Unit 17- Real Estate Investments& Business Opportunity Brokerage Flashcards
The valuation method used for a business that is going out of business
Liquidation analysis
A financial report that shows the company’s financial position at a stated moment in time.
Balance sheet
Anything of value.
Asset
An increase in the worth of value of property.
Appreciation
The measure of the business’s ability to meet short-term obligations and is calculated by dividing the business’s current assets by its current liabilities.
Current ratio
The use of borrowed funds to finance the purchase of an asset; the use of another’s money to make money (OPM)
Leverage
The total amount of money generated from an investment after expenses have been paid.
Cash flow (after-tax cash flow)
The difference between the adjusted basis of property and its net selling price.
Capital gain (loss)
An investor’s initial cost of a property
Basis
The intangible asset attributed to a business’s reputation and the expectation of continued customer loyalty.
Goodwill
The value of an established business property compared with the value of just the physical assets of a business not yet established.
Going concern value
The property’s value minus debt.
Equity
An investment valuation technique that considers anticipated changes in cash flows over years, projects the current value of net proceeds from the sale of the property in the future, and accounts for the time value of money.
Discounted cash-flow analysis
Offers investors the opportunity to invest in a pool of income-producing properties under professional management
Real estate investment trust (REIT)
A more conservative measure compared with the current ration, of the business’s ability to meet short-term obligations because it does not include inventory in current assets. Divide current assets (minus inventory) by current liabilities.
Quick ratio
The present value of future cash flows (at a discount rate) minus the investor’s down payment.
Net present value (NPV)
The ability to sell an investment quickly, without loss of one’s investment.
Liquidity
An investment that shields income from payment of income taxes.
Tax shelter
The chance of losing all or part of an investment.
Risk
An analysis of a business’s management of inventory and is calculated by dividing the cost of goods sold by the ending inventory.
Inventory turnover ratio
The discount rate at which present values of future cash flows equal the down payment.
Internal rate of return
