business terms is the key to learning about business. Terms
C-D are listed below:
Consumer Price Index (CPI),
Cash Basis Accounting,
Capital is money used by a business to finance production or
provide a service.
An economic system defined by private or corporate ownership
of capital goods, by investment that are determined by
private decision, and by prices, production and the
distribution of goods that are determined mainly by
competition in the free market. Source:
Cash Flow is the movement of money in and out of a business.
Cash inflows result of financing, investment and operations.
Outflows result from expenses or investment.
Operating Cash Flow is cash generated by day to day
operations of the business. It includes
accounts receivable, inventory and
Positive cash flow is when the
company is generating more money that it is using.
Positive cash flow can enable a company to buy back stock,
offer a dividend, reduce debt, or grow by acquiring other
The Cash Flow statement is a report that
show how much money was generated and used by the company
for a specific period of time (as stipulated by the
Cash Basis Accounting
In Cash Basis Accounting expenses is incurred when it is
paid and income is earned when the money is received.
This is unlike
Accrual accounting where income and
expenses are incurred when they occur, not when the money is
received or the expense is paid.
A commission is a fee paid to am employee on a percentage
basis. It is used to motivate employees to perform at
a higher level. For exmaple, it is used to get
employees to generate more sales. The employee
receives a percentage of the money generated in sales as a
reward for his/her efforts. A commission is normally
offered in addition to a base salary as added compensation.
Consighment is where the retailer agree to let you place
your products in their store and maintain a certain level of
stockage in return for sharing a percentage of the retail
price with the retailer whenever an item is sold. The
retailer will process the payment from customers and give
you your portion of the proceeds. This minimizes the
risk and upfront cost to the retailer and it helps you to
get your items in the store. Once the item sells well
you can change the arrangement with the retailer and have
the retailer pay for the items upfront and sell it to
customers at a profit.
A core competency is a specific factor that a business sees as central to
the way it operates. This is a term coined by C. K. Prahalad
and Gary Hamel.
It gives the business a competitive advantage in creating
and delivering value to its customers.
This should not be confused with the term
The core business expresses the company's main or
Core competency can be a specific set of skills,
technique or activity that the company performs that enables
them to meet their business objectives and brings additional
value to the cutomer. Core
competencies are difficult for others to imitate, and brings
value to the customer. Some
examples include, distribution, low cost operations,
culture, operations, great guest service, etc.
Cost Per Click (CPC)
CPC refers to the what an advertiser pays for every time
someone clicks on one of their ads. Advertisers such
as other businesses place advertisement on popular websites
and pays the website owners a fee for hosting those ads on
their sites. The fee is paid every time a visitor to
the website clicks on one of the ads. The CPC cost is
determined between the advertiser the hosting website owners
or a advertising network if one is used.
Learn more about CPC.
CPM stands for cost per 1,000 impressions. This means
that advertisers will pay you based on how many people see
their ads on your website. This is unlike CPC which is
based on how many people clicks on the advertiser's ads.
Current Assets are assets on the balance sheet that can be
converted to cash or be used to pay current liabilities
within 12 months. Current liabilities include, cash,
securities, accounts receivables, inventory and prepaid
Current Liabilities are debts and expenses that are to be
paid in cash within the fiscal year or the operating cycle
of the company (whichever one is longer). This
includes payment to vendors, short term loan payments,
wages, taxes, acounts payable, etc.
Payments due beyond one year are considered fixed
liabilities or long term liabilities. however, the
monthly payments are considered current liabilities.
Acquisition Cost (CAC)
Customer Acquisition Cost is the cost of persuading a
customer to buy your product/service. You calculate
your CAC by dividing your marketing cost by the number of
customers you acquire. For example, if it cost you
$2,000 to travel and display your business at an expo and
you acquired 5 customers then your CAC will be $400.
($2,000 / 5 = $400). It is important to know what your
CAC is so that you can efficiently utilize your marketing
Debt is the obligation your business incurr
when you borrow money to support the business. Debt
usualy have to be repaid with interest. However, the
terms of the repayment is between the borrower and the
A deficit is incurred when liabilities or expenditure
exceeds income or assets. In other words, this is when
you more expenses than you have money to pay for.
Deflation is the negative growth of inflation. When
inflation falls below zero deflation begins. While it
may increase the value of the currency it is bad for
business because it leads to lower price and less spending
on the part of consumers who are waiting for prices to go
Demand refers to how much of a product or service is desired
by consumers based on a certain price at a given point in
Devaluation is the reduction of a country's currency in
relation to foreign currency value. This is when a
country decides to set a new fix lower rate for its
When a government devalues its currency, it
is often because the interaction of market forces and policy
decisions has made the currency's fixed exchange rate
untenable. In order to sustain a fixed exchange rate, a
country must have sufficient foreign exchange reserves,
often dollars, and be willing to spend them, to purchase all
offers of its currency at the established exchange rate.
When a country is unable or unwilling to do so, then it must
devalue its currency to a level that it is able and willing
to support with its foreign exchange reserves.
devaluation makes the country's exports relatively less
expensive for foreigners. Second, the devaluation makes
foreign products relatively more expensive for domestic
consumers, thus discouraging imports. This may help to
increase the country's exports and decrease imports, and may
therefore help to reduce the current account deficit
Federal Bank of New York
Discount is selling a product or service at a lower price
than the list price. Discount lowers the price
is lowered in advance of payment.
Discounts are used to move
out-of-stock items, generate short-term sales, reward
customers or incentivize distribution channels to sell your
Distribution Channel is how you get your product before
potential consumers using direct or indirect means.
For example, to get someone to buy the book that your
company produced you have to offer it at a retail location.
To get it to that retail location you may have to go thru a
distributor. Everyone between you and your potential
customer represents your distribution channel.
Distribution channel can consist of wholesalers, agents,
brokers, distributors, value added resellers, manufacturer's
representative, retail sales agent, retailers, etc.
Downsizing is reducing your workforce by layoffs or
Drop Shipping is the technique whereby a retailer offering
something for sale does not actually have the item in stock.
Instead the retailer takes and processes the order for the
item from the customer and transfers the order and shipment
details to the manufacturer or wholesaler who then ships it
directly to the customer. Retailers such as Sears,
amazon.com and many others offers this type of service where
they allow sellers to sell their products on their websites
without having the items physically in their posession.
The seller is responsible for shipping the item. In
return the retailers gets a fee for taking the order and
processing the payment.