Here’s a simple glossary of finance and accounting phrases for the non-financial supervisor.
An amount incurred as an cost in a given accounting period, but no longer paid through the end of that period.
The procedure of spreading costs from one fee class to several others, typically primarily based on usage.
The costs for belongings which includes homes and computer systems, that are expensed over the years to mirror their usable existence.
Anything owned via the employer having a financial price; i.e., constant assets like buildings, flowers and equipment, and cars.
A snapshot in time of who owns what in the organization, and what belongings and debts constitute the price of the enterprise. The stability sheet equation is: capital + liabilities = belongings.
The point while a enterprise' sales equals a business' costs.
The amount of money deliberate to spend over the route of a duration, usually a year.
The difference among a finances forecast and real expenditures.
Cost-Benefit Analysis evaluates whether, over a given time body, the blessings of the brand new funding, or the new enterprise possibility, outweigh the associated charges.
Direct vs. Indirect Costs
Costs which are directly related to the manufacture of a product. Indirect prices cannot be at once tied to a selected product.
Earnings Per Share (EPS)
A generally watched indicator of a employer’s monetary overall performance – it equals internet earnings divided by using the wide variety of stocks exceptional.
Assets that are hard to convert to coins. For instance, homes, and device. Sometimes called plant property.
Gross Margin is a ratio that measures the percentage of gross profit relative to income sales.
The sum left over in spite of everything direct product fees or expenses of goods bought have been subtracted from revenues.
The fee of go back on funding bucks required for a assignment to be profitable. It is typically a better fee of return than what would were received by making an investment the capital in low or mild danger monetary devices.
Non-bodily property with out a constant value, which includes goodwill and intellectual assets rights.
Goods or substances a business is maintaining for sale.
A widespread term for what the enterprise owes. Liabilities are long-term loans of the sort used to finance the business and short-time period debts or money owing as a result of buying and selling activities thus far.
Net Present Value (NPV)
The economic price of an funding, calculated by way of subtracting the value of the investment from the present value of the funding’s destiny income. Due to the time value of cash, the investment’s future profits have to be discounted with a purpose to be expressed accurately in today’s dollars.
Expenses that occur in working a commercial enterprise, for instance, administrative worker salaries, rents, sales, and advertising fees, as well as other costs of commercial enterprise now not without delay attributed to manufacturing a product.
An cost that can't be attributed to anybody single a part of the organization's sports
The length of time had to recoup the value of a capital funding; the time that transpires before an investment pays for itself.
Indicators which include retail income-in line with-worker or gadgets-produced-in step with-employee, which offer a degree of workforce performance and effectiveness.
Return on Investment (ROI)
A monetary ratio measuring the cash return from an funding relative to its fee.
Prior funding that can't be tormented by cutting-edge decisions. These ought to no longer be factored into the calculation of the profitability of a assignment.
Time Value of Money
The precept that a greenback acquired today is worth extra than a dollar obtained at a given factor inside the future. Even with out the outcomes of inflation, the greenback obtained nowadays might be worth extra due to the fact it may be invested immediately, incomes additional revenue.
Costs which can be incurred when it comes to sales volume; examples consist of the cost of materials and sales commissions.