When starting out in any company, especially as someone new to the world of work, just trying to understand your new colleagues is a pretty daunting task. They chat away expecting you to understand everything they ask, whereas in fact you’ve no idea and are just politely nodding to avoid embarrassment.
For a newbie, business terms can seem like a different language, but by studying this list below (which is by no means comprehensive) you will provide yourself with a good foundation to build upon.
An association of groups or businesses
A systematic activity directed toward profit
3. ROI: Return-on-investment
Money gained from a business investment intended to increase profitability
These are resources owned by a company. They are usually broken down into three categories:
· Current Assets: cash, prepaid expenses, etc.
· Fixed Assets: land, furniture, machinery, buildings, etc.
· Intangibles: patents, market research, research and development, etc.
Goodwill also falls in the category of intangible assets.
These are assets owed to creditors. They fall in different categories, by order of maturity:
· Current liabilities: must be paid within twelve months
· Accrued expenses /notes payable: liabilities that must be paid in less than twelve months
· Long term debt: debts that can be settled over a period of more than twelve months
· Contingent liabilities: These are defined as possible or potential liabilities that a business accrues. For example, warranties are a contingent liability.
6. Asset Turnover
Sales divided by total assets
7. Variable Cost
Costs that change based on output. An example of a variable cost is materials.
This is not actual expenditure, but is an ongoing expense for any business. Depreciation is a method used to trace the decreasing value of assets as they are used.
9. Triple Net
This term relates to rental properties. In addition to paying rent, the tenant also assumes all costs relating to taxes, maintenance and running of the building, or space it occupies.
10. Financial Leverage
Total assets divided by owner’s equity
11. Owner’s Equity
This represents the owner’s investment in the business.
12. Retained Earnings
The company profits that have been reinvested in the company
13. Net Profit
The amount of income left after deducting all costs of doing business
14. Net Worth
The total value of the business after deducting all liabilities from total assets
15. Accounts receivable
This is an account that tracks all sales made by store credit.
16. Store Credit
Sales made, in which the customer is given credit directly by the store
17. Operating Efficiency
Net income divided by sales
18. Venture Capital
This money is usually provided to firms that exhibit potential for growth and is used to support unusual undertakings.
A company’s ability to meet its cash obligations and needs
20. Revenue streams
The different methods a business utilizes to make money
The above terms are applicable to all businesses, regardless of size. Nevertheless, it is important to note that different businesses have specific terms and therefore, there are many more terms you will need to learn in order to conduct business like a pro
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