the organized investigation performed before an investment, acquisition, or major agreement. This explainer shows how financial, legal, commercial, operational, and technical findings can affect price, protections, or the decision to proceed.

A term sheet outlines the central economic and control points of a proposed financing or acquisition before detailed contracts are drafted. This explainer covers valuation, investor rights, binding clauses, and why every term should be read as part of the whole deal.

Business valuation estimates the value of a company or ownership interest for a specific purpose and date. This explainer compares income, market, and asset approaches and explains why cash-flow assumptions, risk, control, and documentation matter.

Accrued expenses record costs a business has incurred but has not yet paid or been billed for. This explainer covers adjusting entries, reversals, estimation, and why accruals help financial statements reflect the correct period.

Prepaid expenses begin as assets because the business has paid for a future benefit. This explainer shows how insurance, rent, subscriptions, and service contracts are allocated to expense over time.