Glossary of Financial Terms

Sellers and brokers are instructed to arrive at their financial figures using the definitions below.

Asking: Asking is the asking price of the business for sale.

Gross: Gross income is defined as "all income the business received before any cost-of-sales or expenses have been deducted."

Cash Flow: Cash Flow is arrived at by "starting with your net (before tax) profit. Then, add back in any payments made to the owner, interest and any depreciation of assets." For example, if the net profit before taxes was $100,000 and the owner was paid $70,000 then the cash flow is $170,000.

FF&E: Furniture, fixtures and equipment that will remain with the business, such as desks, office cubicles, decor elements of a restaurant or showroom, computers and office machines, pots and pans, dishes, display cases, manufacturing equipment, etc., depending on the type of business.

Real Estate: If the business has real property that can convey with the business, the value of the property may be included in the asking price or kept separate as an optional purchase.