AMORTIZATION - The non-cash cost of "using up" an intangible asset during a particular period.

ASSETS - Something of value in monetary terms. Tangible and intangible things that are acquired and used by the business.

BALANCE SHEET - A statement of property. A list of all assets (things) which always equal the liabilities (persons who have provided credit) and owners' equity (persons who own the business).

BALANCE SHEET TRANSFER - Internal bookkeeping adjustment that affects two balance sheet accounts, without affecting either the income statement or cash statement.
See DISPOSALS.

BORROW/(PAY BACK) - Of Debt. BORROW: Cash received by borrowing. PAY BACK: Cash used to pay back a prior debt to another party.

CASH - Monetary value that is virtually immediately available to a person or business in that it can be instantly converted into any other kind of asset.

CASH FLOW STATEMENT - The actual movement of cash within the business: cash inflow minus cash outflow.

COLLECTIONS - Also called receipts. Cash paid by customers for their purchases.

COST OF GOODS SOLD or COGS - A non-cash measurement of the goods that were sold and taken out of inventory.. These goods are valued at the cost incurred when the business originally bought goods and/or produced the inventory.

CREDIT ADDITIONS - Additions to Inventory made by purchasing from outside vendors on credit.

DEBT - A liability. Dollars the company owes lenders which must be paid back, usually with interest.

DEBT ADJUSTMENTS - Sometimes a debt amount is charged down in unusual circumstances. (This adjustment could be offset against equity or assets.)

DEPLETION - A portion of the original cost of fixed assets that can no longer be converted into cash, charged as a cost of doing business. Often applied to natural resource assets. Treated similar to depreciation in the Mobley Matrix.

DEPRECIATION - A portion of the original cost of fixed assets charged to a particular income period as a cost of doing business.

DISPOSALS - A value that is removed from fixed assets on the balance sheet.
DISPOSALS always reduce two accounts equally, and may be a balance sheet transfer.

DIVIDEND - A payment to stockholders out of retained earnings, which is usually in the form of cash.

EQUITY - Stock in a business, plus accumulated retained earnings. Also called net worth.

EQUITY ADJUSTMENT – Could result from stock dividend, or from debit-for-equity swap.

EXPENSES - Invoices received for things or services you acquired as a current cost of doing business. This is a non-cash value because it does not measure any cash payment, only your promise to pay. If cash is paid at the time of purchase, the amount is usually recorded as both an expense and a payment of cash.

EXPENSE PAID - Cash paid by the company for current or prior expenses or inventory additions purchased on credit due vendors.

FINANCING CASH FLOW (FCF) - This is the sum of certain line items in the Cash Statement that report loan receipts from, or payments to, lenders as well as all stockholder cash transactions.

FISCAL YEAR - A tax year based upon any twelve month period other than a calendar year.

FIXED ASSET DISPOSALS - A tangible asset on hand with a useful life longer than 1 year. Typical fixed assets are land, plant, and equipment.

FIXED ASSET DISPOSITIONS - Changes in assets that do not fall under the standard definitions of depreciation or depletion. This is a result of a fixed asset sale, trade-in, abandonment, scrap or write-off.

FIXED ASSET INVESTMENT - Fixed Asset additions during the period. (Often referred to as capital spending or fixed asset acquisition.)

GROSS FIXED ASSETS - The total amount paid for fixed assets used by the business before allowances for depreciation or depletion are subtracted.

INCOME STATEMENT - This statement is based on promises and agreements, rather than cash. It summarizes for a specific period of time the total sales and subtracts all the costs of doing business. This gives a Net Profit for the period. All items on the income statement are non-cash measures in dollars.

INCOME TAX ACCRUED - Total federal and state income taxes accrued for the period, based on other amounts shown on the income statement. This is usually not the amount of taxes paid during the period.

INVENTORY - Dollar cost of goods on hand, yet to be sold. Includes raw material, goods in process, and finished goods. (In service businesses, this is sometimes defined as the billable time that is yet to be billed.)

INVENTORY ADDITIONS - Total amounts added to inventory, as a result of INVENTORY PAID plus CREDIT ADDITIONS.

INVENTORY PAID - Cash spent directly for Inventory.

INVESTING CASH FLOW (ICF) - This is the sum of certain line items in the Cash Statement that generally report how much the company is investing or divesting in Gross Fixed Assets, other businesses or other investments.

LIABILITIES - Values in monetary terms provided by creditors outside the business. A measure of their interest in the business, because the company owes them.

LIABILITY ADJUSTMENT - Write-downs of liability amounts are sometimes included on financial statements. This could, for example, be the result of renegotiating a liability with a vendor.

MARKETING AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
(MSGA) - Any operating expense that could not be called a direct COST OF GOODS
SOLD or DEPRECIATION/AMORTIZATION.

NET PROFIT or LOSS - The amount of value added or lost in a business during a specific operating period of time. This shows non-cash values, and so must be considered along with cash when measuring the performance of a business.

NET WORTH - Also called owners' equity. The sum of stock plus retained earnings.

OPERATING CASH FLOW (OCF) - Cash flow from Operations: A pure cash flow computation from selected line items of the cash statement which reflect standard recurring business operations, such as: collections minus payments, etc. This computation measures the amount of cash internally generated which then becomes available for periodic management strategies such as gross fixed asset investment, debt payback, dividends, etc. It is an important measurement, because it can determine the capacity of a business to pursue anticipated strategies.

OTHER ASSETS - Prepaid insurance, other current assets and other non-investing assets should go here.

OTHER INVESTMENT ASSETS - Sometimes a business owns financial instruments, investments, goodwill, warrants, or other rights that are theoretically convertible to cash at some point. Such amounts would go in this category.

OWNERS' EQUITY - Stock provided by owners, plus accumulated Retained Earnings. (Also known as stockholders' equity or net worth.)

PAID IN - Refers to new investment that is paid in to a business by the owners.

PAYABLES - Amounts of money owed to creditors for services already rendered or goods already provided.

PAY BACK - Cash used to pay back a prior debt to another party.

PREPAYMENT - A Cash outlay to obtain an other asset which will have future value to the company (i.e. prepaid insurance).

RECEIVABLES - An asset consisting of monetary value owed from customer or client, which should quickly be converted to cash.

RETAINED EARNINGS - Accumulated Net Profit (or losses) from inception to date retained in the business and not yet paid out to owners as cash dividends.

RETURN ON ASSETS - Annualized Net Profit divided by average assets. A performance measure of all Sales, Expense, Assets (SEA). (Also known as Operating Effectiveness.)

RETURN ON EQUITY - Measures the ratio of profit to stockholders' equity. This is an important measurement that allows meaningful comparisons between businesses for stockholders.

SALES - Also called gross revenue. A measurement of all billings for the period for products or services, which can be expected to result in collections soon.

STOCK - Dollars paid in by the owner(s). Remember that stockholders are considered owners.

TAX ADJUSTMENTS - Could result from company buying or selling a business entity.

TOTAL CHANGE IN CASH - The net amount of cash that has either accumulated in a business or been lost from a business during a specified period of time.