This glossary provides concise definitions of commonly used business terms.
Accounts Payable – an account of money owed that has not yet been paid.
Accounts Receivable – an account of the amount of money owed to the business.
Asset – Anything owned by the business that is of value.
Benchmarking – An evaluation of performance relative to other similar businesses.
Brand – The collection of ideas, signs, or marks that represent a business.
Business Plan – An overview of the goals of a business and their detailed plan for achieving them.
Competitor Analysis – An analysis of the weaknesses and strengths of a business’s competitors.
Corporation – A separate legal entity from those who form it.
Debt to Equity Ratio – The proportion of equity to debt when financing an asset.
Depreciation – The loss of value of an asset throughout its existence.
Direct Marketing – Marketing by any means which makes direct contact with customers such as telesales or email.
Dividend – The payout of profits to the shareholders of a business.
Earnings Before Interest and Taxes – A business’s profit before interest and taxes are considered.
Effective Tax Rate – The actual tax rate paid by a business after offsets and payments are taken into account.
Fiscal Year – The period used by businesses for the calculating of annual financial statements.
Fixed Asset – An asset that is not liquid.
Gross Margin – A business’s profit for each unit sold; usually expressed as a percentage.
Guerrilla Marketing – A low budget, high energy marketing strategy that is generally considered unconventional.
Human Resources – The department that deals with employee relations in administrative aspects.
Income Statement – A statement that details the conversion of revenue into income.
Initial Public Offering (IPO) – When business shares or stock are offered to the public for the first time.
Interest Expense – The cost incurred by a business for borrowing money.
Liability – An obligation, which is binding, to settle a particular debt.
Limited Liability Company (LLC) – A company whose owners have limited responsibilities for its actions and debts.
Limited Liability Partnership (LLP) – A company in which the partners share limited responsibilities for its actions and debts.
Market Penetration – A marketing strategy that involves a business entering the market using current products.
Market Share – The portion of the total market occupied by a business.
Market Value – The price at which a liability or asset would trade in a particular market.
Net Worth – A company’s assets minus their liabilities.
Operating Expense – The ongoing costs of running a business.
Outsourcing – When a business subcontracts part of their process involving a good a service.
Partnership – A business entity in which partners share control of a business.
Payroll – The record of wages, salaries, deductions, and bonuses for a business.
Public Limited Company (PLC) – A type of company that offers shares to the public.
Public Relations – The control of the image and relations of a company with the public.
Receivables – The total amount of money that customers owe to a business.
Return on Investment – A measure of money made from an investment in proportion to how much money was spent.
S Corporation (S Corp) – A corporation that is taxed under US Internal Revenue Code Subchapter S of Chapter 1.
Shareholder – A company or individual who holds share in a business.
Stock Market – A market where derivatives and stocks are sold.
SWOT Assessment – An assessment used by businesses to examine the strengths, weaknesses, and opportunities of a particular action.
Tax Rate – The percentage at which the income of a business is taxed.
Valuation – The process of establishing the market value of an asset or liability.
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