A
- Accounts Payable
- Any money a company owes (short term debts or liabilities) to a supplier for goods and services already received from the supplier, but not yet paid for
- Accounts Receivable
- Any
money owed to a company by a customer for goods and services
already delivered to a customer, but not yet paid for
- Accrual Basis of Accounting
- Revenue
and expenses are recorded in the period in which they are earned
or incurred regardless of whether cash is received or disbursed in
that same period
This
is the accounting basis that generally is required to be used in
order to conform to generally accepted accounting principles
(GAAP) in preparing financial statements for external users
- Accrued Assets
- Assets
from revenues earned but not yet received
- Accrued Expenses
- Expenses
incurred during an accounting period for which payment is
postponed
- Accrued Income
- Income
earned during a fiscal period but not paid by the end of the
period
- Accrued Interest
- Interest
earned but not paid since the last due date
- Accrued Liability
- Liabilities which are incurred, but
for which payment is not yet made, during a given accounting period
Some examples in a manufacturing environment
would be: wages, taxes, suppliers/vendors, etc
- Acquisition
- An agreement between two companies
where one company is purchased or acquired by the other company and
ceases to operate as an independent entity
- Addressable Market
- The size of that portion of the market
that is likely to have an interest in what your business has to offer
- Adjacent Market
- A distinct market or set of customers that are similar to a business's core market that share similar needs or similar business processes, e.g. commercial real estate property management is an adjacent market to multi-family property management with similar requirements, but each market is seen as being a separate and distinct market
- Adjacent Opportunities
- The potential for adjacent market
growth; the ability to enter new, adjacent markets where you can address
similar needs with the existing product or process infrastructure
- Agent
- A person that has been given the authority, typically legally binding, to act on the behalf of the company or the company's principle owners
- Amortization
- The process of paying down a debt
in regular installments over time or deducting a capitalized expenditure
over time
- Angel Investor
- A wealthy individual that makes independent
investments in a company (typically an early-stage start-up company)
in exchange for equity ownership and with the expectation of an eventual
exit and financial return
- Appreciation
- The increase in value of an asset
over time (as opposed to Depreciation)
- Asset
- Anything owned by an individual or
a business, which has commercial or exchange value
Assets may consist of specific property
or claims against others, in contrast to obligations due others
- Asset Leverage
-
The ability to use assets to produce
an income with less effort
A (continued)
- Assign
- To legally give someone the right
or interest in an asset, such as when the "assignor" assigns the
rights to a contract to an "assignee"
- At Will Employment
- The situation when a company can end
an employment relationship with an employee at any time for any reason;
employment laws vary from state to state and may affect the various
aspects of at will employment
- Audit
- The verification of a company's financial performance and proper record keeping by an audit or accounting firm and typically performed by an auditor that is a Certified Public Accountant (CPA); the end product is a written, certified statement of the company's financial condition and compliance to standard accounting practices known as GAAP
B
- Balance Sheet
- A financial statement that lists the total assets, total liabilities and net worth of a business; the total assets equals or "balances" with the total liabilities and net worth
- Bankruptcy
- When a business cannot meet its legal
obligations (liabilities) and petitions a federal district court for
either reorganization of its obligations (known as a "Chapter 11"
bankruptcy) or liquidates its assets (known as a "Chapter 7" bankruptcy);
in a bankruptcy, the assets of a company are surrendered to a receiver
or trustee that oversees the distribution of remaining assets to the
creditors that are owed the outstanding obligations (this surrendering
of assets may be voluntary or involuntary); the creditors typically
end up with only a fraction of what was owed them
- Bargaining Power of Buyers
- The amount of influence the buyers
have on a company
- Bargaining Power of Suppliers
- The amount of influence a supplier
has on a company
- Barriers to Entry
- Market conditions that make it difficult
for a new competitor to enter the market; typically would include the
conditions of a high investment amount, protected intellectual property
by existing market participants, long development cycles or locked up
customer or distribution channels
- Bond
- A debt security issued by an issuer
that receives cash from the holder and owes the holder an agreed upon
principal and interest (coupon) at a later date (fixed maturity); typically
issued by the U.S., state or local government or a corporation and typically
backed by some sort of security interest (unlike a debenture that is
typically not backed by any security interest)
- Bottom Line
- Net income after taxes. In general,
it is an expression as to the end results of something, e.g. the net
worth of a corporation on a balance sheet, sales generated from a marketing
campaign, or final decision on most any subject
- Brand
- Any name, symbol or other identifier
used individually or in combination to identify the goods and/or services
of a seller and differentiate them, on any tangible or intangible basis,
from similar goods and/or services of competitors.
- Branding
- The process of establishing the elements
of a brand, including its name, identifying symbols and related marketing
messages
- Breach of Contract
- The failure of a party to perform
its obligations under the terms of the agreement
- Breakeven
- The number of units of sales required
to cover your fixed and variable costs; the point at which revenues
and costs are equal; a combination of sales and costs that will yield
a no profit/no loss operation
Example:
Fixed costs = $5,000
Variable margin = $10 per unit
Breakeven = $5,000/$10 = 500 units
- Breakeven Timing
- The amount of time it takes for your
opportunity to breakeven from the time you launch until your net income
is zero or positive
- Budget
- A detailed financial plan - typically including an Income Statement, Balance Sheet and a Cash Flow Statement - during a given period of time; typically for one business cycle, such as a year, or for several cycles (such as a five year capital budget); also known as a Plan or a Pro forma
- Burn Rate
- The rate at which a new company uses
up its venture capital to finance overhead before generating positive
cash flow from operations; the rate of negative cash flow, usually quoted
as a monthly rate
- Business Plan
- A detailed planning document that
includes a description of the market, the competition, the company and
its products or services, the management team, the financial plan (budget),
the risks, the capitalization plan and the exit plan