Business terms

Improving your business acumen is pivotal to your success. The first step is to understand the basic business terms. Nope, you do not need any formal qualification for this one. Just save this for ease of reference.


Let’s get straight into it:



Assets are tangible and intangible items that increase a firm’s value, benefit the firm’s operation, and can be converted to cash.


Business Acumen:

The ability to understand how your business operates, make money and proactively anticipate, navigate, and leverage trends impacting your business.


Capital Growth:

The amount by which an asset has increased in value over a period of time.


Cash Flow:

Cash flow is the movement of money in and out of your business. You want there to be a higher flow of income into the business than there is an outflow of expenses from the business. This is called positive cash flow.


Customer Service:

Aligning products and services with customer satisfaction; ongoing client relationships that are maintained to continue key revenue.


Gross Profit: 

The amount of profit generated after the cost of goods sold is deducted from revenue; tells how efficiently a company is turning revenue into profit.


Growth Capital:

Increase in the value of an asset or investment over time. The difference between the current value measures capital growth, market value, an asset or investment and its purchase price, or the value of the asset or investment at the time it was acquired.



Liabilities are debts your business owes another person or entity. Like assets, you’ll have to define liabilities as current or long-term. Current or short-term liabilities might include an expense payable to a supplier. Many business loans are long-term debts.


Net Income:

The total amount of revenue remaining after the deduction of expenses from gross revenue during a defined accounting period.


Operating Expenses:

Costs of operating a business, including salaries, travel, rent, utilities, research, etc; and excluding financing costs and taxes.


Operating Income: 

Operating income is the profit from core business activities; what is left after the cost of goods sold and operating expenses are deducted from revenues before subtracting additional expenses such as interest and taxes.


Owners’ Equity:

Usually represented as a percentage, Owner’s Equity refers to the owner’s part of business assets.


Purchase Order:

An official document that allows buyers to place orders with suppliers without immediately making payment.



Revenue is the income generated from sales associated with an organization’s operation, before deducting cost or expenses.


Working Capital:

the capital of a business which is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

Leave a Reply