Fig. 01 · Glossary
Financial Due Diligence
Also known as FDD, Finance Diligence
Definition
Financial due diligence evaluates the quality, sustainability, and presentation of a company's financial results. It covers quality of earnings, revenue recognition, working capital, debt-like items, cash conversion, forecast reliability, and accounting policy.
Financial diligence answers what the company earned and how reliable that number is. It does not, by itself, prove the company can keep earning it after close.
That is why technology deals need financial and technical diligence connected. Revenue recognition can look clean while the platform carrying the revenue is fragile.
Human Renaissance glossary · operator-grade definitions · Research methodology
