C

Cap Table (Capitalization Table)

A Cap Table, or Capitalization Table, is a detailed document that outlines the ownership structure of a company. It includes information on equity ownership, convertible securities, and the overall capital structure.

For example, a startup might use a cap table to track shares owned by founders, employees, and investors.

Capital Call

A Capital Call is a request by an investment firm to its investors to provide additional funds. This is common in private equity and venture capital, where funds are committed upfront but called as needed.

For example, a venture capital fund might issue a capital call to its limited partners when a new investment opportunity arises.

Capital Efficiency

Capital Efficiency measures how effectively a company uses its financial resources to generate revenue and grow. It is a critical metric for startups seeking to maximize their return on investment.

For example, a startup with high capital efficiency can achieve significant growth with minimal investment.

Capital Expenditure (CapEx)

Capital Expenditure (CapEx) refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, or equipment. These expenditures are typically long-term investments.

For example, a manufacturing company might have high CapEx due to the need to purchase new machinery.

Capital Gain

A Capital Gain is the profit realized when an asset is sold for a higher price than its purchase price. It is a key component of investment returns and is subject to taxation.

For example, an investor might realize a capital gain by selling shares of stock at a higher price than the original purchase price.

Capital Injection

A Capital Injection is the infusion of funds into a company, usually to improve its financial health and stability. This can come from investors, government grants, or other sources.

For example, a struggling business might receive a capital injection from its investors to avoid bankruptcy.

Capital Reserve

A Capital Reserve is a portion of a company’s profits set aside for long-term investment projects or unforeseen expenses. It is often used to strengthen the company’s financial position.

For example, a company might create a capital reserve to fund future expansion projects or to provide a buffer against economic downturns.

Capital Structure

Capital Structure refers to the mix of debt and equity that a company uses to finance its operations and growth. The balance between these elements affects the company’s risk and cost of capital.

For example, a tech startup might have a capital structure that heavily relies on equity financing to avoid the risks associated with debt.

Cash Burn Rate

Cash Burn Rate is the rate at which a company spends its cash reserves to cover operating expenses, typically expressed on a monthly basis. It is crucial for startups to manage their burn rate to extend their cash runway.

For example, if a startup has a burn rate of $100,000 per month and $1 million in cash reserves, it has a 10-month cash runway.

Cash Conversion Cycle

The Cash Conversion Cycle (CCC) measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cycle indicates more efficient operations.

For example, a retail business might focus on reducing its CCC to improve cash flow and operational efficiency.

Cash Flow

Cash Flow is the net amount of cash being transferred into and out of a business. Positive cash flow indicates that a company is generating more cash than it is consuming, which is crucial for sustaining operations.

For example, a company might analyze its cash flow statement to ensure it has enough liquidity to meet its short-term obligations.

Cumulative Preferred Stock

Cumulative Preferred Stock is a type of preferred stock that accumulates unpaid dividends. If dividends are not paid in one period, they accumulate and must be paid out before any dividends can be paid to common stockholders.

For example, if a company misses dividend payments on its cumulative preferred stock, it must pay all missed dividends before distributing dividends to common shareholders.

Convertible Debt

Convertible Debt is a type of financing where a company issues debt that can be converted into equity at a later date, usually at the discretion of the investor. It combines elements of debt and equity financing.

For example, a startup might issue convertible debt to raise funds, with the option for investors to convert their debt into shares during a future funding round.

Convertible Equity

Convertible Equity is a financial instrument that converts into equity at a later date, often used in early-stage financing to defer valuation discussions until a more substantial funding round.

For example, an angel investor might receive convertible equity that converts to shares during the startup’s Series A funding round.

Convertible Note

A Convertible Note is a type of short-term debt that converts into equity, typically in conjunction with a future financing round. It allows startups to delay valuation discussions until more data is available.

For example, a seed-stage startup might issue convertible notes to early investors, which will convert into equity during the next round of funding.

Convertible Preferred Stock

Convertible Preferred Stock is preferred stock that can be converted into a predetermined number of common shares, typically at the option of the shareholder. It offers the benefits of both debt and equity.

For example, an investor holding convertible preferred stock might choose to convert it into common stock if the company’s value increases significantly.

Convertible Security

A Convertible Security is a financial instrument, such as a bond or preferred stock, that can be converted into a different form, usually shares of the issuing company’s common stock.

For example, a company might issue convertible bonds that can be converted into stock, providing investors with the option to benefit from the company’s equity appreciation.

Corporate Governance

Corporate Governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It ensures accountability and fairness in a company’s relationship with stakeholders.

For example, strong corporate governance can help a company attract investors by demonstrating transparency and accountability in its operations.

Corporate Restructuring

Corporate Restructuring involves significant changes to a company’s structure, operations, or finances to improve efficiency and profitability. It can include mergers, acquisitions, divestitures, or debt restructuring.

For example, a company might undergo corporate restructuring to streamline operations and reduce costs after a merger.

Corporate Venture Capital

Corporate Venture Capital (CVC) is the investment of corporate funds directly in external startup companies. It allows corporations to invest in innovative technologies and business models that align with their strategic goals.

For example, a tech giant might set up a CVC arm to invest in emerging startups that develop complementary technologies.

Cost of Capital

Cost of Capital is the required return necessary to make a capital budgeting project, such as building a new factory, worthwhile. It represents the opportunity cost of investing resources in a particular way.

For example, a company might calculate its cost of capital to decide whether to pursue a new project or investment.

Cost of Goods Sold (COGS)

Cost of Goods Sold (COGS) represents the direct costs attributable to the production of the goods sold by a company. This amount includes the cost of materials and labor directly used to create the product.

For example, a manufacturing company would include the cost of raw materials and direct labor in its COGS calculation.

Crowdfunding

Crowdfunding is a method of raising capital through the collective effort of a large number of individual investors, typically via online platforms. It is commonly used for startup financing, product launches, and charitable causes.

For example, a startup might use a crowdfunding platform to raise funds for a new product by pre-selling it to early adopters.

Current Assets

Current Assets are assets that a company expects to convert to cash or use up within one year. They include cash, inventory, accounts receivable, and other short-term assets.

For example, a retail business might list its inventory and accounts receivable as current assets on its balance sheet.

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the cost associated with acquiring a new customer. It includes marketing expenses, sales costs, and other related expenditures.

For example, an e-commerce company might calculate its CAC to determine how much it spends on average to attract each new customer.

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) is a metric that estimates the total revenue a business can expect from a single customer account throughout the business relationship. It helps companies make informed marketing and customer retention decisions.

For example, a subscription service might use CLV to evaluate the long-term value of retaining a customer compared to the cost of acquisition.

Customer Segmentation

Customer Segmentation is the practice of dividing a company’s customers into groups that reflect similarity among customers in each group. It allows for more tailored marketing strategies and product offerings.

For example, a software company might segment its customers by industry to better address the specific needs and preferences of each segment.