ABF 2.2 Key Terms

Front

What is the 'Principal' in financial terms?

Back

The original amount of money lent.

Front

What does the term 'Breakeven (B/E)' mean?

Back

Having income equal to expenditure.

Front

What is 'Salvage value'?

Back

The market value of a depreciable asset when sold.

Front

What does 'Return on assets (ROA)' measure?

Back

The ratio of net income to total assets.

Front

What is 'Depreciation'?

Back

Decrease in the value of assets due to wear and tear.

Front

What is 'Interest'?

Back

The cost of borrowing money, usually expressed as a percentage of the principal.

Front

What is 'Net Income'?

Back

The total revenue minus total expenses, taxes, and costs.

Front

What does 'Asset' mean?

Back

A resource owned by a business that has economic value.

Front

What is 'Liability'?

Back

A financial obligation or debt owed by a business.

Front

What is 'Equity'?

Back

The value of the owner's interest in a business, calculated as assets minus liabilities.