In the business world, we used several terms which are not normally used terms, that is why for understanding the meaning of those terms, we have to learn ‘business terms’. Here are some business-related terms which can help you to understand the professional business language.
“Important Business Terms” :
1. Revenue: The amount of money a company earns from sales of goods or services.
2. Cost of goods sold (COGS): The direct costs of producing products or services sold by a company.
3. Gross profit: The difference between revenue and COGS.
4. Operating expenses: The expenses incurred in running a business, such as rent, salaries, and marketing costs.
5. Operating income: Gross profit minus operating expenses.
6. Net income: The total profit of a company after expenses are deducted from revenue.
7. Balance sheet: A financial statement that shows a company’s assets, liabilities, and equity at a given point in time.
8. Earnings before interest, taxes, depreciation, and amortization (EBITDA): A measure of a company’s operating performance.
9. Liabilities: The debts and obligations that a company owes to others, such as loans and accounts payable.
10. Return on investment (ROI): A measure of the profitability of an investment, calculated as; (gain from investment – cost of investment) / cost of investment.
11. Equity: The difference between a company’s assets and liabilities.
12. Gross margin: Gross profit as a percentage of revenue.
13. Operating margin: Operating income as a percentage of revenue.
14. Net margin: Net income as a percentage of revenue.
15. Cash flow: The amount of cash that flows in and out of a company over a given period.
16. Free cash flow: The cash flow available to a company after all capital expenditures have been made.
17. Debt-to-equity ratio: The ratio of a company’s debt to its equity, calculated as total debt/total equity.
18. Current ratio: A measure of a company’s liquidity, calculated as current assets/current liabilities.
19. Quick ratio: A more conservative measure of a company’s liquidity, calculated as (cash +marketable securities + accounts receivable)/current liabilities.
20. Return on equity (ROE): A measure of how much profit a company generates for each dollar of shareholder equity.
21. Return on assets (ROA): Net income as a percentage of assets.
22. Earning per share (EPS): Net income divided by the number of outstanding shares of stocks.
23. Price-to-earning (P/E) ratio: The ratio of a company’s stock price to its earnings per share.
24. Dividend yield: The annual dividend payment per share divided by the stock price.
25. Market capitalization: The total value of a company’s outstanding shares of stock.
26. Beta: A measure of a stock’s volatility relative to the market as a whole.
27. Capital asset pricing model (CAPM): A model used to calculate the expected return on investment, taking into account the risk-free rate, the market risk premium, and the beta of the investment.
28. Weighted average cost of capital (WACC): The average cost of a company’s debt and equity, weighted by their relative proportions.
29. Swot analysis: A strategic planning tool that helps businesses identify their strengths, weaknesses, opportunities, and threats.
30. Porter’s five forces: A framework for analyzing the competitive environment of an industry, based on the threat of new entrants, the bargaining power of buyers and suppliers, the threat of substitutes, and the intensity of rivalry among existing competitors.
31. Marketing mix: The four Ps of marketing: product, price, place, and promotion.
32. Branding: The process of creating a unique image and identity for a product or service.
33. Market segmentation: The process of dividing a market into smaller groups of customers with similar needs and characteristics.
34. Target market: The specific group of customers that a business intends to reach with its products or services.
35. Market share: The percentage of total sales in a particular market that is held by a particular company or product.
36. Customer lifetime value (CLV): The total value of a customer to a business throughout their relationship.
37. Customer acquisition cost (CAC): The cost of acquiring a new customer.
38. Customer churn rate: The rate at which customers stop doing business with a company.
39. Return on advertising spend (ROAS): The revenue generated by advertising, divided by the cost of advertising.
40. Search engine optimization (SEO): The process of optimizing a website to improve its ranking in search engine results pages.
41. Pay-per-click (PPC) advertising: A form of online advertising in which advertisers pay each time a user clicks on one of their ads.
42. Cost per click (CPC): The amount that an advertiser pays each time a user clicks on one of their ads.
43. Cost per acquisition (CPA): The cost of acquiring a new customer through advertising or other marketing activities.
44. Conversion rate: The percentage of website visitors who take a desired action such as making a purchase or filling out a form.
45. A/B testing: A method of comparing two versions of a website or other marketing assets to see which performs better.
46. Customer relationship management (CRM): The process of managing a company’s interactions with its customers.
47. Sales funnel: The process through which a potential customer becomes a paying customer, typically involving awareness, interest, consideration, and purchase.
48. Lead generation: The process of identifying and attracting potential customers.
49. Sales pipeline: The series of steps that a potential customer goes through in the sales process, from initial contact to closing the deal.
50. Sales forecasting: The process of predicting future sales based on historical data and other factors.
51. Inventory turnover: A measure of how quickly a company sells its inventory.
52. Variable costs: Costs that vary with changes in production or sales volume, such as materials and labor.
53. Fixed costs: Costs that do not vary with changes in production or sales volume, such as rent and salaries.
54. Break-even point: The level of sales at which a company’s revenue equals its total costs, resulting in a profit of zero.
55. Contribution margin: The amount of revenue remaining after variable costs are subtracted, used to cover fixed costs, and contribute to profit.
56. Gross margin: Gross profit as a percentage of revenue.
57. Operating margin: Operating income as a percentage of revenue.
58. Net margin: Net income as a percentage of revenue.
58. Debt-to-equity ratio: A measure of a company’s leverage, calculated as total debt/total equity.
59. Current ratio: A measure of a company’s liquidity, calculated as current assets/current liabilities.
60. Quick ratio: A measure of a company’s ability to meet short-term obligations.