Business terms
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ACCOUNTS PAYABLE:
Account to pay from your suppliers.ACCOUNTS RECEIVABLE:
Cash to receive from your customers.ACCRUALS:
Amounts due but not yet disbursed. Eg. sales tax collected but not yet sent on.ADMINISTRATIVE EXPENSES:
An operating costs incurred in the normal course of running a business, such as management and office salaries, property taxes, etc.back to top
COLLECTION DAYS:
This ratio shows how fast a business is collecting from its customersback to top
ASSET:
Everything of value that is owned by a person or a business such us: accounts and notes receivable, cash, inventory, equipment, real estate, goodwill, etc.back to top
ASSET TURNOVER:
The sales generated by each unit of assets. It is calculated by dividing total sales by total assets.back to top
BALANCE SHEET:
A statement listing all assets, liabilities and equity of a business which show the financial position at a given date.back to top
BREAK-EVEN POINT:
When the new business sales is equal to its fixed and variable costs.back to top
BUDGET:
An estimate of future revenue and expenses during a period (quarterly, yearly, etc.)back to top
BUSINESS FINANCING PLAN:
An outline of business objectives, the impact of funding, and the resulting benefits. You can also include historical summaries, and other market data.back to top
CAPITAL:
The owner's equity available to a business.back to top
CASH FLOW BUDGET:
The spreadsheet of periodic flows (daily, monthly etc) with inputs and outputs of resources of cash used in financial planning.back to top
COGS:
An abbreviated form of Cost of Goods Sold, also called Cost of Sales. See also Cost of sales.back to top
CORPORATION:
A Legal entity under the law. This entity is distinct from parties or individuals that own it. The owners are not liable for debts or obligations of the corporation.back to top
COST OF SALES:
A Direct cost of producing goods or services. It includes the direct costs of labor, inventory and overhead.back to top
CURRENT ASSETS:
An asset that in the normal course of events can be converted into cash or used in the production process within one year (or within your normal operating cycle). Includes cash, accounts receivable, inventory and prepaid expenses.back to top
CURRENT LIABILITIES:
The liabilities that are payable within one year. They include the Bank loan, Accounts payable, Accruals (e.g. sales tax collected), income tax and the current portion of long term debt.back to top
CURRENT RATIO:
A Financial ratio defined as current assets divided by current liabilities, which measures a company's ability to meet its obligations in the short- term, or any need to raise additional funds.back to top
DEPRECIATION:
The decline of the value of a tangible asset over time. Ex. machinery, equipment, furniture, vehicles, etc. are assets subject to depreciation.back to top
DISBURSEMENTS:
The Funds paid in settlement of obligations.back to top
DIVIDENDS:
A profit of a company paid to its shareholder.back to top
FINANCIAL LEASING:
The financial leasing is a type of financing to purchase assets. The asset owner, a leasing company (lessor) receives lease payments from their client (lessee). The leasing company, by agreement of the parties can to transfer to the client, as current owner, the ownership asset, at the end of the contract by a value called residual value, or simply receives the asset as return.back to top
FINANCIAL STATEMENTS:
The Reports, prepared from accounting records, describing the financial position and performance of the business. They include the Balance Sheet, the Income Statement and the Sources and Uses of Funds.back to top
FIXED ASSETS:
An asset, not intended to be sold, usually involved in the production of goods or services. They represent a long-term investment and are used by more than one year. Ex. land, buildings, equipment, vehicles.back to top
FIXED COSTS:
The Amounts that do not vary with changes in sales or production volume, such as :rent, depreciation, interest payments, building insurance and property taxes.back to top
FORECAST:
An estimate or prediction of anything, such as: sales, profits, expenditures, wages, etc.back to top
FREIGHT & OTHER DUTY:
The amounts paid to transport goods from your suppliers.back to top
GROSS PROFIT:
The Net Sales less Cost of Goods Sold. Often referred as "Gross Margin".back to top
INCOME STATEMENT:
A financial statement that shows the total revenues and expenditure and indicates the net income (or loss) of a company during an accounting period, usually the fiscal year.back to top
INTANGIBLE ASSETS:
An Assets that can not be touched, seen, weighed or measured, which like all assets, adds benefits to your business. (e.g, goodwill, trademarks and patents)back to top
INVENTORY:
All physical items that a company uses in its production process or has for sale in the ordinary course of its business.back to top
INVENTORY TURNOVER:
A financial ratio that measures the number of times the inventory was kept stored in a given year. Is defined as sales divided by inventory.back to top
LABOR EXPENSES:
The Total cash paid as a direct cost to the company for its employees during an accounting period. Includes actual wages paid and all benefits.back to top
LEASE:
A legal document established between an owner (lessor) and a lessee (tenant), which covers the use of property by a certain amount of money and a certain time.back to top
LEASEHOLD IMPROVEMENTS:
The improvements or renovations made to leased property at the expense of the tenant.back to top
LIABILITIES:
The obligations from which they are paid in the future. Ex accounts payable, loans.back to top
LONG-TERM LIABILITIES:
The obligations to be paid in more than 12 months.back to top
MARKET:
A group of consumers that can be identified.back to top
MARKET SEGMENT:
A part of a market.back to top
NET PROFIT:
The total revenue minus total expenditure during the accounting period.back to top
NET PROFIT MARGIN:
The net profit divided by sales; expressed as a percentage.back to top
NICHE:
A part of a market segment.back to top
NON-OPERATING ITEMS:
Un unusual income or expenses, not related to day-to-day business operations, such as rent(gain) and loss on sale of fixed assets(expense).back to top
OPERATING PROFIT:
An excess of revenues over expenses, excluding income and expenses from other sources not used to the activities of day-to-day.back to top
OVERHEAD:
The Costs not directly associated to the production of a good(ex. salary of office manager, rent, property taxes.back to top
PREPAID EXPENSES:
The operational expenditure, paid in advance, during an accounting period which is expected to benefit the business in the future. (ex. insurance premium).back to top
PROFESSIONAL FEES:
The fees paid for professional services (ex. accountants, consultants, lawyers etc).back to top
PROFIT:
The total revenue minus total costs.back to top
RATIO ANALYSIS:
A comparative analysis of indices from the financial reports of a company to determine their degree of economic and financial soundness.back to top
REPAIRS & MAINTENANCE:
The Costs related to maintenance of equipment.back to top
RETAINED EARNINGS:
The profits not distributed among the owners of a company.back to top
RETURN ON ASSETS:
A financial index that indicates the company's ability to use efficiently the resources to generate profits.back to top
RETURN ON INVESTMENT:
A financial index which measures the profitability of the company to its owner.back to top
SALES:
The total value of goods sold or services rendered, less discounts and returns.back to top
SALES EXPENSES:
The operating costs directly related to the selling of a product or service.back to top
SERVICES & UTILITIES:
The costs of benefits, generally public service, such as gas, electricity, water and sanitation.back to top
SHAREHOLDERS EQUITY:
The Net worth that belong to owners of the business (i.e. total assets minus total liabilities).back to top
TOTAL DEBT TO EQUITY RATIO:
A financial ratio defined as Total liabilities divided by Shareholders' equity. It indicates the extent to which the company is reliant on debt financing.back to top
TOTAL DEBT TO TOTAL ASSETS:
A financial ratio that indicates what proportion of debt a company has relative to its assets.back to top
VARIABLE COSTS:
The expenses that vary directly with changes in the volume of sales or productions.back to top
WORKING CAPITAL:
A financial indicator defined as current assets less current liabilities. If negative, it is a need, for cash resources to fund the normal activities of short-term.back to top
Related Topics
DuPont Analysis Investments - Net Present Value Discounted Cash Flow (DCF) Internal Rate of Return (IRR) Modified Internal Rate of Return (MIRR) Average Interest Rate Average Rate of Return Break-Even Point in Quantities Break-Even Point (BEP) in Sales French Amortization System Constant Amortization System German Amortization System Sinking Fund American Amortization System Amortization - Average Constant and French Straight Line Depreciation Method Sum of Digits Depreciation Method (SYD) Balance Sheet Analysis Cash Flow Statement by Direct Method Cash Flow Statement by Indirect Method