E - BizDefinition.com

Term	Definition
Earning before interest and taxes (ebit)	Measures a company’s revenue that includes all expenses (except for interest and income tax expenses). Used as an alternative to Gross Profits (see below) as a measure of company performance and financial standing, often by potential investors.
Earnings	Wages, salaries, and other income from labor.
EBCDIC	A protocol for putting data on a tape. All IBM mainframes use EBCDIC. Most others use ASCII.
Ebit	A form of operating profit. Stands for Earnings Before Interest and Tax.
EBITA	A measure of company earnings that excludes interest, taxes, and amortization. EBITA is an acronym for “earnings before interest, taxes, and amortization.”
Ebitda	Another form of operating profit. Stands for Earnings Before Interest, Tax, Depreciation and Amortisation and is a measure of a company’s overall financial performance.
Economic accountability	Accountability achieved by economic processes, notably competition among firms or other entities in which failure to take account of those affected will result in losses in profits or in business failure. See also: accountability, political accountability.
Economic cost	The out-of-pocket cost of an action, plus the opportunity cost.
Economic growth	This is the term used to describe an increase in the amount of goods and services produced by the county, known as gross domestic product (GDP).
Economic profit	A firm’s revenue minus its total costs (including the opportunity cost of capital).
Economic rent	A payment or other benefit received above and beyond what the individual would have received in his or her next best alternative (or reservation option). See also: reservation option.
Economic system	A way of organizing the economy that is distinctive in its basic institutions. Economic systems of the past and present include: central economic planning (e.g. the Soviet Union in the twentieth century), feudalism (e.g. much of Europe in the early Middle Ages), slave economy (e.g. the US South and the Caribbean plantation economies prior to the abolition of slavery in the nineteenth century), and capitalism (most of the world’s economies today).
Economically feasible	Policies for which the desired outcomes are a Nash equilibrium, so that once implemented private economic actors will not undo the desired effects.
Economics	The study of how people interact with each other and with their natural surroundings in providing their livelihoods, and how this changes over time.
Economies of agglomeration	The advantages that firms may enjoy when they are located close to other firms in the same or related industries. See also: economies of scale.
Economies of scale	The cost advantages obtained by a business when buying an item in bulk. The price of an item usually decreases as the amount bought increases.
Economies of scope	Cost savings that occur when two or more products are produced jointly by a single firm, rather being produced in separate firms.
Economy of scale	The reduction of costs that accrue as more copies of an item are produced. This is often achieved by utilizing higher fixed (and lower variable) costs and by distributing those fixed costs over larger quantities of items.
Economy of scope	The reduction of costs that accrue as a firm specializes upon a collection of related offerings. This is often achieved by investing in shared fixed costs across its offerings.
Edit check	A software process whereby data to be entered into a marketing database is checked for logic before it goes into the database.
Effective tax rate on profits	This is calculated by taking the before-tax profit rate, subtracting the after-tax profit rate, and dividing the result by the before-tax profit rate. This fraction is usually multiplied by 100 and reported as a percentage.
Efficiency wages	The payment an employer makes that is higher than an employee’s reservation wage, so as to motivate the employee to provide more effort on the job than he or she would otherwise choose to make. See also: labour discipline model, employment rent.
Efficient market hypothesis	The belief that the price of any item reflects all available information.
Effort heuristic	The cognitive bias that leads people to assume that the value of a good is proportional to the effort required to create it.
Empathy	Empathy is the ability to emotionally understand what other people feel, see things from their point of view, and imagine yourself in their place.
Employee	Person who works for another under that person’s control and direction.
Employee (part/full time)	An individual who works for a business under an employment contract (as opposed to a non-permanent labor contract — see Contractor).
Employee development.	When you delegate tasks to your team members, employees get a chance to improve their skills and demonstrate their abilities in a specific area, such as leadership and interpersonal skills.
Employee motivation.	Employees may be more driven to perform at their best when trusted with new responsibilities.
Employer identification number (ein)	Number issued by the Internal Revenue Service to identify businesses, such as an LLC, for tax purposes. An EIN is essentially a Social Security number for a business.
Employment protection legislation	Laws making job dismissal more costly (or impossible) for employers.
Employment rate	The ratio of the number of employed to the population of working age. See also: population of working age.
Employment rent	The economic rent a worker receives when the net value of her job exceeds the net value of her next best alternative (that is, being unemployed). Also known as: cost of job loss.
End user license agreement	The contract that grants the right for a customer to use a vendor’s software system.
Endogenous	Produced by the workings of a model rather than coming from outside the model. See also: exogenous
Endowment	The facts about an individual that may affect his or her income, such as the physical wealth a person has, either land, housing, or a portfolio of shares (stocks). Also includes level and quality of schooling, special training, the computer languages in which the individual can work, work experience in internships, citizenship, whether the individual has a visa (or green card) allowing employment in a particular labour market, the nationality and gender of the individual, and even the person’s race or social class background. See also: human capital.
Endowment effect	People value belongings more highly than they otherwise would, had they not owned them.
Enhancement	Appending demographic or lifestyle data to a list.
Enterprise value	This is the market value of a business. It is calculated by market capitalisation times current share price, minus cash, plus debt.
Entrepreneur	A person who creates or is an early adopter of new technologies, organizational forms, and other opportunities.
Environment-consumption indifference curve	A curve on which all points are combinations of environmental quality and consumption that are equally valued by an individual or policymaker. The slope of the indifference curve is the ratio of the marginal disutility of lost consumption due to the cost of abating and of the marginal utility of environmental quality (a public good shared by all).
Equilibrium	A model outcome that is self-perpetuating. In this case, something of interest does not change unless an outside or external force is introduced that alters the model’s description of the situation.
Equilibrium (of a market)	A state of a market in which there is no tendency for the quantities bought and sold, or the market price, to change, unless there is some change in the underlying costs, preferences, or other determinants of the behaviour of market actors.
Equilibrium rent	Rent in a market that is in equilibrium. Also known as: stationary or persistent rents.
Equilibrium unemployment	The number of people seeking work but without jobs, which is determined by the intersection of the wage-setting and price-setting curves. This is the Nash equilibrium of the labour market where neither employers nor workers could do better by changing their behaviour. See also: involuntary unemployment, cyclical unemployment, wage-setting curve, price-setting curve, inflation-stabilizing rate of unemployment.
Equipment and real estate loans	The 504 loan program from the Small Business Administration provides businesses with long-term, fixed-rate financing for major assets. The maximum amount of an SBA 504 loan is $5.5 million, and these loans are available with 10- or 20-year maturity terms.
Equipment loans	Equipment financing is a type of term loan that can be used to purchase and spread out the cost of a large piece of machinery or equipment for your business. Usually, the equipment serves as collateral for the loan
Equity	Equity is used by analysts to work out how financially “healthy” a company is. It also represents what would be left if all of a businesses’ assets were liquidated and the debt paid off.
Equity financing	Using capital stock (common stock or preferred stock) instead of debt in order to finance an investment such as a plant asset.
Ersatz good	A good that is inferior to one that it has replaced.
Escrow account	Asset that a third party holds during the period in which two other parties are finishing a transaction
Ethical investment	Investments made in companies that are specifically chosen for their environmental or moral credentials. Defence contractors, or companies known to use contentious labour practices, will generally be avoided by ethical investors.
Ethical trade	Ethical trade can refer to many different things but is most often used as an umbrella term for any business practices that promote socially and/or environmentally responsible trading.
Etiquette	The set of rules or customs that control accepted behaviour in particular social groups or social situations.
Even pricing	A pricing method that uses round numbers (such as $10 rather than $9.99). This system tends to make offerings seem more expensive and is often used for premium products.
Event Driven Programs	Database programs which are triggered to produce output (usually communications) based on events: a birthday letter, anniversary letter, thank you letter, etc.
Evolutionary economics	An approach that studies the process of economic change, including technological innovation, the diffusion of new social norms, and the development of novel institutions.
Excellence	Behavior that adheres to, exceeds, or adapts best practices to provide the highest quality care; including engagement in continuous professional development.
Excess demand	A situation in which the quantity of a good demanded is greater than the quantity supplied at the current price. See also: excess supply.
Excess supply	A situation in which the quantity of a good supplied is greater than the quantity demanded at the current price. See also: excess demand.
Exchange rate	The number of units of home currency that can be exchanged for one unit of foreign currency. For example, the number of Australian dollars (AUD) needed to buy one US dollar (USD) is defined as number of AUD per USD. An increase in this rate is a depreciation of the AUD and a decrease is an appreciation of the AUD.
Excludable good	A product whose seller can prevent people who have not paid from deriving benefit from it.
Exit strategy	A plan to enable you to leave your business, either after achieving your goal or deciding you would like to move on to do something else while recouping any capital you invested when starting the company.
Exogenous	Coming from outside the model rather than being produced by the workings of the model itself. See also: endogenous.
Exogenous shock	A sharp change in external conditions affecting a model.
Expected inflation	The opinion that wage- and price-setters form about the level of inflation in the next period. See also: inflation.
Expense	Refers to the total cost of something; the opposite of profit. This can include money spent on bills, marketing, stocks, taxes, payroll, and other operating costs.
Expenses and losses	A classification on a single-step income statement for both operating and nonoperating expenses and losses that pertain to the time interval shown in the heading of the income statement.
Experience good	A product or service with a value that can not be ascertained until it is used.
Export	Selling your goods or services overseas.
Exports (x)	Goods and services produced in a particular country and sold to households, firms and governments in other countries.
Expropriation risk	The probability that an asset will be taken from its owner by the government or some other actor.
External benefit	A positive external effect: that is, a positive effect of a production, consumption, or other economic decision on another person or people that is not specified as a benefit in a contract. Also known as: external economy. See also: external effect.
External cost	A negative external effect: that is, the negative effect of production, consumption, or other economic decisions on another person or party, which is not specified as a liability in a contract. Also known as: external diseconomy. See also: external effect.
External diseconomy	A negative effect of a production, consumption, or other economic decision, that is not specified as a liability in a contract. Also known as: external cost, negative externality. See also: external effect.
External economy	A positive effect of a production, consumption, or other economic decision, that is not specified as a benefit in a contract. Also known as: external benefit, positive externality. See also: external effect.
External effect	A positive or negative effect of a production, consumption, or other economic decision on another person or people that is not specified as a benefit or liability in a contract. It is called an external effect because the effect in question is outside the contract. Also known as: externality. See also: incomplete contract, market failure, external benefit, external cost.
Externality	An effect on a third party (who is neither buyer nor seller). Although externalities are almost always described as a negative effect on a third party (such as pollution), positive externalities can also exist (a job training program may, for example, reduce crime in a given neighborhood).
Extract	A system for creating a sequential file from a relational marketing database. The extract can be used for preparing reports, or for sending data to other companies for their use.