9.5: Key Terms
- Page ID
- 50809
\( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)
\( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)
\( \newcommand{\id}{\mathrm{id}}\) \( \newcommand{\Span}{\mathrm{span}}\)
( \newcommand{\kernel}{\mathrm{null}\,}\) \( \newcommand{\range}{\mathrm{range}\,}\)
\( \newcommand{\RealPart}{\mathrm{Re}}\) \( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)
\( \newcommand{\Argument}{\mathrm{Arg}}\) \( \newcommand{\norm}[1]{\| #1 \|}\)
\( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\)
\( \newcommand{\Span}{\mathrm{span}}\)
\( \newcommand{\id}{\mathrm{id}}\)
\( \newcommand{\Span}{\mathrm{span}}\)
\( \newcommand{\kernel}{\mathrm{null}\,}\)
\( \newcommand{\range}{\mathrm{range}\,}\)
\( \newcommand{\RealPart}{\mathrm{Re}}\)
\( \newcommand{\ImaginaryPart}{\mathrm{Im}}\)
\( \newcommand{\Argument}{\mathrm{Arg}}\)
\( \newcommand{\norm}[1]{\| #1 \|}\)
\( \newcommand{\inner}[2]{\langle #1, #2 \rangle}\)
\( \newcommand{\Span}{\mathrm{span}}\) \( \newcommand{\AA}{\unicode[.8,0]{x212B}}\)
\( \newcommand{\vectorA}[1]{\vec{#1}} % arrow\)
\( \newcommand{\vectorAt}[1]{\vec{\text{#1}}} % arrow\)
\( \newcommand{\vectorB}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)
\( \newcommand{\vectorC}[1]{\textbf{#1}} \)
\( \newcommand{\vectorD}[1]{\overrightarrow{#1}} \)
\( \newcommand{\vectorDt}[1]{\overrightarrow{\text{#1}}} \)
\( \newcommand{\vectE}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash{\mathbf {#1}}}} \)
\( \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } \)
\( \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} \)
\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)- accounting
- system of recording and classifying a company’s financial transactions and summarizing and communicating those transactions in the form of financial statements
- accounting equation
- assets = liabilities + equity
- accounts payable
- account that includes vendors that the company owes money to
- accounts receivable
- account that includes customers that owe the business money
- angel investor
- wealthy, private individual seeking investment options with a greater potential return than is generally available with traditional publicly traded stocks
- assets
- items a business owns and derives future use from
- balance sheet
- financial statement that summarizes a company’s financial condition according to the accounting equation
- bartering
- exchanging goods or services for other goods or services instead of for cash
- bootstrapping
- funding strategy that seeks to optimize use of personal funds and other creative strategies (such as bartering) to minimize cash outflows
- breakeven point
- level of operations that results in exactly enough revenue to cover costs
- burn rate
- rate at which cash outflow exceeds cash inflow
- charitable organization
- nonprofit company founded for altruistic purposes
- collateral
- something of value pledged to secure a loan
- contribution margin
- gross profit from a single item sold
- cost of goods sold
- cost required to produce the product or service
- credit
- lending of funds in exchange for a promise to repay
- crowdfunding
- financing with investments of small amounts of money from a large number of people
- debt financing
- borrowing funds that must be repaid, usually with interest
- donation
- financial gift intended to support an organization’s general operations
- early stage
- company lifecycle stage in which the product or service has begun development
- equity
- owner’s interest in the assets of the business
- equity financing
- funds provided in exchange for a share of ownership in a business
- expenses
- costs incurred in the normal course of business operations
- financial statement
- output of an accounting system that is used to make financial decisions
- financial viability
- long-term financial sustainability of an organization to fulfill its mission
- financing
- raising money to fund the startup and operation of a business
- financing activities
- section of the statement of cash flows that shows where new infusions of cash are coming from
- fixed assets
- major purchases with a long life, such as buildings, land, and so on
- fixed costs
- costs that do not change, regardless of the amount of sales
- funds
- financial resources for acquiring assets
- grant
- financial gift intended to fund a specific goal or project
- gross profit
- selling price of a product or service minus its direct costs
- income (profit-and-loss) statement
- financial statement that describes how much a company earned while the business was operating and what costs were incurred to generate those revenues
- initial public offering (IPO)
- process by which a company lists its ownership shares on a public stock exchange
- investing activities
- section of the statement of cash flows that shows major purchases of equipment or facilities
- liability
- company’s debt to another party
- mature stage
- company lifecycle stage in which the business has reached commercial viability
- moonlighting
- earning income from a source outside of one’s primary employ
- net income
- revenue minus expenses
- operating activities
- section of the statement of cash flows that shows day-to-day activities of the business, such as purchasing supplies, paying rent, and receiving cash from customers
- profit margin
- amount by which revenue exceeds costs, typically described as a percent
- program services
- basic offerings that a nonprofit provides to generate a portion of its revenue to sustain operations
- projection
- forecast of the future operations of a business
- revenue
- amount a business earns through product sales or providing a service
- run rate
- cost of running a business over a specified period of time
- seed stage
- company lifecycle stage in which the business is largely still an idea
- statement of cash flows
- financial statement that explains the sources and uses of the company’s cash
- sustainable strategy
- strategy that can maintain an organization’s financial stability
- tax-exempt status
- treatment under U.S. tax law that removes the burden of taxes from nonprofit organizations
- valuation
- estimate of a company’s worth
- variable costs
- costs that fluctuate with the level of revenue
- venture capitalist
- individual or investment firm that specializes in funding startup companies
- working capital
- funds available for day-to-day operations