📘 The A–Z Business Glossary for Builders & Young Owners
📘 The A–Z Business Glossary for Builders & Young Owners
Understand business the way Warren and Shaq do. Simple. Profitable. Smart.
A
Amortization – The gradual writing off of intangible asset costs (like a patent or brand). Think of it like depreciation for invisible things.
Assets – Anything a business owns that has value (cash, equipment, buildings, IP).
B
Balance Sheet – A snapshot of what a business owns (assets), owes (liabilities), and what's left (equity) at a specific point in time.
Break-Even Point – The amount of sales needed to cover all costs. After this point, you make profit.
Burn Rate – How fast a business is spending its cash. Especially important for startups.
C
Capital – Money used to start or grow a business. Can be cash or other valuable assets.
Cash Flow – The movement of cash in and out of the business. Positive cash flow means you're bringing in more than you're spending.
COGS (Cost of Goods Sold) – The direct cost of making your product or delivering your service.
D
Depreciation – The loss of value of a tangible asset (like a car or machine) over time.
Dividends – Payments made to shareholders from profits.
E
EBITDA – Earnings Before Interest, Taxes, Depreciation, and Amortization. A clean measure of core business profitability.
Equity – Ownership in the business. Can be shares in a company or the leftover value after subtracting liabilities from assets.
Expense – Any cost the business has to pay to operate.
F
Fixed Costs – Costs that don’t change no matter how much you produce (like rent or salaries).
Free Cash Flow – Cash left over after the business pays for operations and investments. What you can use, invest, or distribute.
G
Gross Profit – Revenue minus COGS. Doesn’t include operating expenses.
Gross Margin – Gross profit as a % of revenue.
H
Hurdle Rate – The minimum rate of return an investor expects before putting money in.
I
Income Statement – A report showing revenue, costs, and profit over a time period. Also called a Profit & Loss (P&L) statement.
Intrinsic Value - What a business is really worth. Like knowing your favorite toy costs $50, even if it’s marked $80.
Inventory – All the goods a business holds for sale or production.
Interest – The cost of borrowing money.
L
Liabilities – What the business owes (loans, credit, unpaid bills).
Liquidity – How easily assets can be turned into cash.
M
Margin – The difference between what you sell something for and what it costs you. Can refer to gross, operating, or net.
Margin of Safety - A price buffer in case you’re wrong about how much you can sell something for. For example, knowing your favorite toy costs $50, and you can mark it up for $80. However, you only buy it when the price is $30, just to be safe.
Market Capitalization (Market Cap) – The total value of a company’s shares (share price × number of shares).
N
Net Income / Net Profit – What’s left after all expenses, taxes, and interest. The “bottom line.”
Net Margin – Net income as a % of revenue.
O
Operating Expenses (OPEX) – Regular costs to keep the business running (marketing, salaries, rent).
Owner's Equity – The owner's stake in the business after all debts are paid.
P
P&L Statement – Profit & Loss statement. See Income Statement.
Profit – What’s left after you subtract costs from revenue.
Private Equity – Investing in private companies (not on stock markets) to improve and eventually sell them for profit.
R
Revenue – All the money a business brings in before subtracting any costs. Also called sales or top line.
ROI (Return on Investment) – How much money you make compared to what you invested.
S
Scalability – The ability of a business to grow rapidly without growing costs as fast.
Stock – A share of ownership in a company.
T
Top Line – Another word for revenue. It’s at the top of the income statement.
Trade-Off – Giving up one thing to get another. In business, often used to describe cost vs. benefit decisions.
U
Unit Economics – The revenue and cost per unit sold. Helps measure if each sale is profitable.
V
Valuation – How much a business is worth.
Variable Costs – Costs that change depending on how much you produce (like materials or shipping).
W
Working Capital – Short-term cash available to run daily operations (Current Assets – Current Liabilities).
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