Financial Glossary


V

Valuation. A comprehensive financial and operational review that focuses on pricing a business in anticipation of a sale or other reason. The act or process of determining the value or price of something. There are many techniques that can be used to determine value, some are subjective and others are objective. For example, an analyst valuing a company may look at the company's management, the composition of its capital structure, prospect of future earnings, and market value of assets. See Appraisal and Fair Market Value.

Value-Added Tax (VAT). A value-added tax (VAT) is a tax that applies on consumer expenditure and is charged on the supply of goods and services within a country by a registered person where such supplies are not exempt or subject to a zero-rate of tax. VAT is also charged on imports. To ensure that tax applies only once to the final consideration paid for a consumer expenditure, registered businesses are entitled to credits for tax paid on inputs into making taxable supplies. Put another way, Method of indirect taxation whereby a tax is levied at each stage of production on the value added at that specific stage. Most commonly levied in Europe.

Variable Costs. Costs that change as a direct result of a change in production volume.

Variable Mortgage. A mortgage set to the lenders standard rate, it is influenced by economic conditions so will fluctuate with over the course of the mortgage. Generally, the payments remain the same, despite interest rate changes. Also known as a variable-rate mortgage.

Venture Capital. Risk equity investing, generally in private equities of private companies, with a goal of achieving above-average long-term investment returns that compensate for the investment risk. Venture capital includes investments in startups, expansion-stage companies, and emerging growth companies. Venture capital investments are structured so that liquidity can be achieved, usually within three to seven years.

Vesting. The rate at which options granted under a stock option plan become exercisable by the option holder. Most stock option plans provide that options vest (and therefore become exercisable by the option holder) over a period of years so that the company gets the benefit of extended employment and performance from the option holder. A common pattern is for options to vest in equal percentages over three to five years, usually on the anniversary date of the option grant. If the option holder's relationship with the company ceases, then the option holder forfeits the options that have not yet become vested.

Volatility. The degree of price fluctuation for a given asset, rate, or index.

Voting Rights. Stockholders' rights to vote in the affairs of the company. Most common shares have one vote per share, although some Canadian companies have voting and non-voting shares. The aim of a dual-class system of stock is to give a controlling shareholder increased access to capital without losing the decision-making control of the company. Another way this is achieved is through subordinate voting shares. In such a structure, a share may hold one vote, but other shares have more votes per share.