Business Operations and Management Glossary

Money a business owes to its suppliers for goods or services received but not yet paid for.

Money owed to a business by its customers for goods or services delivered but not yet paid for.

An accounting method that records revenue when earned and expenses when incurred, regardless of cash timing.

A financial statement showing assets, liabilities, and equity at a specific point in time.

The production or sales level at which total revenue equals total costs, resulting in zero profit or loss.

The net amount of cash moving into and out of a business during a specific period.

The selling price per unit minus the variable cost per unit, representing what each unit contributes to covering fixed costs.

The direct costs attributable to producing the goods sold by a company, including materials and direct labor.

A liquidity ratio calculated as current assets divided by current liabilities.

A leverage ratio calculated as total debt divided by total equity, measuring financial risk.

The systematic allocation of a tangible long-term asset cost over its estimated useful life.

The residual interest in the assets of a business after deducting all liabilities; represents owner value.

Business costs that remain constant regardless of production volume, such as rent and salaries.

Revenue minus cost of goods sold, representing profit before operating expenses and taxes.

A financial statement reporting revenues, expenses, and net income over a specific period.

A ratio measuring how quickly inventory is sold and replaced, calculated as COGS divided by average inventory.

An inventory management strategy that aligns raw material orders with production schedules to minimize holding costs.

A financial obligation or debt that a business owes to outside parties.

Total revenue minus all expenses, taxes, and costs; the bottom line of the income statement.

Net income divided by revenue, expressed as a percentage, showing profitability per dollar of sales.

Costs incurred in the normal course of business operations, excluding COGS, such as rent, utilities, and salaries.

The process of inspecting products or services to ensure they meet defined quality standards.

The network of organizations, resources, and activities involved in producing and delivering a product to the end customer.

A strategic planning tool that evaluates Strengths, Weaknesses, Opportunities, and Threats.

Business costs that change proportionally with production or sales volume, such as raw materials and shipping.