CVA (Mile2 Cybersecurity Certifications) flashcards
CVA · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Fair market value definition
- The price at which property would change hands between a willing buyer and a willing seller, neither under compulsion, both having reasonable knowledge of relevant facts, per IRS Revenue Ruling 59-60.
- WACC formula
- Weighted average cost of capital equals equity weight times cost of equity plus debt weight times after-tax cost of debt, using market-value weights; it discounts debt-free cash flows.
- Capitalization rate
- A divisor converting a single period of normalized earnings into value; it equals the discount rate minus the long-term sustainable growth rate of the earnings stream.
- Modified CAPM
- Cost of equity equals risk-free rate plus beta times equity risk premium, plus size premium and company-specific risk premium when supported by evidence.
- Control premium
- The incremental amount paid over minority share value to acquire a controlling interest, reflecting the ability to direct operations and determine distributions.
- DLOM
- Discount for lack of marketability: a reduction applied to value reflecting the inability to quickly convert an ownership interest to cash at a fair price.
- Minority discount
- A reduction from pro-rata control value applied to a noncontrolling interest, reflecting lack of power to direct management, declare distributions, or force a sale.
- Guideline public company method
- A market approach technique applying pricing multiples such as EV/EBITDA or P/E derived from publicly traded comparables to the subject company's operating metric.
- Normalized EBITDA
- Reported EBITDA adjusted for nonrecurring items, above- or below-market owner compensation, related-party transactions, and non-operating income or expense.
- Adjusted net asset method
- An asset-based approach restating each asset and liability to fair market value, including off-balance-sheet intangibles; often the floor value for a going concern.
- Terminal value
- The present value at the end of the forecast period of all cash flows beyond it, commonly computed with the Gordon growth model or an exit multiple.
- Lost profits measure
- Damages equal but-for profits minus actual profits, less avoided costs, net of mitigation, discounted to present value at a risk-appropriate rate.
- Daubert standard
- Admissibility test asking whether expert methodology is testable, has a known error rate, was peer reviewed, and is generally accepted in the relevant field.
- Frye standard
- A rule admitting expert testimony only when the underlying scientific technique is generally accepted as reliable within the relevant scientific community.
- Expert versus fact witness
- An expert may offer opinions based on facts and data reviewed; a fact witness testifies only to matters personally observed and cannot give opinion testimony.
- Valuation date
- The specific date as of which value is measured, set by contract, pleadings, or triggering event; cash flows and market data must correspond to that date.
- Business interruption loss
- Lost gross earnings minus continuing expenses and saved costs, plus extra expense incurred to resume operations, limited to the policy restoration period.
- Prejudgment interest
- Interest added to a damages award from the date of loss to judgment, awarded under statute or contract to compensate for delay in receiving funds.
- Chain of custody
- A documented record tracing each item of evidence from seizure through analysis and trial, establishing that it was not altered or substituted.
- Mitigation of damages
- The plaintiff's duty to take reasonable steps to reduce losses; failure to mitigate reduces the recoverable damage award.
- Fraud triangle
- The three conditions enabling fraud: pressure or incentive, opportunity, and rationalization; opportunity is most directly reduced by internal controls.
- Benford's Law
- In naturally occurring data, leading digit d appears with probability log10(1 + 1/d); digit 1 occurs about 30.1 percent and digit 9 about 4.6 percent.
- Beneish M-score
- An eight-variable model using ratios such as receivables growth, gross margin, asset quality, and accruals to estimate the likelihood of earnings manipulation.
- Altman Z-score
- A five-ratio bankruptcy prediction model for public manufacturers; scores below 1.81 indicate distress and above 2.99 indicate a safe zone.
- Skimming
- A cash misappropriation scheme in which funds are stolen before being recorded in the accounting system, leaving no direct entry to detect.
- Larceny
- A cash misappropriation scheme in which funds already recorded in the books are stolen, often concealed by subsequent deposits or receivable write-offs.
- Three-way match
- A control comparing purchase order, receiving report, and vendor invoice before payment approval; it deters fictitious vendors and inflated billing schemes.
- Net worth analysis
- A method computing unexplained funds as the increase in net worth plus personal expenditures minus known income, indicating possible unreported income.
- Segregation of duties
- Splitting authorization, custody, and recordkeeping among different employees so no single person can both commit and conceal an error or fraud.
- Round-number journal entries
- Manual entries in even amounts lacking supporting documentation; a red flag for fabricated adjustments used to manipulate reported results.
- Days sales outstanding trend
- A rising DSO relative to peers or prior periods may signal channel stuffing, premature revenue recognition, or fictitious receivables.
- Asset misappropriation
- Theft or misuse of an organization's assets, the most frequent occupational fraud category but typically the least costly per scheme.