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Our tools will help you create a personalized business plan and financial statements. And all of it is free for everyone!

Business Plan

Use our easy, step-by-step form to generate your business plan. You can even use our sample business plan as a helpful guide.

Financial Reports

Answer the questions in our three step interview process and you will immediately be presented a Profit & Loss statement, and Cash Flow statement, and a Balance Sheet - all customized to your business.                               

Glossary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

 

A

Accounts Payable
Money a business owes to others. Accounts payable are current liabilities incurred in the normal course of business as a firm purchases goods or services with the understanding that payment is due at a later date. If a firm pays cash for all of its purchases, no accounts payable will appear on that firm's balance sheet.

cost of goods sold year 1 / 360 * days payable

Accounts Receivable
Money owed to a business by customers who have bought goods or services on credit. Accounts receivables are current assets that continually turn into cash as customers pay their bills. Also called receivables.

Gross Income Year 1 / 360 * Days Receivable

Amortization
n 1: The reduction of the value of an asset by prorating its cost over a period of years [syn: amortisation]
2: payment of an obligation in a series of installments or transfers [syn: amortisation]

Asset
Something of monetary value that is owned by a firm or an individual. Assets are listed on a firm's balance sheet and include tangible items such as inventories, equipment, and real estate as well as intangible items such as property rights or goodwill.

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B

Balance Sheet
The sum of the after-tax profit of a business plus depreciation and other non-cash charges: used as an indication of internal funds available for stock dividends, purchase of buildings and equipment, etc.

Breakeven Point
The breakeven point in any business is that point at which the volume of sales or revenues exactly equals total expenses - the point at which there is neither a profit nor loss - under varying levels of activity. The breakeven point tells the manager what level of output or activity is required before the firm can make a profit; reflects the relationship between costs, volume, and profits.

Business Plan
A comprehensive planning document which clearly describes the business developmental objective of an existing or proposed business applying for assistance in SBA's 8(a) or lending programs. The plan outlines what and how and from where the resources needed to accomplish the objective will be obtained and utilized.

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C

Capital
1. Assets less liabilities, representing the ownership interest in a business;

2. A stock of accumulated goods, especially at a specified time and in contrast to income received during a specified time period;

3. Accumulated goods devoted to the production of goods; (4) accumulated possessions calculated to bring income.

Cash Flow
1. The sum of the after-tax profit of a business plus depreciation and other noncash charges: used as an indication of internal funds available for stock dividends, purchase of buildings and equipment, etc.

2. An accounting presentation showing how much of the cash generated by the business remains after both expenses (including interest) and principal repayment on financing are paid. A projected cash flow statement indicates whether the business will have cash to pay its expenses, loans, and make a profit. Cash flows can be calculated for any given period of time, normally done on a monthly basis.

Commissions
A fee or percentage allowed to a sales representative or an agent for services rendered.

Costs
Money obligated for goods and services received during a given period of time, regardless of when ordered or whether paid for.

Credit Rating
A grade assigned to a business concern to denote the net worth and credit standing to which the concern is entitled in the opinion of the rating agency as a result of its investigation.

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D

Depreciation
1. Decrease in value due to wear and tear, decay, decline in price, etc.

2. Such a decrease as allowed in computing the value of property for tax purposes.

3. A decrease in the purchasing or exchange value of money.

4. A lowering in estimation.

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E

Earning Power
The demonstrated ability of a business to earn a profit, over time, while following good accounting practices. When a business shows a reasonable profit on invested capital after fully maintaining the business property, appropriately compensating its owner and employees, servicing its obligations, and fully recognizing its costs, the business may be said to have demonstrated earning power. Demonstrated earning power is the foremost test of the business risk in pressing upon an application for a loan.

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F

Financial Reports
Reports commonly required from applicants request for financial assistance, e.g.:
  1. Balance Sheet - A report of the status of a firm's assets, liabilities and owner's equity at a given time.
  2. Income Statement - A report of revenue and expense which shows the results of business operations or net income for a specified period of time.

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G

Gross Domestic Product (GDP)
The most comprehensive single measure of aggregate economic output. Represents the market value of the total output of the goods and services produced by a nation's economy.

Gross National Product (GNP)
A measure of a nation's aggregate economic output. Since 1991 GDP, a slightly different calculation, has replaced GNP as a measure of U.S. economic output.

Gross Income - Accounting. total revenue received before any deductions or allowances, as for rent, cost of goods sold, taxes, etc.

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I

Income Statement
A financial report that - by summarizing revenues and expenses, and showing the net profit or loss in a specified accounting period - depicts a business entity's financial performance due to operations as well as other activities rendering gains or losses. Also known as the "profit and loss statement" or "statement of revenue and expense".

Interest Income
A sum paid or charged for the use of money or for borrowing money. A charge for a loan, usually a percentage of the amount loaned or monies paid on a Savings/Checking account.

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L

Liability
Moneys owed; debts or pecuniary obligations (opposed to assets).

Lending Institution
Any institution, including a commercial bank, savings and loan association, commercial finance company, or other lender qualified to participate with SBA in the making of loans.

Loan Agreement
Agreement to be executed by borrower, containing pertinent terms, conditions, covenants, and restrictions.

Loan Payoff Amount
The total amount of money needed to meet a borrower's obligation on a loan. It is arrived at by accruing gross interest for one day and multiplying this figure by the number of days that exist between the date of the last repayment and the date on which the loan is to be completely paid off. This amount, known as accrued interest, is combined with the latest principal and escrow balances that are applicable to what is now referred to as the loan payoff amount. In the case where prepaid interest exceeds the accrued interest, the latter is subtracted from the former and the difference is used to reduce the total amount owed.

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M

Mortgage
An instrument giving legal title to secure the repayment of a loan made by the mortgagee (lender). In legal contemplation there are two types: (1) title theory - operates as a transfer of the legal title of the property to the mortgagee, and (2) lien theory - creates a lien upon the property in favor of the mortgagee.

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N

Net Income
Income after all expenses and taxes have been deducted. Net income, the most frequently viewed figure in a firm's financial statements, is used in calculating various profitability and stock performance measures including price-earnings ratio, return on equity, earnings per share, and many others.

Net Worth
Property owned (assets), minus debts and obligations owed (liabilities) and is the owner's equity (net worth).

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O

Operating Expenses
The essential things that a company must purchase in order to maintain business. Operating expenses include expense accounts that are necessary to earn operating revenues.
  • Cost of sales (or cost of goods sold)
  • Selling, General and Administrative Expenses (SG&A Expenses)
  • Selling, General and Administrative Expenses include the following accounts
  • Salaries expense
  • Sales salaries expense (Salaries expense for sales personnel)
  • Insurance expense
  • Property tax expense
  • Rent expense
  • Utilities expense

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P

Principal (balance)
The amount borrowed or the amount still owed on a loan, separate from interest.

Profit and Loss
The gain and loss arising from commercial or other transactions, applied esp. to an account or statement of account in bookkeeping showing gains and losses in business.

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R

Return On Investment
The amount of profit (return) based on the amount of resources (funds) used to produce it. Also the ability of a given investment to earn a return for its use.

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S

Salvage Value
The estimated value that will be realized upon the sale or other disposition of an asset at the end of its useful life.

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