Unit 17 Key Terms Flashcards
appreciation
An increase in value.
asset
Anything of value.
basis
The initial cost of an investor’s property.
capital gain (or loss)
The profit (or loss) from the sale of an asset, including real propety.
cash flow
The resulting amount when annual debt service, tax liability, and capital improvement costs are subtracted from net operating income.
equity
The market value of a property less any debt against it; in a business entity, assets minus liabilities equals capital (owner’s equity); a system of legal rules administered by a court of chancery.
going-concern value
The worth of a business, including real estate, goodwill, and earning capacity.
goodwill
An intangible asset (value) of a business.
leverage
The use of borrowed funds to finance the purchase of an asset; the use of another’s money to make more money.
liquidation analysis
An appraiser’s methodology and estimate of the value of a business that is being liquidated. An assessment of such factors as the ability of the firm to pay off short-term obligations, the value of the inventory on hand, and the liquidation value of preferred stock.
liquidity
The ability to convert noncash assets into cash quickly; refers to a firm’s cash position and its ability to meet obligations.
real estate investment trust (REIT)
A method of pooling investment money using the trust form of ownership.
risk
The chance of losing all or part of an investment; the uncertainty of financial loss.
tax shelter
An investment that shields items of income or gain from payment of income taxes; a term used to describe some tax advantages of owning real property (or other investments), including postponement or even elimination of certain taxes.
An increase in value.
appreciation
