What is a Relative Valuation Model? A type of business valuation method that analyzes the value of a company to the value of its competitors or industry peers in order to determine the financial worth of such a company is termed the Relative Valuation Model. It makes use of multiples, averages, ratios, and benchmarks to determine a company's worth. ...

What is the Least Squares Method? The least squares method is a procedure of finding the best fit for a data set. This method uses statistics and mathematical regression analysis to find the line of best fit when a data set is given. Using the least squares regression analysis, the distinct behaviors of dependent variables in a data set are predicte...

What is an Earnout? An Earnout applies in situations where one company is purchased by another. Generally, it is an agreement where the buyer of the company agrees to pay the seller additional funds (above the purchase price) if the firm performs at a given level over a specified period following the sale.  An Earnout agreement is generally used whe...

What is Offshoring? Offshoring is when a business process carried out in a country is relocated outside of that country. The process may be outsourced to a third party or handled by a foreign controlled business. An offshored business process might include manufacturing, accounting, customer support, etc. ...

What is a Bell Curve? A bell curve is referred to as a normal distribution because it is the most common type of distribution for a variable. The term bell curve' is derived from the graph depicting a normal distribution because it consists of a bell-shaped line. The highest point in the curve represents the most probable events in a series of data....

What is a Board of Governors? A board of governors refers to a set of individuals who are in charge of managing the effective running of an organization. This group of people supervise the operations and activities of a business or an organization and ensures its mission and goals are achieved. The board of governors is the decision-making body of a...

What is a Private Foundation? A private foundation is a non-profit organization that executes charitable projects to serve a good cause. This foundation is a non-governmental organization, otherwise called a charitable organization whose projects and finances are managed by its trustees or directors. The principal fund or primary donation of a priva...

What is a Conversion Ratio? The conversion ratio refers to the number of shares that is obtainable after converting a certain denomination or convertible security into common shares. Hence, the conversion ration outlines the sum of common shares that was received or obtained after the conversion of a number of convertible securities.  Conversion rat...

What is Disability Insurance? Disability insurance provides financial benefits to someone who becomes disabled and is unable to continue working in a given profession or function. Disability insurance coverage is generally divided into short-term and long-term disability. Note: Long-term disability insurance is generally in addition to any benefits ...

What is Personal Selling?  Personal selling is when we engage in direct personal communication between ourselves as sellers and people that we view as buyers or potential buyers of our product. When to Use Personal Selling?  We generally engage in personal selling when we really need to focus on our audience. So, if we have just a few major customer...