Glossary

The Cost of Capital is the opportunity cost of making a specific investment. It refers to the rate of return that could have been earned by making a different investment with equal risk. 

Cost of Goods Sold (COGS) are the costs directly attributable to the production of the goods sold by a company, including the cost of the materials used in creating the good along with the direct labor costs used to produce the good.

A Covenant Compliance Certificate is a document provided to a lender by a borrower, pursuant to the underlying credit agreement, certifying that the borrower has complied with the financial and other covenants set forth in such agreement, as well as usually confirming that no events of default have occurred.

A Covenant-Lite Loan is a type of loan that does not contain the usual protective covenants whereby the loan is granted with minimum restrictions for the benefit of the borrowing party (which makes the financing more bond-like). Such loans are generally available in red-hot markets only.

A Covenant is a legal term for a promise to do something (i.e., an affirmative covenant), refrain from doing something (i.e., a negative covenant) or maintain something (i.e., a maintenance covenant). 

A Cram Down is a process used in bankruptcy, when there are still objections from one or more creditors, whereby the court is able to modify certain conditions in an attempt to improve outcome for all parties as long as the changes are fair and equitable.

An insurance policy held by a company which protects the company against bad debts from their customers. Credit Insurance is typically purchased to allow for foreign receivables and high risk account debtors to be included in the borrowing base.

Test of credit memos by a field examiner. This test analyzes lag time from return/request date of the credit memo, whether a credit memo is dilutive and why it is being issued.