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Goodwill: As it relates to valuation, that intangible asset arising as a result of name, reputation,
customer loyalty, location, products, and similar factors not separately identified. It is the excess of
purchase price over fair market value of net assets acquired under the purchase method of accounting;
goodwill appears on the acquirer‟s balance sheet as an intangible asset and is amortized over a period
of not more than 40 years.
Gross margin: Difference between revenues and cost of goods sold.
Health Insurance Portability and Accountability Act (HIPAA): Enacted by Congress in 1996. As
part of the act, Congress codified various privacy rights that are placed upon health care providers
regarding the protection of patient health care information.
Horizontal merger: A merger of firms producing similar goods or services.
Hurdle rate: The cost of the capital used to fund an investment project. If the rate of return of the
project clears the hurdle rate, the project should be accepted. If the rate of return of the project is less
than the hurdle rate, the project should be rejected.
Impairment: Results from the loss in value of goodwill; impairment is the result of the write-down of
goodwill.
Implied warranty: An implied guarantee that the good or service being sold is both merchantable
(must be fit for the ordinary purpose for which such goods are sold) and fit for a particular purpose.
Income approach: A general way of determining a value indication of a business, business ownership
interest, security, or intangible asset using one or more methods that convert anticipated benefits into a
present single amount.
Income from continuing operations: A measure of financial performance for the period that
excludes the effects of discontinued operations, extraordinary items, and the cumulative effect of
accounting changes. All other revenues, gains, expenses, and losses are included in the computation of
income from continuing operations.
Income statement: A financial statement reporting revenues (such as sales), expenses, and income,
and their respective dollar amounts, for an enterprise over a given period of time.
Intangible assets: Nonphysical assets (such as franchises, trademarks, patents, copyrights, goodwill,
equities, mineral rights, securities, and contracts as distinguished from physical assets) that grant
rights, privileges, and have economic benefits for the owner.
Intellectual property (IP): The rights that a company or individual has over creations such as
inventions or artistic creations. They are usually legalized in the form of a patent, copyright, trade
secret, or trademark and are protected by law.
Interest rate: Compensation paid for use of money over a period of time.