1. Capital
- 1. Wealth in the form of money or assets, taken as a sign of the financial strength of an individual, organization, ornation, and assumed to be available for development orinvestment.
- 2. Accounting: Money invested in a business to generateincome.
- 3. Economics: Factors of production that are used to creategoods or services and are not themselves in the process.
2. Overhead
- Accounting: A cost or expense (such as foradministration, insurance, rent, and utility charges) that (1) relates to an operation or the companyas a whole, (2) does not become an integral part of a good or service (unlike raw material or direct labor), and (3) cannot be applied or traced to any specific unit of output. Overheads are indirect costs.
3. Marginal Cost
- The increase or decrease in the total cost of a production run for making one additional unit of an item. It is computed in situations where the breakeven point has been reached: the fixed costs have already been absorbed by the already produced items and only the direct (variable) costshave to be accounted for.
- The concept of marginal cost is critically important in resource allocation because, foroptimum results, management must concentrate itsresources where the excess of marginal revenue over the marginal cost is maximum
- Think of pizza slices and how first one you eat makes you feel real good, second it not bad either, third one gets you full and fourth one would make you puke – that’s declining marginal benefit for you.
4. Amortization
- The process of an item, loan, etc… decreasing over a period of time… Often known in the world of loans… as the loan becomes smaller and the amount needed to be paid decreases…
5. Risk Management
- The identification, analysis, assessment, control, andavoidance, minimization, or elimination of unacceptablerisks. An organization may use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or combination of strategies) in propermanagement of future events.
6. Leverage
- The ability to influence a system, or an environment, in a way that multiplies the outcome of one’s efforts without a corresponding increase in the consumption of resources. In other words, leverage is the advantageous condition of having a relatively small amount of cost yield a relativelyhigh level of returns. See also financial leverage andoperating leverage.
7. Angel Investors
- Usually, a former entrepreneur or professional who providesstarting or growth capital in promising ventures, and helps also with advice and contacts. Unlike venture capitalists, angel investors usually operate alone (or in very smallgroups) and play only an indirect role as advisors in theoperations of the investee firm. They are deemed to be ‘angels‘ in comparison with grasping investors who are termed ‘vulture capitalists.’ Also called business angel.
8. Venture Capital
- Startup or growth equity capital or loan capital provided by private investors (the venture capitalists) or specializedfinancial institutions (development finance houses orventure capital firms). Also called risk capital.
9. Intellectual Property
- Knowledge, creative ideas, or expressions of human mind that have commercial value and are protectable undercopyright, patent, servicemark, trademark, or trade secretlaws from imitation, infringement, and dilution. Intellectual property includes brand names, discoveries, formulas,inventions, knowledge, registered designs, software, andworks of artistic, literary, or musical nature. It is one of the most readily tradable properties in the digital marketplace.
10. Variable Costs
- A periodic cost that varies in step with the output or thesales revenue of a company.
- Variable costs include raw material, energy usage, labor,distribution costs, etc. Companies with high variable costs are significantly different from those with high fixed costs. This difference affects the financial structure of the company as well as its pricing and profits. The breakeven point in such companies (in comparison with high fixed cost companies) is typically at a much lower level of output, but their marginal profit (rate of contribution) is also much lower.
11. Fixed Costs
- A periodic cost that remains more or less unchanged irrespective of the output level or sales revenue, such as depreciation, insurance, interest, rent, salaries, and wages.
- While in practice, all costs vary over time and no cost is a purely fixed cost, the concept of fixed costs is necessary in short term cost accounting. Organizations with high fixed costs are significantly different from those with highvariable costs. This difference affects the financial structureof the organization as well as its pricing and profits. Thebreakeven point in such organizations (in comparison with high variable cost organizations) is typically at a much higher level of output, and their marginal profit (rate ofcontribution) is also much higher.
12. Benchmark
- Standard, or a set of standards, used as a point of referencefor evaluating performance or level of quality. Benchmarks may be drawn from a firm’s own experience, from the experience of other firms in the industry, or from legalrequirements such as environmental regulations.