Glossary

A warehouse lien waiver is a legal document used when a borrower has assets (i.e. inventory) held offsite. The agreement typically states that the owner of the warehouse waives any of its potential lien rights against these assets including any offsets for past due payables.

A warrant is a security that gives the owner the right, but not the obligation, to buy or sell a security, most commonly equity, at a certain price before expiration. Riskier loans will sometimes have warrants attached to them that allows the lender the right to purchase equity based on negotiated terms and benchmarks.

A warranty is a type of guarantee that a manufacturer or similar party makes regarding the condition of its product upon the sale of the product. It also refers to the terms and situations in which repairs or exchanges can be made in the event the product does not perform as intended.

Waterfall is a common term used when describing the order of payouts based on the capital structure. The 1st lien senior secured debt is paid out first and thus is considered at the top of the waterfall. Second lien or junior secured debt would be paid next followed by unsecured debt and finally equity.

Weighted Average Cost of Capital, often referred to as WACC, is a calculation of a company's cost of capital with each category of capital (i.e. debt and equity) proportionally weighted. A company with a higher proportion of equity to debt will have a higher WACC given that equity is more expensive than debt. WACC is often used as the rate when discounting cash flows.

Wholesale price is the cost of the goods sold by a wholesaler. The wholesaler will charge a price higher than it paid to the producer of the goods when it sells to the retailer. Retailers will purchase the goods from a wholesaler and increase the price further when sold to the end consumer.

Work in process inventory, often referred to as WIP, represents inventory that is in the production process.

Working capital is defined as Current Assets minus Current Liabilities. The key components of the working capital equation are accounts receivable (current asset), inventory (current asset), and accounts payable (current liability).