Basic Terms
A bill sent to a customer
INVOICE
Shows revenue and expenses
INCOME STATEMENT
Assets easy to turn into cash
LIQUID ASSETS
Money from owners
EQUITY CAPITAL
Used to analyze performance
FINANCIAL RATIO
Money customers owe a business
ACCOUNTS RECEIVABLE
Shows assets, liabilities, and equity
BALANCE SHEET
Assets hard to turn into cash
ILLIQUID ASSETS
Borrowed money
DEBT CAPITAL
Profit compared to cost
RETURN ON INVESTMENT
Money available right away
CASH
Tracks cash in and out
CASH FLOW ANALYSIS STATEMENT
Long-term assets like buildings
FIXED ASSETS
Borrowing up to a set limit
LINE OF CREDIT
Profit compared to equity
RETURN ON EQUITY
A list of all accounts
CHART OF ACCOUNTS
Used to see profit or loss over time
INCOME STATEMENT
Example of a liquid asset
CASH
Asset used to secure a loan
COLLATERAL
High ROI means what
STRONG RETURN
Selling receivables to get cash fast
BALANCE SHEET
Example of an illiquid asset
BUILDING OR EQUIPMENT
Does not require repayment
EQUITY CAPITAL
Why businesses use ratios
TO COMPARE PERFORMANCE