A C corporation is a corporation which has not made the Subchapter S election to be taxed as a partnership. In other words, it is a regular corporation which is subject to two levels of taxes. One tax is at the corporate level (for corporate profits), and one is at the shareholder level (for dividends).

The amount at which the holder of preferred stock or bonds must sell the stock or bonds back to the issuing corporation. The call price is disclosed in the indenture. The call price might be the face or par amount plus one year’s interest or dividend.

A policy through which a limited number of permits to pollute are issued, and can be bought and sold on a market. It combines a quantity-based limit on emissions, and a price-based approach that places a cost on environmentally damaging decisions.

A non-liquid (or non-cash) property, tangible or intangible, held by a business. Generally not counted as inventory, these assets are often used by the business, rather than sold as part of routine operations. Company cars, office computers, or retail storefronts are all common types of capital assets.

Money spent to create future benefits. Capital expenditure is money spent by a company either to buy fixed assets or to add to the value of existing fixed assets with a useful life that extends beyond the taxable year. With regard to tax, capital expenditure cannot be deducted in the year the money is paid. Compare with operating expenditure (OPEX), which refers to ongoing costs to run a product, service or system.

An economic system in which the main form of economic organization is the firm, in which the private owners of capital goods hire labour to produce goods and services for sale on markets with the intent of making a profit. The main economic institutions in a capitalist economic system, then, are private property, markets, and firms.

Cash accounting is an accounting method where payment receipts are recorded during the period in which they are received, and expenses are recorded in the period in which they are actually paid. In other words, revenues and expenses are recorded when cash is received and paid, respectively.

Cash flow is a measure of the amount of funds coming into a business in a given time period (typically a month). Cash flow may be either positive or negative, depending on whether the business is bringing in more or less money than it spends in that period. While positive cash flow is a good sign, having a very high cash flow could indicate a business isn’t investing enough in its own growth.

A cash flow forecast is an estimation of a business’ cash flow in a given future time period (typically 12 months). It informs the business’ financial planning and highlights potential problems before they happen, allowing it to take pre-emptive action. There are several different methods that can be used to forecast cash flow, and businesses can benefit from forecasting various hypothetical scenarios, to be ready for what actually happens. Specialised software exists to help businesses forecast their cash flow with ease and accuracy.

A cash flow position, also referred to as a cash position, is a measure of how much money a business has at a specific point in time. It may measure more than just cash in the bank, sometimes including other highly liquid assets. Like cash flow, having a positive cash flow position is a good sign, however a very high cash flow position could indicate a business isn’t investing enough in its own growth

One of the main financial statements (along with the income statement and balance sheet). The cash flow statement reports the sources and uses of cash by operating activities, investing activities, financing activities, and certain supplemental information for the period specified in the heading of the statement. The cash flow statement is also known as the statement of cash flows.

A direction from cause to effect, establishing that a change in one variable produces a change in another. While a correlation is simply an assessment that two things have moved together, causation implies a mechanism accounting for the association, and is therefore a more restrictive concept. See also: natural experiment, correlation.

After completing RFM analysis, every customer is assigned a Cell Code which identifies her recency frequency and monetary level of buying. The cell code is often used in mailing. Sometimes used interchangeably with the term Source Code.

Also known as a CD. A bank time deposit (savings deposit) that cannot be withdrawn until a specified date. For example, a CD might mature in 6, 9, 12, or 18 months. If the amount deposited in a CD needs to be withdrawn prior to its maturity date, a penalty is assessed by the bank.

Economists often simplify analysis by setting aside things that are thought to be of less importance to the question of interest. The literal meaning of the expression is ‘other things equal’. In an economic model it means an analysis ‘holds other things constant’.

The return of funds from vendor to buyer through forcible means by a third party in the financial realm. This may be in response to overt fraud, faulty provision of service or inability to match the value promised. The term is often, though not exclusively, used to refer to actions taken with credit cards companies.

The thing in the center of a computer that makes it work. On a PC a 486 chip is a fast chip. A Pentium is faster. Faster and faster chips keep coming out. Chips are the size of your fingernail, and hold millions of circuits shrunk by photographic methods to tiny size.

Organizational clarity is a two-way street; everyone has to participate equally. The most important thing is to make the effort. If you manage to foster a culture of clarity inside of your organization, you’ll see fewer problems, better execution, and happier, more productive teams.

A way of dividing all households in the country into about sixty different types, such as “Blue Blood Estates” and “Shotguns and Pickups.” Usually called lifestyle groups. Useful for file segmentation. Clustering systems are provided by Claritas, Equifax, Donnelley, CACI. In Canada by Compusearch.

Coaching refers to a method of training, counselling or instructing an individual or a group how to develop skills to enhance their productivity or overcome a performance problem. The supervisor is called a coach while the learner is called the coachee.

Practice in health care occurs when multiple health workers from different professional backgrounds provide comprehensive services by working together synergistically along with patients, their families, caregivers, and communities to deliver the highest quality of care across settings.

A structured financial instrument (a derivative) consisting of a bond or note backed by a pool of fixed-income assets. The collapse in the value of the instruments of this type that were backed by subprime mortgage loans was a major factor in the financial crisis of 2007–2008.

This ratio adds together your annual personal and business cash flow and compares them against your combined annual personal and business debts. Learn why debt coverage matters on the SmartBiz Blog: Combined Debt Coverage Explained.

Physical goods traded in a manner similar to stocks. They include metals such as gold and silver, and agricultural products such as coffee and sugar, oil and gas. Sometimes more generally used to mean anything produced for sale.

An offering that is virtually indistinguishable from that of the competition. This lack of differentiation leads to a situation in which sellers have no pricing power and become price takers rather than price makers. Note that the idiom hot commodity uses the term in a way that is contradictory to the established meaning in modern economics.

Costs that are common to several products, processes, activities, departments, territories, etc. Often common costs are subsequently allocated to each of the joint products, joint processes, etc. in order to determine the cost of each.

A person or country has comparative advantage in the production of a particular good, if the cost of producing an additional unit of that good relative to the cost of producing another good is lower than another person or country’s cost to produce the same two goods. See also: absolute advantage.

Financial statements prepared by an accountant based on the amounts provided by a client. The accountant does not review or audit the amounts provided and therefore does not provide any assurances regarding the validity of the amounts.

This is an important term for small businesses that have a few big clients. It describes how much of your revenue comes from a specific customer. Businesses that have a handful of customers or partners that generate most of their revenue are considered over-concentrated, which is obviously more risky because losing one customer could have a big effect on earnings. Keeping concentrations low and spread evenly across your customers ensures a balanced foundation for business stability.

Conscientiousness is a trait that is commonly associated with awareness. Typically, conscientious people are well organised, demonstrate self-control and can plan their time very well. They are known as great team players and diligent workers.

Merchandise that is not owned by the party in possession of the goods. For example, a craftsperson might have produced 100 ornate wood items. In order to sell the items, the person asks a local merchant to take five of the items on consignment. This means that the merchant has possession of the five items and will attempt to sell them for a commission, but the merchant does not own the items. Those five items are consigned goods. (When the merchant sells one of the items, the merchant might be required to remit 80% of the selling price to the craftspersons and can keep 20% as a commission.) The merchant is the consignee and the craftsperson is the consignor.

These occur when doubling all of the inputs to a production process doubles the output. The shape of a firm’s long-run average cost curve depends both on returns to scale in production and the effect of scale on the prices it pays for its inputs. See also: increasing returns to scale, decreasing returns to scale.

An equation that shows how consumption spending in the economy as a whole depends on other variables. For example, in the multiplier model, the other variables are current disposable income and autonomous consumption. See also: disposable income, autonomous consumption.

Financial statements that reflect the total economic entity. For example, on a consolidated income statement a corporation having several subsidiaries would report the total of all of its companies’ sales that were made to customers outside of its group.

A potential loss that is dependent upon some future event occurring or not occurring. If the loss is probable and the amount can be estimated, then the loss and a liability are recorded with a journal entry. If the loss is only reasonably possible (not probable), then a journal entry is not recorded but a disclosure should be made in the notes to the financial statements. If the loss is remote, then neither a journal entry nor a disclosure is required.

The revenue classification used by nonprofit organizations to account for the amounts received as donations. It is also an expense classification for the donations made to another nonprofit organization. Contributions may be in the form of cash, securities, other property, as well as unconditional promises to give assets at a later date.

 

Contributions made by a donor without conditions attached are referred to as unrestricted contributions. Contributions with donor-imposed restrictions are either temporarily restricted or permanently restricted.

Every database promotion should include a control group of customers who are not exposed to the promotion. The success of the promotion is measured by the difference in response of the promoted group compared to the control group (after subtracting the cost of the promotion).

A device for managing the data input and output from several devices which are connected with a mainframe. These devices can include terminals or disks or tape drives. Controllers usually have a small computer inside them which permits them to manage the flow of instructions from the computer to the units in an organized way. They make the computer more powerful.

By choosing this option, your limited liability company will assume all of the assets, liabilities and obligations of your existing sole proprietorship or partnership. The current owner(s) of the existing business will automatically become members of the limited liability company.

A bond (long term note) that can be exchanged by the holder for a specified number of shares of stock in the company. The convertibility feature usually allows for the bond to have a lower interest rate when it is issued. The holder of the bond enjoys the potential for a gain if the stock price increases.

Corporate social responsibility (CSR) is a form of self-regulation, where companies integrate social, environmental and ethical policies into their overall business strategy. Companies embracing CSR should take responsibility for their actions and take a proactive approach to having a minimal negative impact on the world.

A statistical association in which knowing the value of one variable provides information on the likely value of the other, for example high values of one variable being commonly observed along with high values of the other variable. It can be positive or negative (it is negative when high values of one variable are observed with low values of the other). It does not mean that there is a causal relationship between the variables. See also: causality, correlation coefficient.

A measure of how closely associated two variables are and whether they tend to take similar or dissimilar values, ranging from a value of 1 indicating that the variables take similar values (‘are positively correlated’) to –1 indicating that the variables take dissimilar variables (‘negative’ or ‘inverse’ correlation). A value of 1 or –1 indicates that knowing the value of one of the variables would allow you to perfectly predict the value of the other. A value of 0 indicates that knowing one of the variables provides no information about the value of the other. See also: correlation, causality.

The accounting focused on determining the cost per unit of a manufacturer in order to value inventory and cost of goods sold. It is also used to determine unit costs of items processed in service businesses, such as a bank’s cost to process a check or deposit.

The change in total costs in response to the change in some activity. For example, some of the costs of owning and operating a vehicle will increase in total with an increase in miles driven. These are referred to as variable costs and include gasoline and tires. Some other costs will not change in total with a reasonable increase in miles driven. These costs are referred to as fixed costs and include insurance and parking. Other costs might be part variable and part fixed. These are referred to as mixed costs and an example might be depreciation.

Startup costs that would be incurred when a seller enters a market or an industry. These would usually include the cost of acquiring and equipping new premises, research and development, the necessary patents, and the cost of finding and hiring staff.

Joseph Schumpeter’s name for the process by which old technologies and the firms that do not adapt are swept away by the new, because they cannot compete in the market. In his view, the failure of unprofitable firms is creative because it releases labour and capital goods for use in new combinations.

A credit limit is the maximum value of goods or services a business will supply a customer before payment must be made. Appropriate credit limits ensure a business controls the risk of not being paid on time (or in the worst case scenario – at all).

Credit terms are the rules, agreed between a business and their customer, which dictate when payment must be made. They are also commonly referred to as ‘payment terms’. Typical credit terms include payment being due 30, 60, or 90 days after goods or services have been delivered (however, as long as the business and customer both agree on them, any period could be used).

There are two quite distinct uses of the term. One is the observed negative effect when economic incentives displace people’s ethical or other-regarding motivations. In studies of individual behaviour, incentives may have a crowding out effect on social preferences. A second use of the term is to refer to the effect of an increase in government spending in reducing private spending, as would be expected for example in an economy working at full capacity utilization, or when a fiscal expansion is associated with a rise in the interest rate.