Entrepreneurial Finance: Fundamentals of Financial Planning and Management for Small Business

GLOSSARY

ABC analysis:

An inventory classification system by which inventory is classified into three groups: A, B, and C based on the investment volume in them.

Account payable:

The largest and most important component of current liabilities, which consists mostly of the inventory purchased on credit, and other payments due for travel, maintenance, entertainment, and the like.

Account payable turnover (APT):

It is the average payment period, which is obtained by dividing the account payable (APY) by the average daily purchase (DP).

Account receivable:

The firm's ability and willingness to extend credit to its customers. Generally, it represents the debt owed to the firm due to selling its goods and services on credit basis.

Account receivable aging:

A method to tabulate and categorize all the account receivable amounts by number of days it remains outstanding in order to examine why some accounts are not paid properly.

Account receivable turnover (ART):

Annual number of times the firm can collect its account receivable. Obtained by dividing the total on-credit sales (TCS) by the average account receivable (AAR).

Account receivable turnover (ART):

It is the average collection period that shows the extent to which customers pay their credit bills. It is the account receivable (AR) divided by the average daily sales (DS).

Accountant's profit:

The difference between total revenue and total explicit cost.

Accruals:

The firm's obligations that accumulate during the normal ...