Shark Tank application: Financial terms

Front

Equity

Back

The value of ownership in a company, typically represented by shares.

Answer explanation

Equity refers to the value of ownership in a company, typically represented by shares. This distinguishes it from profit, revenue, or capital, which relate to financial performance rather than ownership value.

Front

Net Income

Back

The residual amount after all expenses have been subtracted.

Answer explanation

Net Income is defined as the residual amount after all expenses have been subtracted from total revenue, reflecting the company's profitability.

Front

Gross Income

Back

The total revenue generated before any deductions for expenses.

Answer explanation

Gross Income is defined as the total revenue generated before any deductions for expenses, making the second choice the correct answer. It represents the overall income before costs are subtracted.

Front

Cost per Unit

Back

The total expenses incurred to manufacture a single unit of a product.

Answer explanation

"Cost per Unit" refers to the total expenses incurred to manufacture a single unit of a product, making it essential for pricing and profitability analysis.

Front

Break-even Point

Back

The juncture at which total revenue matches production costs.

Answer explanation

The "Break-even Point" signifies the juncture at which total revenue matches production costs, meaning the company is not making a profit or a loss.

Front

Valuation in a business context

Back

The monetary value of a business determined by financial metrics.

Answer explanation

In a business context, "Valuation" refers to the monetary value of a business, which is determined by various financial metrics. This is crucial for investment decisions and understanding a company's worth.

Front

Operating Costs

Back

Recurring expenditures necessary for business operations, including rent and employee salaries.

Answer explanation

"Operating Costs" refer to recurring expenditures necessary for business operations, such as rent and employee salaries, making this choice the most accurate definition compared to others that focus on specific expenses.

Front

Return on Investment (ROI)

Back

The ratio of profit to the initial investment expressed as a percentage.

Answer explanation

Return on Investment (ROI) quantifies the ratio of profit to the initial investment expressed as a percentage, indicating how effectively an investment generates profit.

Front

Revenue

Back

The total amount of money generated from sales and services.

Answer explanation

The term "Revenue" refers to the total amount of money generated from sales and services, making it the correct choice. Other options describe different financial concepts, such as profit or investment.

Front

Profit Margins

Back

The percentage of revenue that is retained after all expenses have been accounted for.

Answer explanation

"Profit Margins" refers to the percentage of revenue that remains after all expenses have been deducted, indicating how efficiently a company converts sales into profits.