Financing Glossary

Every term used across the Bridge calculators, defined in plain English and linked to the tool that computes it.

Last updated: August 2026 · Reviewed by the Bridge lending team · Glossary

Hotel & Commercial Real Estate

NOI (net operating income): NOI is a property's revenue minus its operating expenses, before debt service, income taxes, depreciation, and capital expenditures. It is the income figure behind cap rates, DSCR, and debt yield. Calculate it →
DSCR (debt service coverage ratio): DSCR is net operating income divided by annual debt service. A DSCR of 1.25x means the property earns $1.25 of NOI for every $1.00 of loan payments; most commercial lenders want at least 1.20x to 1.30x. Calculate it →
Debt yield: Debt yield is NOI divided by the loan amount, expressed as a percentage. Because it ignores interest rate and amortization, lenders use it as a rate-proof measure of how much income backs each dollar lent; 9% to 11% is a common minimum. Calculate it →
Loan constant: The loan constant is annual debt service divided by the loan amount, as a percentage. It captures the combined cost of interest and principal amortization; a property must yield more than its loan constant to cover payments. Calculate it →
Cap rate (capitalization rate): The cap rate is NOI divided by property value, expressed as a percentage. It is the unlevered yield a buyer earns at a given price, and dividing NOI by a market cap rate gives an indicative property value. Calculate it →
ADR (average daily rate): ADR is room revenue divided by rooms sold. It measures the average price a hotel achieved for the rooms it actually sold, independent of how full it was. Calculate it →
RevPAR (revenue per available room): RevPAR is room revenue divided by available rooms, or equivalently ADR multiplied by occupancy. It blends rate and occupancy into one top-line productivity number. Calculate it →
RevPAR Index: RevPAR Index is a hotel's RevPAR divided by its competitive set's RevPAR, times 100. An index of 100 means fair share; above 100 means the hotel captures more than its share of market revenue. Calculate it →
GOPPAR (gross operating profit per available room): GOPPAR is gross operating profit divided by available rooms. Unlike RevPAR it accounts for operating costs, so it measures profitability rather than just revenue capture. Calculate it →
FF&E reserve: An FF&E reserve is money set aside each year, typically 3% to 5% of gross revenue, to replace furniture, fixtures, and equipment as they wear out. Brands and lenders usually require it in hotel budgets. Calculate it →
PIP (property improvement plan): A PIP is the renovation scope a hotel brand requires, usually at purchase, relicensing, or set brand milestones, to bring a property up to current brand standards. PIPs are distinct from routine FF&E replacement. Calculate it →
LTV (loan-to-value): LTV is the loan amount divided by the property's appraised value, as a percentage. Lenders cap LTV to keep an equity cushion; hotel loans commonly top out around 60% to 75%. Calculate it →
LTC (loan-to-cost): LTC is the loan amount divided by total project cost, as a percentage. It is the construction-lending counterpart to LTV, measured against budget rather than appraised value. Calculate it →
Yield on cost: Yield on cost is stabilized NOI divided by total project cost. Developers compare it to market cap rates; the spread between the two is the development profit margin. Calculate it →
C-PACE: C-PACE (Commercial Property Assessed Clean Energy) is long-term, fixed-rate financing for energy and resiliency improvements, repaid through a special assessment on the property tax bill. Availability depends on state and local programs. Calculate it →
Amortization: Amortization is the schedule by which loan principal is paid down over time through regular payments. A longer amortization period lowers each payment but slows principal reduction and increases total interest. Calculate it →

Consumer Brands & Working Capital

COGS (cost of goods sold): COGS is the direct cost of producing the goods a company sells, including materials, manufacturing, and inbound freight. It is the cost base for gross margin and inventory turnover. Calculate it →
Gross margin: Gross margin is gross profit divided by the selling price, as a percentage: (price − cost) ÷ price. It measures how much of each revenue dollar is left after direct product costs. Calculate it →
Markup: Markup is gross profit divided by cost, as a percentage: (price − cost) ÷ cost. It is not the same as margin; the same $25 of profit on a $40 price is a 62.5% margin but a 166.7% markup. Calculate it →
Landed cost: Landed cost is the true per-unit cost of inventory after adding freight, duties, insurance, and handling fees to the factory price. Pricing off factory cost alone overstates margin. Calculate it →
DIO (days inventory outstanding): DIO is the average number of days inventory sits before it is sold, calculated as inventory divided by COGS times 365. Lower DIO means cash spends less time parked in stock. Calculate it →
DSO (days sales outstanding): DSO is the average number of days it takes customers to pay after a sale, calculated as accounts receivable divided by revenue times 365. Retail and distributor terms of net 30 to net 90 drive DSO for consumer brands. Calculate it →
DPO (days payable outstanding): DPO is the average number of days a company takes to pay its suppliers, calculated as accounts payable divided by COGS times 365. Longer DPO means suppliers are financing more of the working capital cycle. Calculate it →
Cash conversion cycle (CCC): The cash conversion cycle is the number of days between paying suppliers and collecting from customers: DIO + DSO − DPO. A longer cycle means more working capital is tied up funding growth. Calculate it →
Working capital gap: A working capital gap is the difference between the cash needed to produce and deliver an order and the cash a company has available before the customer pays. Purchase order and inventory financing exist to bridge this gap. Calculate it →
Purchase order (PO) financing: PO financing is short-term funding that pays a brand's supplier so it can fulfill a confirmed purchase order, repaid when the retailer pays the invoice. Fees are usually quoted flat per 30 days, which converts to a much higher annualized rate. Calculate it →
Inventory turnover: Inventory turnover is COGS divided by average inventory, measuring how many times a year a company sells through its stock. Dividing 365 by turnover gives days of inventory on hand. Calculate it →
Contribution margin: Contribution margin is the selling price minus variable cost per unit. It is the amount each unit sold contributes toward covering fixed costs, which is why break-even units equal fixed costs divided by contribution margin. Calculate it →
Trade spend: Trade spend is the money a consumer brand pays retailers and distributors for promotions, slotting, discounts, and allowances. It is deducted from gross sales to reach net revenue and often runs 15% to 25% of gross sales in retail channels. Calculate it →

Definitions are general industry usage for planning purposes and are not legal, tax, or investment advice.