In This Section
Federal Tax Lien 
A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets.
FASB
Financial Accounting Standards Board (FASB), established in 1973, is the independent, private-sector, not-for-profit organization based in Norwalk, Connecticut, that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP).
Fair Market Value
Fair market value (FMV) is the price that a person interested in buying a given asset would pay to a person interested in selling it for the purchase of the asset or asset would fetch in the marketplace.
Factoring
Factoring is the process by which a factor buys the receivables of a client, at a discount. The receivables are due from the client’s customers, referred to as the “account debtors.”
Extraordinary Assumption
An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions or conclusions.
External Obsolescence
External Obsolescence “is an element of depreciation; a defect, usually incurable, caused by negative influences outside a site and generally incurable on the part of the owner, landlord, or tenant.”1
Export Letters of Credit
A payment method commonly used in international trade transactions, whereby the advising bank facilitates payment to the exporter - provided the exporter complies with the terms and conditions of the letter of credit.
Exit Strategies
A business owner's strategic plan to sell his or her investment in a company. An exit strategy gives a business owner a way to reduce or eliminate his or her stake in the business and, if the business is prosperous, make a substantial profit. If the business is a failure, an exit strategy enables the entrepreneur to limit losses.
Exchange Rate
Price for which the currency of a country can be exchanged for another country's currency.
Excess Inventory
Excess inventory, sometimes also know as slow moving inventory or obsolete inventory, is unsold product that: 1. exceeds the projected consumer demand (usually determined based on the prior 12 months actual usage or projected usage over the subsequent 12 months period); 2. has not been sold in 12 months; 3. Inventory relating to cancelled products or product lines; 4. Is customer specific for a former customer.
Excess Cash Flow Recapture (ECF)
A loan agreement or bond indenture provision that requires the borrower to apply excess cash flow (or some percentage of excess cash flow) to reduce the outstanding debt balance.
Excess Availability
The amount generated by applying the stated advance(s) rate to the eligible portion of the collateral and then subtracting the outstanding loan balance against that collateral.
Equity Call
A legal right which permits a company to require its investors to pledge a certain amount of stock or any other security representing an ownership interest to the company.
Equity Bid Appraisal
Well after the completion of the appraisal itself, appraisers will continue to monitor the company and collateral. Importantly, appraisers will often conduct retail appraisals on an equity bid basis, reflecting their willingness to provide an immediate cash guarantee on the value of the consumer goods they appraise. The result is the more definitive, accurate appraisal in the marketplace.
Equity
The ownership investment/interest in a company, typically expressed through stock certificates.
Equitable Subordination
Equitable subordination refers to the legal action, typically in a bankruptcy case, by which a court rearranges the lien priority position of various creditors to move a lower priority lien up in the order. Lien priority governs the order in which creditors are paid or can foreclose on assets used to secure loans made to a company.
Enterprise Value
The market capitalization of a company is simply its share price multiplied by the number of shares a company has outstanding. Enterprise value is calculated as the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.
Engagement Letter
An engagement letter is a legal document that defines the engagement between the appraiser and the borrower. This letter should state the terms and conditions of the engagement, address the scope of the assignment and the terms of compensation.
Employee Stock Ownership Plan (ESOP)
An employee stock ownership plan (ESOP) is a qualified defined-contribution employee benefit (ERISA) plan designed to invest employee retirement contributions primarily in the stock of the sponsoring employer.
Eligible Collateral
Eligible collateral is the assets of a business that a lender considers of sufficient quality to lend against. Eligible collateral represents assets that a lender believes it could convert into cash to repay a loan in the event the owner of the asset, the borrower, went out of business.