Glossary of Business Terms
Business mortgage — for businesses that own and occupy their premises; mortgage financing can be used to purchase or refinance property.
Cash equity contribution — money invested in your business that represents an ownership interest.
Cash receipts — cash you receive from selling your goods or services.
Collateral or security — assets pledged to support a loan or line of credit.
Cost of goods/services sold — direct costs incurred in making your product or service.
Current assets — cash, receivables, inventory and other assets due within one year.
Current liabilities — payables, bank loans and other debts payable within one year.
Depreciation — the amount by which the cost of an asset is written off, over its estimated useful life.
Disbursements — money paid out to run your business – the opposite of revenue.
General and administrative expenses — the common expenses of doing business, for example, rent, hydro, advertising, insurance, etc.
Goodwill — an intangible asset reflecting the excess paid for a company over its net asset value.
Gross profit margin — the difference between revenue and the cost of goods or services sold.
Interest expenses — the cost of servicing your company’s debt.
Line of Credit — a type of bank credit generally used for day-to-day operating expenses.
Market — everyone who will potentially buy from you.
Operating profit — profit before owners’ drawings, dividends and business income taxes.
Payables (or accounts payable) — money your business owes to suppliers, etc.
Receivables (or accounts receivable) — money owed to your business by customers.
Retained earnings — accumulated profits retained in your business and not paid out as dividends.
Revenue or sales — money you receive for the product or service you sell.
Shareholders’ equity — the net assets belonging to the owners of a business (the difference between your company’s total assets and total liabilities).
Term loan — a type of bank loan for a specified amount and period of time, often used to finance equipment or other fixed-asset purchases.