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Cost approach: A general way of estimating a value indication of an individual asset by quantifying
the amount of money that would be required to replace the future service capability of that asset.
Cost of capital: The expected rate of return (discount rate) that the market requires in order to attract
funds to a particular investment.
Cost of capital: The cost to a company of the long-term capital it raises from debt and equity
investors. Long-term investors provide capital expecting a rate of return, and this expected return is
the company‟s cost of capital.
Cost-plus pricing: A pricing strategy where products and services are priced based on cost to develop
plus a predetermined margin.
Country risk: The risk of conducting business in another country. Major components include
repatriation risk, foreign exchange risk, and political risk.
Covariance: A product of the correlation between the rates of return of two investments, and the
standard deviation of the rates of return of each of the two investments. Covariance captures the extent
of association between the two investments and the volatility of each of the two investments.
Current: Generally means within a year.
Current ratio: Current assets divided by current liabilities.
Debt providers: Organizations that specialize in providing debt funding to businesses (e.g., banks).
Deferred tax valuation allowance: A portion of a deferred tax asset that is judged unlikely to be
realized.
Demographic: Statistical characteristics of human populations (such as age, income, gender) used to
identify markets.
Depreciation: The portion of the total initial cost of a tangible asset expensed each period to allow for
wear, tear, and obsolescence.
Discontinued operations: Operations that constitute a separable business that are sold or otherwise
ended.
Discount rate: A rate of return (cost of capital) used to convert a monetary sum, payable or receivable
in the future, into present value.
Discounted cash flow: When discussing the time value of money, we assume that money invested or
saved will earn interest; therefore, a known dollar amount today is worth more than that same dollar
amount in the future.