Business Terminology Directory

📘 Business Terminology Directory

Accounts Payable

Money owed by a business to its suppliers shown as a liability on a company's balance sheet.

Accounts Receivable

Money owed to a company by its debtors.

Amortization

The gradual reduction of a debt over a given period.

Angel Investor

An affluent individual who provides capital for a business start-up.

Annual Report

A yearly record of a public company’s financial condition.

Appreciation

An increase in the value of an asset over time.

Assets

Resources owned by a company that have economic value.

Balance Sheet

A statement of a company’s assets, liabilities, and capital at a particular point in time.

Bankruptcy

A legal proceeding involving a person or business that is unable to repay outstanding debts.

Benchmarking

Comparing business processes and performance metrics to industry bests.

Blue Chip Stocks

Shares in large, well-known companies with a solid history of growth.

Bootstrapping

Building a company from the ground up with personal savings or revenue.

Brand Equity

The value of a brand based on consumer perception.

Break-even Analysis

Determining when an investment will start to generate a positive return.

Business Model

A plan for the successful operation of a business.

Capital

Wealth in the form of money or assets used to start or maintain a business.

Capital Expenditure

Funds used by a company to acquire or upgrade physical assets.

Cash Flow

The total amount of money being transferred in and out of a business.

Churn Rate

The percentage of customers who stop using a service during a given time frame.

Collateral

An asset used to secure a loan.

Commission

A fee paid to an agent or employee for transacting a piece of business.

Competitive Advantage

A condition that puts a company in a favorable position.

Consignment

Goods sent to another party to sell.

Cost of Goods Sold (COGS)

The direct costs attributable to the production of goods sold.

Credit

An agreement to purchase goods or services with payment at a later date.

Crowdfunding

Raising small amounts of money from a large number of people, typically via the internet.

Current Assets

Assets that can be converted into cash within one year.

Current Liabilities

A company's debts or obligations due within one year.

Customer Acquisition Cost

The cost associated with convincing a customer to buy a product/service.

Depreciation

A reduction in the value of an asset over time.

Diversification

A risk management strategy that mixes a wide variety of investments.

Dividend

A distribution of a portion of a company's earnings to shareholders.

Due Diligence

An investigation or audit of a potential investment.

Earnings Before Interest and Taxes (EBIT)

A measure of a firm's profit.

Earnings Per Share (EPS)

The portion of a company's profit allocated to each outstanding share.

Economies of Scale

Cost advantages gained when production becomes efficient.

Equity Financing

Raising capital through the sale of shares.

Escrow

A financial arrangement where a third party holds and regulates funds.

Exit Strategy

A plan for investors to take profit from a business.

Fixed Assets

Long-term assets like property and equipment.

Franchise

A license to use a business’s name, brand, and operating model.

Freemium

A pricing strategy offering basic services for free while charging for premium features.

Gross Margin

Sales revenue minus the cost of goods sold.

Guarantor

A person or entity that promises to repay a loan if the original borrower defaults.

Income Statement

A financial statement showing revenue and expenses.

Initial Public Offering (IPO)

The first time a company offers its shares to the public.

Insolvency

A situation where a company cannot meet its debt obligations.

Intangible Assets

Non-physical assets like patents, trademarks, or goodwill.

Inventory

The raw materials, work-in-progress, and finished goods a company has.

Invoice

A document requesting payment for goods or services provided.

Joint Venture

A commercial enterprise undertaken jointly by two or more parties.

Key Performance Indicator (KPI)

A measurable value that indicates how effectively a company is achieving key objectives.

Leverage

The use of various financial instruments or borrowed capital to increase the potential return of an investment.

Liabilities

A company’s legal financial debts or obligations.

Liquidity

The ease with which an asset can be converted into cash.

Loan

A sum of money borrowed that is expected to be paid back with interest.

Margin

The difference between the cost and the selling price of a product.

Market Capitalization

The total market value of a company’s outstanding shares.

Merger

The combination of two companies to form one.

Monopoly

A market structure where a single seller controls the market.

Net Income

Total revenue minus expenses, taxes, and costs.

Operating Expenses

The costs required to keep a business running day-to-day.

Overhead

The ongoing business expenses not directly attributed to creating a product or service.

Partnership

A business owned by two or more individuals.

Pitch Deck

A presentation used to provide an overview of a business to potential investors.

Portfolio

A range of investments held by an individual or organization.

Profit and Loss Statement

A report that summarizes revenues, costs, and expenses.

Proprietorship

A business owned and run by one person.

Receivables

Money owed to a company by customers.

Revenue

Income generated from normal business operations.

Risk Management

The process of identifying, assessing, and controlling threats.

SaaS (Software as a Service)

A software distribution model in which applications are hosted by a vendor or service provider.

Scalability

A business’s ability to grow without being hampered by its structure or resources.

Shareholder

An owner of shares in a company.

Solvency

The ability of a company to meet its long-term debts and financial obligations.

Stakeholder

Any individual or group affected by the operations of a business.

Startup

A newly established business.

Supply Chain

The entire system of producing and delivering a product.

SWOT Analysis

A framework for identifying strengths, weaknesses, opportunities, and threats.

Target Market

A particular group of consumers at which a product or service is aimed.

Trade Credit

The credit extended to you by suppliers who let you buy now and pay later.

Turnover

The amount of business a company conducts during a period.

Unicorn

A privately held startup company valued at over $1 billion.

Valuation

The process of determining the current worth of a company or asset.

Variable Cost

A cost that changes with the level of output.

Venture Capital

Financing provided to startups with high growth potential.

Vertical Integration

A strategy where a company expands control over multiple stages of its supply chain.

Working Capital

Current assets minus current liabilities.

Yield

The income return on an investment.

Zero-Based Budgeting

A method of budgeting where all expenses must be justified for each new period.