Some Financial Terms You Need to Know
When ordering, the capital to start or expand your business, it is important to understand the key promoters and financiers of what these terms really mean. We have a financial overview of what you have in your efforts:
Financial Statements: as a reference to the profit and loss account (with the income and expenditure and the profit or loss) and balance sheet (assets, liabilities and shareholders’ equity of the owner). Financial resources, such as cash flow, breakeven analysis, origin and use of working capital and Financial Analysis figures are also often.
Debt or equity: Describe the type of capital you are looking for. The debt ratio is normally in the form of a loan, note, mortgage or other legal instruments. Equity is a position of participation in the industry.
Return on investment (ROI): The main objective of their money to invest or for other people to make money is a return on invested capital. This figure shows the rate of interest or income of a lender or investors investment. There are almost any source of funds, you need to know what kind of performance you are looking for.
Cash flow is the lifeblood of a business. Cash flow is the production of funds available for payment of costs and benefits to investors and lenders. Cash flows reflects the time and level of incoming and outgoing funds.
Working Capital: Generally, this number is the sum of assets to be converted into cash in the year, net of debt payable within one year.
Warranty: This property is considered a secondary source of repayment of a loan or other obligation.
Break-Even Analysis: a method for evaluating the performance of the business risk of a possible infringement. Costs must be variable costs (ie labor, materials, fees) and expenses (eg, utilities, salaries, insurance, etc.). These costs and the estimation of the results per unit, the quantity of products / services must be sold to cover costs. In this volume, the company is a profit or a loss. The threshold analysis is an important tool for the impact of changes in commodity prices, increasing costs or reducing demand on the profitability of the company.
Margin: The difference between revenues and expenses, often expressed in percentage or dollar amount. Gross margin is the difference between total turnover and cost of goods sold. The net margin is the difference between total revenue and expenditure relating to the production of goods, including management, taxes and other overheads.
Leverage: The ability to lend a greater amount of money invested in property or assets.
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