Operating earnings
Income left after operating expenses and before acquisition financing and modeled tax. A business review may label this estimated EBITDA based on the selected financial-data basis.
Last updated: September 2026
Business buyer glossary.
Use these plain-language definitions when a report or guide uses an unfamiliar term. Formula details remain in How the Analysis Works and the calculation pages.
Business numbers
EBITDA
Earnings before interest, taxes, depreciation, and amortization. Seller-reported EBITDA remains an unverified claim until its source and adjustments are checked.
SDE
Seller's Discretionary Earnings, often used for owner-operated businesses. It is not interchangeable with EBITDA because it may include one owner's compensation and benefits.
Add-back
An expense the seller says should be added back to earnings because it may not continue. Each add-back needs evidence and a clear reason.
Owner replacement cost
The expected cost of replacing work performed by the current owner when the buyer will not perform that work.
Operating Earnings Yield
Annual operating earnings divided by asking price before buyer financing. Income property uses the secondary name CAP Rate.
Loan and buyer cash
Debt service
The principal-and-interest loan payment for the entered financing assumptions. Annual debt service is twelve monthly payments.
Actual DSCR
Actual Debt Service Coverage Ratio: annual operating earnings divided by annual debt service. It shows operating coverage, not lender approval or buyer profit.
Required DSCR
The minimum coverage ratio entered as a buyer requirement. It stays separate from the calculated Actual DSCR.
Buyer cash flow
What remains for the buyer after operating expenses and debt service, shown before and after the modeled tax estimate.
NIAT
Net Income After Tax: buyer cash flow after debt service and the modeled tax estimate. It is an estimate from entered assumptions, not a tax return.
Cash on Cash
Annual before-estimated-tax cash flow divided by the entered cash contribution. Other purchase cash stays separate from this denominator.
Known total initial buyer cash
The entered contribution plus known additional cash for items such as real estate, inventory, equipment, repairs, and working capital. It is partial when an amount is unknown.
Price and decision context
Indicative Valuation
A point estimate or low, base and high range from one selected method and its assumptions. The asking price is compared with the base estimate. It is not an appraisal or a recommended offer.
Base estimate
The value calculated from the selected method's base assumption. An asking price can be inside the range and still above its base estimate.
Direct capitalization
Annual property net operating income (NOI) divided by a selected capitalization rate. A higher rate produces a lower estimated value.
Gross Rent Multiplier (GRM)
A multiple applied to annual gross rent for a property valuation cross-check. It ignores operating expenses and stays separate from a direct-cap estimate.
Comparison yield
The return assumption a buyer enters to compare the opportunity with another use of capital.
Financing And Investment Benchmarks
Separate comparison-yield and NIAT-preserving references. They do not determine value, affordability, or an offer.
Buyer screen
The part of the review that compares supported calculated results with the buyer's exact saved requirements.
Requirement met, missed, or missing
Met and missed are exact comparisons with a supported target. Missing means the available information cannot support that part of the review yet.
Review margin
A saved tolerance that can call an exact miss nearby for attention. It never changes the exact outcome into a pass.