Cash, publicly traded stocks, government bonds or corporate bonds that can be quickly turned into cash. Cash Instruments can be turned into cash at values that are predictable and available to all holders of the cash instrument. Example: "Apple stock is a cash instrument because it can be sold and converted into cash immediately, and the amount anyone would get for that Apple stock is the same - the price of the stock at that moment in the stock market."

Equipment, inventory or other goods that are pledged to the bank in the case the company can’t make a loan payment.

Money earned when something is sold. Example: the real estate agent who sells you a house is paid a 2% commission on the value of the house sold.

A person or a business with a strong credit score and the financial resources that make it likely they will be able to repay any loan.

Money paid by a company to a person who owns stock in that company. Dividends are optional – many companies do not pay dividends. Dividends are typically paid every three months (which is called a “quarter,” since three months is a quarter of a year) or annually.

An obligation you have to pay someone else money. Also called a debt or a loan

The right to take possession of collateral until a debt is repaid. Example: "The bank has a lien on my company's inventory. If we can't repay the bank loan, the bank has the right to take possession of our inventory and sell it to pay themselves the money we owe them."

Cash or securities that can be immediately turned into cash, which can then repay any loan amount outstanding. A company or individual “has liquidity” if they have lots of liquid assets.

The date a loan (or debt or liability) is repaid in full. Example: the maturity of your car loan is five years from the day you buy the car – five years from now that debt needs to be completely repaid.

The money a person borrows to buy real estate. Example: when you buy a house you go to the bank to get a mortgage.

“Net” means revenues after costs. Example: you get $1,000 a month for renting a house you own to a friend. The costs of maintaining the house every month equal $800. That means your “net income” from renting that house to your friend is: $1,000 - $800 = $200 per month (before taxes).

Other types of debt (or money you owe someone else) other than a mortgage: Example: if you borrowed money to buy a boat, then the money you borrowed is a note payable to the person or company that sold you the boat.

An investment worth money; a “financial instrument” indicating ownership. Example: stock in companies like Apple or McDonald’s that are traded in the stock market is a security.

One of the equal parts into which a company’s capital is divided, entitling the holder to a proportion of the profits. Share refers to the ownership certificates of a particular company.

An individual or company that owns shares in a company.

Assets that are not already pledged as a guarantee to repay another loan

Money owed by a company to a supplier. Example: "I purchased $20,000 of beauty supplies for my big sidewalk sale. My supplier gave me 60 days to pay for this huge order. That $20,000 is now an Account Payable for my company. The supplier trusts me to pay this account payable on the terms we agreed to."

Money owed by a customer to a company. Example: "I sold the new computer system to my client for $20,000. They made an initial payment of $1,000 and now owe me $19,000, which they've promised to pay in 30 days. That $19,000 is an Account Receivable for me. I trust the customer to pay this account receivable on the terms we agreed to."

Individuals who make small investments in an enterprise or to support an entrepreneur where they do not expect an immediate or large return on investment. Angel Investors are typically “friends and family,” individuals who know the business owner and want the owner to succeed. Angel Investors typically provide small amounts of equity with no expectation of a large return.

Debt from a bank. Banks require much more information from potential borrowers, and take more time to make a lending decision based on a great deal of analysis. Therefore bank loans are less expensive than online lines of credit.

A loan. A bond is security that investors buy and sell, that represents a legal obligation from the company issuing the bond that they will repay the funds they received when they issued the bond.

A determination of how many units are needed to sell in order to pay for all fixed costs. Example 1: "That equipment costs $4,000. The contribution margin for each item it makes is $10. I will need to sell 400 items to breakeven on that investment." Example 2: "My overhead expenses are $50,000. The contribution margin on each item I sell is $50. I will need to sell 1,000 items for my company to breakeven."

A company that provides individuals and companies with access to financial markets. Example: "I buy stocks and bonds from my broker."

Funds contributed by investors to a business. Investors contribute capital to a business because they expect a significant return on their investment when the business succeeds.

Expenditures on equipment the business will use for many years.

Total Revenues minus Total Cost minus one-time expenditures (called “capital expenditures”) on equipment you will use for many years.

Unit price minus cost of goods sold.

A loss that an insurance company will reimburse a policyholder for in the event of a claim. Example: "The fire damage to my inventory was a covered loss - the insurance company paid my claim after I paid for my deductible. I had to close my store for a week - the business I lost because my store was closed cost me another $20,000, but that was not a covered lost because my fire insurance policy did not cover a business interruption claim."

Funds lent to a business with an agreement that the business will repay the lender with interest.

Crowdfunding is an Internet phenomenon, where strangers learn about a

business online and then decide whether or not to make an investment.

Crowdfunding investors are typically “fans” of the owner, but they do expect

a return on investment. (The company pays a percentage of the capital raised

to the online Crowdfunding website.)

Crowdfunding is an Internet phenomenon, where strangers learn about a business online and then decide whether or not to make an investment. Crowdfunding investors are typically “fans” of the owner, but they do expect a return on investment. (The company pays a percentage of the capital raised to the online Crowdfunding website.)

Crowdfunding is an Internet phenomenon, where strangers learn about a business online and then decide whether or not to make an investment. Crowdfunding investors are typically “fans” of the owner, but they do expect a return on investment. (The company pays a percentage of the capital raised to the online Crowdfunding website.)

Crowdfunding is an Internet phenomenon, where strangers learn about a

business online and then decide whether or not to make an investment.

Crowdfunding investors are typically “fans” of the owner, but they do expect

a return on investment. (The company pays a percentage of the capital raised

to the online Crowdfunding website.)

The act of making a business different (and presumably more attractive to target customers) than any competitor.

Funds contributed by investors to a business. Investors contribute capital to a business because they expect a significant return on their investment when the business succeeds.

An option a supplier might grant a company to pay their bills later than they normally would. Example: "I usually have to pay my supplier within 30 days of receiving their goods. But if I order extra for a big sale that features their product my supplier gives me extended payment terms - 60 days - so I don't run out of money before the sale."

The 12 month period a company uses to report financial results. A fiscal year can be the same as a calendar year (January through December), any other 12 month period that makes sense. Example: a gift store chain sells most of its items during the Holiday season and then in clearance sales during January. Therefore the gift store chain uses a fiscal year of February 1 - January 31 so that its year-end accounting doesn't interfere with its selling efforts.

Costs that do not vary based on the units sold by enterprise. Fixed costs are

often incurred at the start your enterprise, before you know how well your

enterprise will perform. Example: when you sign your lease, your store rent

is now a fixed cost that will not vary based on how many units you sell.

A credit-worthy individual or business with sufficient liquidity who guarantees

to repay a loan in the event that the debtholder can’t make required

payment.

A special account where individuals can deposit retirement funds that can

grow tax-deferred until they withdraw them after they retire. The advantage

of an IRA: there are no annual income taxes on any dividends or profitable

sales that an IRA makes - the money remains in the account and only gets

taxed when the individual retires. If an individual withdraws money from an

IRA before he/she retires they are forced to pay the IRS significant penalties

for early withdrawal.

Debt owed to someone that is paid in monthly payments. Examples: your car

or truck payment, your credit cards and your mortgage are all paid in monthly

installment payments.

The amount an insurance policyholder receives from the insurance company

to reimburse the policyholder for a covered loss. Example: "The fire at my

store caused $20,000 in damages. After I paid my deductible of $500, my

insurance company paid my claim in the amount of $20,000 - $500 =

$19,500."

The individual or business that purchases an insurance policy for various

types of protection (examples: fire insurance, life insurance, etc.)

The amount a policyholder (either every quarter or year) pays for an

insurance policy. Example: that fire insurance policy for the new store has an

annual premium (or cost) of $1,000.

The merchandise that a company sells to its customers.

JA legal decision requiring a person or company to pay another person or

company. Example: "I sued that company for failing to repay the loan I gave

them. I won a judgment for all the money they owed me plus the money I

paid to my lawyer to sue them."

A loan that provides the borrower a maximum amount of money he/she can

borrower - the borrower can then access or use that line of credit for only as

much money as they need at any particular time. Example: "I have a $40,000

line of credit with the bank. I only need to borrow $5,000 to increase my

inventory for the holiday season, so I've only used $5,000 of my $40,000 line

of credit to minimize my interest payments."

Ratios a lending company calculates about an individual or a company to

determine how likely they are to have the liquidity to repay debt payments

that are required in a loan.

An investment security that includes many different stocks purchased and

held together. Investors purchase mutual funds because they are less risky

than holding any individual stock. Example: "One stock in the mutual fund

went down 50%. But because the mutual fund holds over 1000 other stocks,

the value of the mutual fund went down less than 1%

A payment that is owed every month. Example: your mortgage is a monthly

obligation. (something you must do)

Debt obtained from a number of online companies. Borrowers need to

disclose much less information about themselves to obtain online credit, and

online credit companies make credit decisions much more quickly than banks.

For these reasons, online credit is much more expensive for borrowers than

bank loans.

The percentage of a loan a bank or online credit company charges when a

small business receives a loan. Original fees add to the cost of the loan.

When a company issues a check or makes a financial commitment for an

amount greater than the amount the company has deposited in the bank.

Costs that a business incurs that are not part of producing the goods or

services its sells, but which are required to operate legally and efficiently.

Example: "The salary I pay my accountant is overhead - these funds dont

help us sell more product, but I need my accountant to keep our financial

records and submit all required filings.

Owning an asset without any associated debt.

A legal agreement that an assets is part of a guarantee to a lender, when the

lender can take possession of the assets and sell it to recover the funds owed

by a borrower in the event the borrower is unable to make a required debt

payment.

The amount of money borrowed.

business means a projection of

future financial performance. A pro forma usually takes the form of a

projection of future revenues and costs.

Revenues minus costs.

Unit price minus cost of goods sold.

three months. New and seasonable businesses are most likely to make

quarterly projections to make sure they’re on track for success.

Real estate is property and the building(s) on it. Real estate can be a piece of

land, or it can be a home on that piece of land, or it can be a building. Real

estate is typically purchased using a mortgage.

repaying the loan

Debt that includes a legal obligation by the borrower to repay the debt

personally if the business is unable to make its scheduled debt payment. A

secured debt can be guaranteed by the entrepreneur or by any credit-worthy

guarantor.

An investment vehicle. Different types of securities include stocks, bonds and

mutual funds.

How a business moves a specific customer to buy their service or offering.

Costs that vary somewhat based on the number of units you sell. Example: if

your enterprise buys an iPhone you won’t have to pay again for apps you

already own.

All people or companies associated with an enterprise. Stakeholders include

internal stakeholders (employees and shareholders / owners) as well as

external stakeholders (customers, suppliers, community members).

Shares of ownership in a company. Stock is a general term of ownership in

any company. Example: if investors say they own stocks, they are generally

referring to their overall ownership in one or more companies.

A company that provides a good or service to another company.

The hard work a small business owner puts into forming, founding and

operating his/her business – small business owners typically work very long

hours. Sweat equity is as important as any capital but it’s not a cash

investment.

The exact customers and market sector the business intends to serve.

Fixed costs plus variable costs. If the enterprise sells more than one type of

unit, Total Costs equal the sum of fixed costs and the sum of variable costs (or

cost of goods sold) for each type of unit.

Units times price. If the enterprise sells more than one type of unit, then

Total Revenue equals the sum of revenues created by selling each type of

unit.

Companies that conduct business with a company, and that can document

how well a company pays its bills to its suppliers.

Units refer to the “things” the company sells. Retail stores sell many different

types of units. Service businesses can sell different services (Example: men’s

haircuts, women’s hair styling, manicures, etc.)

Debt that does not include a promise by a guarantor to repay the loan in the

event the debtholder is unable to make a required payment. Unsecured debt

is riskier for the bank or online lending company - therefore the lending party

charges a higher interest rate on unsecured debt than it does on secured

debt.

Costs that vary based on the units sold by your enterprise.