Capital & Credit
Money borrowed from external sources (like a bank) that must be repaid with interest.
What is Debt Capital?
A "snapshot" of a company’s financial health at a specific moment, showing Assets, Liabilities, and Equity.
What is a Balance Sheet?
The most liquid asset; includes currency, coins, and checking account balances.
What is Cash?
A document sent to a buyer that lists the goods or services provided and the amount of money owed.
What is an Invoice?
A performance measure used to evaluate the efficiency of an investment; calculated as the net profit divided by the cost of the investment.
What is Return on Investment (ROI)?
Money raised by a business in exchange for a share of ownership (stock) in the company.
What is Equity Capital?
A report that shows a company's revenues and expenses over a specific period (usually a month or year).
What is an Income Statement?
Assets that can be converted into cash quickly without losing much value.
What are Liquid Assets?
Money owed to a business by its customers for goods or services delivered but not yet paid for.
What is Accounts Receivable?
A specific ratio that measures how much profit a company generates with the money shareholders have invested.
What is Return on Equity (ROE)?
A flexible loan from a bank that allows a business to borrow up to a certain limit and pay interest only on the amount used.
What is a Line of Credit?
A document that tracks the actual movement of money in and out of a business to ensure there is enough to pay bills.
What is a Cash Flow Analysis Statement?
Assets that are difficult to sell quickly (like specialized machinery or land) without a significant loss in value.
What are Illiquid Assets?
A process where a business sells its accounts receivable to a third party at a discount to get immediate cash.
What is Factoring?
Money raised by a business in exchange for a share of ownership (stock) in the company.
What is Equity Capital?
An asset (like real estate or equipment) that a borrower offers to a lender to secure a loan.
What is Collateral?
An organized list of every category (account) a business uses to record its financial transactions.
What is a Chart of Accounts?
Long-term tangible property used in the operation of a business, such as buildings, vehicles, or furniture.
What are Fixed Assets?
Relationships between different numbers on financial statements used to track trends and compare performance.
What are Financial Ratios?
Relationships between different numbers on financial statements (like the Quick Ratio or Debt-to-Equity) used to track trends and compare performance.
What are Financial Ratios?
A performance measure used to evaluate the efficiency of an investment; calculated as the net profit divided by the cost of the investment.
What is Return on Investment (ROI)?
A specific ratio that measures how much profit a company generates with the money shareholders have invested.
What is Return on Equity (ROE)?
This term describes the specific risk a business faces when it holds high-value Illiquid Assets but lacks enough Liquid Assets to meet its short-term debt obligations.
What is Liquidity Risk (or a Liquidity Crisis)?
While Accounts Receivable represents money owed to you, this specific financial practice involves selling those outstanding Invoices to a third party at a discount to improve immediate Cash Flow.
What is Factoring?
This is the fundamental accounting equation found on a Balance Sheet that defines the relationship between what you own and what you owe.
What is Assets = Liabilities + Owner's Equity?