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Home Resources M&A Glossary Accounting Period

M&A Glossary

Accounting Period

The period of time in which financial activity is recorded and financials are prepared.

Tips

Normally refers to a 12-month period. The two primary accounting periods are fiscal and calendar year. Most businesses use the calendar year; however, businesses in certain industries, such as retail, often use a fiscal year rather than the calendar year of Jan 1 – Dec 31. When analyzing or comparing two or more businesses, it is critical to analyze them using the same accounting period.

Related M&A Terms

Absentee Owner

A business owner who is not personally involved in the management or operations of a business. Tips The application of this term varies; some refer to business owners as absentee...

Accounting Method

The method that is used to record a business's revenue and expenses for tax purposes. See Also Cash basis , accrual basis. Tips Most businesses use a hybrid of the...

Accrual Method of Accounting/Accrual Basis

One of the two primary accounting methods, recognizes income and expenses based on when they are "accrued" or when they actually occur. Example If a job was awarded today but...

Add-Backs

An adjustment made to the income or expenses in a financial statement when calculating the true earnings capacity of a business (i.e., SDE or EBITDA). See Also Normalize, SDE, EBITDA....

Add-on Acquisition

The purchase, or acquisition, of a smaller company that is added on to a larger platform company by a private equity firm or strategic buyer, to compliment the acquirer’s business...

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