40 terms

Finance & cash flow glossary

Plain-English definitions of the finance, accounting and cash flow terms that run a business — with formulas and worked examples.

Glossary

13-Week Cash Flow Forecast

A 13-week cash flow forecast is a rolling projection of your cash position for the next three months, typically updated weekly.

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Glossary

Accounts Payable

Accounts payable (AP) is money your business owes to suppliers, vendors, or service providers for goods or services already received but not yet paid for.

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Glossary

Accounts Receivable

Accounts receivable (AR) is money customers owe you for goods or services you've already delivered but haven't yet been paid for.

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Glossary

Accrual Accounting

Accrual accounting records revenues and expenses when they are earned or incurred, rather than when cash is actually received or paid.

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Glossary

Balance Sheet

A balance sheet is a financial snapshot of what your business owns (assets), what it owes (liabilities), and what the owner has invested (equity) on a specific date.

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Glossary

Bank Reconciliation

Bank reconciliation is the process of comparing your accounting records (general ledger) with your bank statement to identify and explain differences.

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Glossary

Break-Even Point

The break-even point is the sales volume or revenue level at which a business neither makes a profit nor incurs a loss—total revenue equals total costs.

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Glossary

Budget

A budget is a detailed forecast of expected revenue and expenses over a specific period (usually a month, quarter, or year).

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Glossary

Budgeting

Budgeting is the process of forecasting future revenues and expenses, then allocating resources to meet business goals.

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Glossary

Burn Rate

Burn rate is the speed at which a company spends its cash reserves, typically measured as monthly spending.

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Glossary

Cash Flow Forecasting

Cash flow forecasting is the process of projecting your future cash inflows and outflows based on historical data, business assumptions, and known commitments.

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Glossary

Cash Flow Statement

A cash flow statement is a financial report showing exactly how much cash moved in and out of your business over a specific period.

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Glossary

Cash Flow

Cash flow is the movement of money in and out of your business—cash inflows from sales, loans, or investments, and cash outflows for expenses, debt payments, and investments.

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Glossary

Cash Inflow

Cash inflow is money coming into your business.

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Glossary

Cash Outflow

Cash outflow is money leaving your business—payments for expenses, salaries, debt repayment, inventory, equipment, taxes, and anything else that requires you to hand over cash.

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Glossary

CFO (Chief Financial Officer)

A Chief Financial Officer (CFO) is the executive responsible for managing a company's financial planning, accounting, treasury, and reporting.

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Glossary

Cost of Goods Sold (COGS)

Cost of Goods Sold (COGS) is the total direct cost of materials, labor, and manufacturing overhead required to produce the goods sold by a company during a period.

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Glossary

Current Ratio

The current ratio is a liquidity metric that measures your ability to pay short-term obligations with current assets.

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Glossary

Days Sales Outstanding (DSO)

Days Sales Outstanding (DSO) is the average number of days it takes your business to collect payment after making a sale.

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Glossary

EBIT

EBIT (Earnings Before Interest and Taxes) is the profit a company generates from its core operations, excluding the effects of financing (interest expense) and taxation.

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Glossary

EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.

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Glossary

Fixed Costs

Fixed costs are expenses that remain constant regardless of how much your business produces or sells.

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Glossary

FP&A (Financial Planning & Analysis)

FP&A (Financial Planning & Analysis) is the function within a business responsible for forecasting revenues, costs, and cash needs, and then analyzing actual performance against those forecasts to support decision-making.

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Glossary

Free Cash Flow

Free cash flow (FCF) is the cash a company generates from its operations, less the money spent on capital investments like equipment, facilities, or software.

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Glossary

Gross Margin

Gross margin is the percentage of revenue left after subtracting the cost of goods sold (COGS).

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Glossary

Gross Profit

Gross profit is the revenue earned from sales minus the direct costs of producing those goods or services.

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Glossary

Income Statement

An income statement (also called a profit and loss or P&L statement) is a financial document that shows all revenues, costs, and expenses over a specific period (usually a quarter or year), culminating in net income—the bottom-line profit or loss.

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Glossary

Liquidity

Liquidity is your ability to convert assets into cash quickly to pay bills and meet short-term obligations.

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Glossary

MRR (Monthly Recurring Revenue)

Monthly Recurring Revenue (MRR) is the predictable revenue a subscription or membership-based business expects to receive each month from active customers.

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Glossary

Net Cash Flow

Net cash flow is the total cash coming into your business minus the total cash going out in a given period—typically a week, month, or quarter.

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Glossary

Net Profit Margin

Net profit margin is the percentage of revenue that remains as profit after all expenses are paid.

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Glossary

Net Working Capital

Net Working Capital (NWC) is the difference between your current assets and current liabilities.

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Glossary

Operating Cash Flow

Operating cash flow (OCF) is the actual cash generated—or consumed—by your core business operations, excluding investment and financing activities.

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Glossary

Quick Ratio

The quick ratio (also called the acid-test ratio) is a more conservative liquidity metric than the current ratio.

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Glossary

ROI (Return on Investment)

ROI measures how much profit you generate from an investment relative to its cost.

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Glossary

SME (Small and Medium Enterprise)

An SME (Small and Medium Enterprise) is a business classified by size, typically measured by employee count or annual revenue.

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Glossary

Variable Costs

Variable costs are expenses that fluctuate in proportion to your production volume or sales.

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Glossary

Variance Analysis

Variance analysis is the process of comparing actual financial results—revenue, expenses, cash flow—against your planned budget and investigating why differences exist.

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Glossary

Working Capital

Working capital is the difference between your current assets (cash, receivables, inventory) and current liabilities (payables, short-term debt) due within one year.

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Glossary

Zero-Based Budgeting

Zero-based budgeting (ZBB) is a budgeting method in which every expense must be justified from scratch for each budget cycle, starting from zero.

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