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Glossary of Business Management Terms

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A Comprehensive Dictionary of Business Management Terms.

If you’re a brand new business owner, you may well be hearing some terms you’re not familiar with. These 30 business phrases might help you understand a few of the jargon.

Accounts Payable

That accounting term identifies the credit debt your company has incurred. Many businesses use credit for supplies, raw materials, or inventory purchases. The organizations your debt payment to are thought an account. These accounts can wear a report for viewing. An instant glance at this report reveals the identities of your creditors, the amount of money owed to each creditor, and how long that money has been owed.

Assets

Every business has assets, in its simplest terms, items with value. All businesses need assets to create products or sell services. A resource is anything a company owns.

According to generally accepted accounting principles, the amount of the owner’s (shareholders’) equity and a business’s liabilities equals the company’s total assets.

B2B

A B2B (business to business) company provides products or services to other businesses. The company can be a buyer, for example, whenever a company purchases material because of its products, or it can be a supplier providing products to other companies.

B2C

B2C is an acronym for business-to-consumer. A B2C business sells products or services right to the consumer.

Balance Sheet

A balance sheet is a statement of a company’s financial position that describes the assets, liabilities, and owner’s equity at a certain point in time. Quite simply, the total amount sheet illustrates the business’s net worth.

Benchmarking

Benchmarking, or goal setting, allows a business to gauge the opportunities it could have for improving several areas in its functions. A baseline is made, and metrics are developed to compare the functions’ future performance.

Bottom Line

Generally, the word main point here identifies the last line in an economic statement of a company, where a profit or loss is shown. It’s been adopted as a term to displace “What this implies is…” in presentations and papers.

Cash Flow

Cash flow is the cash that is moving (or flowing) in and out of a company in just about any given month. Cash might arrive from customers or clients buying products or services. Cash might be venturing out in the form of payments for expenses like rent or a mortgage.

CEO

The Chief Executive Officer (CEO) is the top executive within an organization. That top executive might have many titles. The most effective executive may also be a managing partner or president. Most organizations are replacing the title of these top executives with CEO.

Continuous Improvement Plan

A continuous improvement plan is a couple of activities designed to create gradual, ongoing improvement to products, services, or processes through constant review, measurement, and action.

Employee Turnover

When employees leave a business and need to be replaced, it’s called employee turnover, a certain amount of turnover is unavoidable, but an excessive amount can ruin a company. Both general types of turnover are voluntary (such as resigning) and involuntary (such as layoffs).

Equity

Equity is the worth of the capital contributed by owners or stockholders. That is also referred to as shareholders’ equity.

Financial Accounting Standards Board

The Financial Accounting Standards Board (FASB) is the principal body in the United States that sets accounting standards. The board updates and publishes generally accepted accounting principles to standardize accounting procedures.

Fiscal Year

The fiscal year for some business types mirrors the calendar year. Sole proprietorships, partnerships, and S corporations follow the calendar year for tax purposes, while corporations can design their particular fiscal year.

Fixed Assets

Fixed assets are anything a company owns, such as an example, buildings, or equipment.

GAAP

Generally accepted accounting principles (GAAP) are a couple of rules and practices having substantial authoritative support. GAAP is the standard companies use to compile their financial statements, such as the income statement, balance sheet, and statement of cash flows.

Golden Parachute

A golden parachute is a title fond of the clause in a high executive’s employment agreement or contract that defines the payout the individual will receive should they be terminated by the business before the end of this contract.

Insider

An insider in a business is somebody who uses important information regarding a company. This information could influence investor decisions impacting the firm’s stock price or valuation.

Liabilities

Liabilities are amounts owed by a company at anybody time. They could be expressed as payables for accounting purposes. Included in liabilities are loans, credit payments due, taxes, or any other kind of debt that you are obligated to pay.

Line Manager

A range manager is an individual who directly manages other employees and operations of a company while reporting to a higher-ranking manager. The line manager term is frequently used interchangeably with direct manager.

Matrix Management

Matrix management is commonly used in organizations if they must share resources across functions (i.e., different departments). In a matrix management system, an individual has a primary report-to boss and works for one or more managers, most typically on projects.

Non-Disclosure Agreement

For many companies, one of their most valuable assets is their intellectual property which they must keep secret. A non-disclosure agreement (NDA) is a legal document between an employee and employer in that the employer agrees to disclose certain information to the employee for a certain purpose. The employee then becomes legally bound never to disclose that information to anyone else.

Profit and Loss Statement

A profit and loss statement (called an income statement under GAAP) is a company report that shows net income since the difference between revenue and expenses.

Revenue

A business’s revenue is the cash generated by all its operations before deductions are taken for expenses. Revenue can come from selling the company’s products or services, selling surplus equipment or property, or selling shares of stock in the company. It can come from several other sources, such as interest, royalties, and fees.

Return On Investments

Return on investment (ROI) ratios are several business ratios that indicate the performance of capital contributed to the organization by investors. There are many ratios for returns on investment. Generally, ROI identifies one formula used to assess the return of investment:

  • Net Profit รท Cost of Investment = ROI

Senior Manager

Senior managers (typically used in large organizations with multiple layers of management) have responsibilities and authority broader in scope when compared to a front-line manager. Senior managers are generally positioned to move into a director or general manager position.

Shewhart Cycle

The Shewhart Cycle is frequently a group with no beginning or end, meaning that the continuous improvement processes of business never stop. The cycle has four stages: planning (when you identify an opportunity and create a plan), doing (to test the program on a tiny scale), checking (to evaluate the advantage of the plan), and acting (implementing the program on a larger scale and then monitoring results).

Subject Matter Expert

A subject matter expert (SME) is an individual with heavy knowledge of a certain process, function, technology, machine, material, or type of equipment. Individuals designated as subject matter experts are normally sought out by others interested in learning more about or leveraging their expertise to solve specific problems or help with particular technical challenges.

Variable Expenses

Variable expenses are those business expenses that vary concerning the level of business, sales, or the number of transactions. Examples of variable expenses include postage and shipping for customer purchases, purchase of raw materials, inventory of products to be sold, hourly wages of employees, and sales commission.

Vision

Vision may be the dream of what the owners want the business to be. It will not be confused with strategy, which is the organization’s large-scale plan to help make the dream happen.

Brian Santiago

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